Lithuanian EMI Licensing
Electronic Money Institution
Electronic money (e-money) institution (or EMI) is a licensed financial institution which may engage in e-money related services and payment services, as herein below described.
The full license for e-money is not limited in either time or area of activities. Thus, a holder of the e-money institution license in Lithuania shall be allowed to provide any services in the European Economic Area (EEA) without having to undergo a licensing procedure in any other member state. After the license in Lithuania is obtained the e-money institution may provide services in other EEA member states by establishing branches or by means of pass porting (with the use of freedom to provide services).
Services provided by an Electronic Money Institution
Electronic Money Institution license is the right decision for the payment service providers planning a wider range of services than just instant payment processing.
– Services enabling cash to be placed on a payment account.
– Services enabling cash withdrawals from a payment account.
– Execution of payment transactions, including transfers of funds on a payment account with the payment service provider of the payment service user or with another payment service provider: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders.
– Execution of payment transactions where the funds are covered by a credit line for a payment service user: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders.
– Issuing and/or acquiring of payment instruments.
– Money transfers.
– Payment Initiation Service (PSD2 implementation).
– Account Information Service (PSD2 implementation).
– Issuing of Electronic Money.
Lithuania has already implemented the EU Second Payment Services Directive (PSD2) allowing Payment Initiation Service (PIS) – initiation of a payment order from the client bank account at the request of the client from the payment account held at another payment service provider (bank). PSD 2 also allows E-money Institution to provide Account Information Service (AIS) accessing consolidated information from the client accounts held by other payment service providers (banks) and have an overall view of client financial information.
Why Lithuania is one of the best European jurisdictions for Fintech companies?
Choosing the jurisdiction for registration of a payment license is one of the main factors for the successful development of the project. We recommend you consider Lithuania to start the Electronic Money Institution (EMI), due to the following factors:
1. Regulator is business oriented
The Lithuanian financial regulator (The Central Bank of Lithuania) is not an ordinary government body where you have to wait weeks for clarification of any issue or to make an appointment. This is a new level of relationship between the state and the client. During the first year of operating, the Central Bank of Lithuania shows loyalty to possible shortcomings in the organization of business. Also, in Lithuania there is a special visa program that allows the founders of start-ups to obtain a residence permit under the simplified procedure.
2. Access to SEPA for payment companies in Lithuania
The Bank of Lithuania, through its infrastructure, provides technical access to the SEPA (Single Euro Payments Area) for all types of payment service providers (banks, electronic or payment institutions) licensed in the EEA. Within this system, the client has an opportunity to open IBAN (International Bank Account Number) and make money transfers throughout the entire territory of the European Union.
3. The number of fintech projects registered in Lithuania
In 2018, about 170 Fintech companies operated in Lithuania, and this, compared to 2017 (117 companies), demonstrates a positive tendency in the development of the Fintech industry. 70% of all Fintech projects operating in Lithuania have a registered company in Lithuania, while its other enterprises are located in other European countries and beyond, for example, in Singapore and Hong Kong. Fintech companies are developing dynamically in Lithuania, due to the fact that over the past two years their number has doubled, in particular, in 2018 47 EMI and 33 PSP licenses were obtained.
4. A unique platform (Sandbox) for testing fintech projects
Fintech companies that develop innovative financial products can test their services on the technology platform – Sandbox. 170 companies based in Lithuania have already used the Sandbox platform to test and improve their innovations.
5. Preferential taxation of Lithuania
Lithuania is a very popular jurisdiction for obtaining the above licenses, because it is a country with competitive business tax rates. In turn, the corporate income tax rate (0-15%) is the third among the lowest in the EU, and the personal income tax rate (15%) is the second in the same rating.
Comparing to other jurisdictions, Lithuania has one distinguishing feature: clear strategic objectives for the functioning of the entire fintech industry. The regulator is interested not only in rapid development, but also in the adaptation of the ecosystem to changes.
The specialists of our company recommend starting your project in Lithuania, because it has all of the most favorable conditions for its development. Considering the above, we can make an obvious conclusion: Lithuania has all the opportunities to become a new Fintech hub in Europe.
EMI License and Payment Institution License In Lithuania
How to Apply for Electronic Money Institution License and Payment Institution License in Lithuania?
We know what difficulties our customers face in the process of applying for an Electronic Money Institution License and Payment Institution License In Lithuania. Lithuania is home to the fastest-growing fintech sector in the European Union, and the second-fastest growing in Europe, behind only the UK. So we decided to share our experience with you.
According to Lithuanian law (Law on Financial Institutions IX-1068 as of 24th November 2015), the activities of payment service providers and electronic money issuers are regulated and supervised by the Central National Bank (CNB).
In order to obtain an Electronic money license (EMI license Lithuania), the applicant is required to meet certain criteria (e.g. authorized capital, legal form) and provide the CNB with a set of documents.
Authorized capital requirement for Electronic Money Institution license is standard for the EU and amounts to 350,000 EUR. The applicant may be required by CNB to confirm the sources of authorized capital.
For the purpose of obtaining an e-money license Lithuania, a company is obliged to have a bank account for capital deposit and operational needs in Lithuania.
According to our knowledge, the average timeline for obtaining the e-money license: 4-8 months starting from the date of application for an EMI license is submitted by the applicant.
EMI License Requirements
In spite of the similarity of authorization processes for EMI in the EU states, Lithuanian aims to make it a little bit different and more friendly. Before the start of the formal authorization process for EMI and submitting applications, we usually encourage applicants to hold preliminary meeting contact to discuss the planning process and help determine financial services that have to be licensed.
Technically, the process of authorization is pretty standard: submission of an application for an EMI license to the CBL. After that CBL reviews whether all necessary documents have been submitted and, where nothing is missed and no mistakes identified, accepts the application for consideration. In certain cases, CBL may request applicants to submit additional information. or documents.
E-money License Lithuania Cost
When submitting an application for EMI authorization the applicant is required to pay EMI license fee. At the time of this article (May 2021), the amount of fee is 1,463 EUR.
When submitting an application to CBL the applicant must provide the following documents and information:
– the articles of association;
– a program of operations;
– a business plan, including a forecast budget for the first 3 financial years which demonstrates that the electronic money institution is able to operate soundly and employs the appropriate internal control systems, procedures, and resources;
– the documents demonstrating that the minimum size of the initial capital does not fall
below 350,000 EUR;
– a description of the measures taken (or to be taken) according to the requirements of Article 25 of this Law for safeguarding electronic money holders’ funds, and where payment services not relating to electronic money issuance are to be provided — also a description of the measures taken (or to be taken) according to the requirements of the Law on Payment Institutions for safeguarding the funds of payment service users;
– a description of the governance arrangements and internal control mechanisms applied (to be applied), including administrative, risk management and accounting procedures demonstrating that such governance arrangements and internal control mechanisms are appropriate, sound and proportionate to the risks taken on;
– a description of the internal control mechanisms established (or to be established) in order to comply with obligations in relation to the prevention of money laundering and terrorist financing under the applicable law.
– a description of the procedure for monitoring, handling and following up of
Operational and security incidents and security-related customer complaints;
– a description of the procedure to file, monitor, track and restrict access to sensitive
– a description of business continuity processes, with clearly states operations of exceptional significance, effective business continuity plans, procedure of testing and control of adequacy and effectiveness of such plans;
– a description of principles and definitions applicable to the collection of the statistical
data on performance, transactions, and fraud;
– a description of security policies, including a detailed assessment of risks related to the pursued activity, security control, and risk mitigation measures taken to properly protect electronic money holders and/or payment service users from identified risks, including fraud and unauthorized use of sensitive and personal data;
– a description of the structural organization, including the intended use of branches, agents, natural or legal persons through which the electronic money institution will distribute and redeem electronic money, or third parties to whom the performance of operating functions will be outsourced, and a description of the obligation to conduct reviews of branches and agents at least once a year, and a description of participation in payment systems;
– the data on the basis of which the identity of persons who acquire (hold) qualifying holdings of the authorized capital and/or of the voting rights in the legal person applying for an electronic money institution license;
– the identity of the heads (the forename, surname, identification number (where the person has no identification number – the date and place of birth) and documents demonstrating that they meet the requirements of good repute, qualifications, and experience set forth in the applicable law;
– the identity of the head (heads) of a branch (the person’s forename, surname, identification number (where the person has no identification number – the date and place of birth) where the electronic money issuance and/or provision of payment services is intended to be carried out through a branch established in another Member State in accordance with the procedure set out by the law;
– the details of an audit firm or certified auditor (hereinafter – an auditor) who conducts audits independently (hereinafter in this Law an audit firm and an auditor who conducts audits independently collectively referred to as an audit firm) conducting (intending to conduct) an audit, provided that such audit firm or certified auditor meets the requirements of the Law on Financial Institutions and the Law of the Republic of Lithuania on the Audit of Financial Statements;
– the documents and data demonstrating that the applicant for the provision of a payment initiation and/or account information service meets the requirements of Article 20 of the Law on Payment Institutions and supporting the amount of professional indemnity insurance or comparable guarantee;
– the head office address.
Payment Institution License
The procedure for applying to Electronic Money Institution and Payment Institution licenses Lithuania is pretty much the same. The key differences are:
a) the initial capital requirement
b) license fee.
The initial capital of a payment institution must at all times be no less than the larger of the following amounts:
– at least 20,000 EUR where the payment institution intends to provide only money
– at least 50,000 EUR where the payment institution intends to execute only payment
– at least 125,000 EUR where the payment institution intends to provide: services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account; services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account; payment transactions, including transfers of funds on a payment account with the institution of the payment service provider of a payment service user or with the institution of another payment service provider: execution of direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders; payment transactions where the funds are covered by a credit line for a payment service user: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or credit transfers, including standing orders; issuing of payment instruments and/or acquiring of payment transactions.
Prior to applying for a payment institution license, the applicant should pay the license fee which as per May 2021 constitutes 898 EUR.
More information about the process of Electronic Money Institution and Payment Institution licensing please do not hesitate to contact us.
Our Business Development Team will be ready and glad to promptly help and guide you.
Call us today and check our most competitive EMI Licensing service fees!