An EMI License in Lithuania
Market participants who have the right to issue electronic money are e-money institutions regulated by the Bank of Lithuania. Payments can be made with electronic money stored on electronic devices and issued by an e-money institution. In addition to transferring money, making payments, and facilitating cash withdrawals, an e-money institution can also handle money transfers. E-money institutions can operate throughout the European Union if licensed for unlimited activities.
The primary difference between an EMI and a traditional money institution is that an EMI can hold its clients’ funds.
Publish Date
22 August 2024
Reading Time
13 minutes
Category
Legal Guides
Jurisdiction
Lithuania
Types of Lithuanian EMI Licenses
- Regular EMI License. Suitable for established financial institutions and larger fintech companies. Requires a minimum capital of 350,000 euros and allows for EU-wide services.
- Regular EMI License. Suitable for established financial institutions and larger fintech companies. Requires a minimum capital of 350,000 euros and allows for EU-wide services.
EMI Regulations in Lithuania and EU
EMIs in Lithuania are regulated by a combination of national and EU legislation, including:
- Republic of Lithuania Act on Financial Institutions
- Republic of Lithuania Law on Electronic Money and Electronic Money Institutions
- Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing
- Law of the Republic of Lithuania on Payments
- The Republic of Lithuania Law on Companies
- Resolution No 03-83 of the Board of the Bank of Lithuania on the Calculation of Initial Capital and Own Funds of EMIs
- Republic of Lithuania Law on Consumer Protection
- The Civil Code of the Republic of Lithuania
Relevant EU regulations include:
- Payment Services Directive 2 (PSD2)
- Sixth Anti-Money Laundering Directive (AMLD6)
- General Data Protection Regulation (GDPR)
- Market Abuse Regulation (MAR)
Benefits of an EMI License in Lithuania
Lithuania has positioned itself as a fintech-friendly jurisdiction, attracting numerous financial technology companies. The regulatory framework is supportive, and the Bank of Lithuania is known for its innovative and open approach to financial regulation. The benefits of obtaining an EMI license in Lithuania include:
EU Passporting
Licensed EMIs can operate throughout the European Union, allowing businesses to scale across multiple markets without the need for additional licenses.
Cost Efficiency
Lithuania has a favorable cost structure, including lower operational costs and a corporate income tax rate of 15%, one of the lowest in the EU.
Innovative Ecosystem
Lithuania’s regulatory framework allows fintech companies to experiment with new technologies, fostering an environment conducive to innovation.
Favorable Regulatory Environment
The Bank of Lithuania offers a streamlined licensing process and is proactive in supporting fintech innovation.
Access to SEPA
Holding an EMI license in Lithuania grants access to the Single Euro Payments Area (SEPA), facilitating seamless cross-border transactions within the EU.
Stages of Obtaining an EMI License
At Legasset, we can help your company navigate each stage of obtaining an EMI license in Lithuania.
STAGE 1:
Initial Analysis
- Business Model and Services Review. Analysis of the company’s business model and planned services to ensure compliance with regulatory requirements.
- Company Structure Evaluation. Examination of the company’s structure, including shareholders and ultimate beneficial owners (UBOs).
- UBOs and Residency Analysis. Assessment of the residency and background of UBOs to ensure they meet the Bank of Lithuania’s standards.
- Project Financing Model Assessment. Evaluation of the project’s financing model to ensure sustainability and compliance.
- Personnel Requirements Identification. Identification of requirements for the company’s personnel, including qualifications and experience.
- Bank of Lithuania Requirements Identification. Identification and approval of the Bank of Lithuania’s requirements for filing an application.
STAGE 2: Document Preparation
- Application Preparation for EMI. Preparation of the initial application for an EMI license in Lithuania.
- Initial Application Form Assistance. Support in filling out the initial application form accurately and comprehensively.
- Company Structure Documentation. Assistance in preparing documents that describe the company’s structure and operations.
- Business Plan Development. Development of a business plan that meets the requirements of the Bank of Lithuania.
- Project Platform/Website Analysis. Analysis and guidance on presenting the project platform or website.
- Account Opening for Authorized Capital. Assistance in opening a bank account for the subsequent payment of the company’s authorized capital.
- Regulator Communication. Ongoing communication with the Bank of Lithuania during the application process.
- Meeting Organization with Bank of Lithuania. Organization of meetings with representatives of the Bank of Lithuania to discuss the application and clarify any issues.
STAGE 3: Application Submission
- AML, KYC, and Cybersecurity Policy Documentation. Documentation of company policies for Anti-Money Laundering (AML), Know Your Customer (KYC), and cybersecurity of client assets.
- Three-Year Financial Plan Preparation. Preparation of a financial plan for the next three years, including profit and loss statements and cash flow projections.
- Operational Process Documentation. Documentation of the company’s operational processes and procedures, including internal policies, risk assessment policies, internal audit processes, and accounting procedures.
- Application Form Completion Assistance. Assistance with completing the application form and ensuring all required information is included.
- Internal Control Mechanisms Documentation. Preparation of a document describing internal control mechanisms for preventing money laundering and terrorist financing.
- Customer Payment Data Monitoring Procedures. Development of procedures for monitoring, tracking, and restricting customer payment data.
- Business Continuity Process Documentation. Detailed description of business continuity processes, including procedures for testing the adequacy and effectiveness of these plans.
- Suspicious Transaction Reporting Procedures. Development of procedures for collecting statistical data and reporting suspicious transactions.
- Security Policy Development. Creation of security policies to protect electronic money holders and payment service users from identified risks.
- Company Structure Description. Detailed description of the company’s structure, including branches, agents, and third-party service providers.
- Licensing Fee Confirmation. Confirmation of the licensing fee payment.
- Proof of Client Funds Storage. Documentary proof that client funds are stored in a segregated client account.
- Detailed CVs of Company Owners and Executives. Submission of detailed CVs of the company’s owners and key executives.
- Office Agreement. Agreement regarding the company’s registered office.
The Main Stages of Application for an EMI License in Lithuania
1. Application Submission. The Bank of Lithuania’s Supervisory Service receives and checks the application within five working days to ensure all necessary documents have been submitted.
2. License Issuance. The EMI license is issued within three months of application receipt if all documents are satisfactory.
3. License Decision. The Bank of Lithuania Board of Directors reviews and decides on the license issuance.
Applicants are encouraged to meet with representatives of the Bank of Lithuania early in the process to clarify the legal requirements and application process. Legasset can assist with these meetings.
The authorization process with the Bank of Lithuania begins long before an application is submitted. We encourage applicants to contact us early to define the financial services to be licensed and to understand the authorization process requirements.
Before applying, a duty of 1,463 euros must be paid to the State Tax Inspection.
Applicants must meet detailed requirements before the initial issuance of electronic money, including.
- Compliance with Legal Acts. Ensuring all documents submitted comply with relevant legal acts.
- Minimum Statutory Capital. A minimum statutory capital requirement of 350,000 euros.
- Qualified Management. The company must be managed by individuals with impeccable business reputations and relevant experience.
- Financial Service Readiness. The company must be ready to provide financial services at the time of application submission.
- Prudent Management Procedures. Implementation of procedures to ensure prudent and effective management of the EMI.
The Bank of Lithuania Supervisory Service evaluates applications, ensuring compliance and communicating with the applicant as needed.
Choosing Between a New EMI License and a Ready-Made Company
There are two ways to start an EMI business in Lithuania: establishing a new company and applying for a license or acquiring a ready-made company with an existing license.
New EMI License:
- Control Over Company Structure. Full control over the company’s structure and operations.
- Compliance Process. Start the compliance process from the beginning, including documentation and procedures.
- Time-Consuming Application Process. Involves various stages, including due diligence, background checks, and meetings with regulatory authorities.
It does not matter which way you choose – at Legasset, we provide convenient solutions for clients looking to obtain or start their Electronic Money Institution business quickly. We offer ready-made companies with a valid EMI license, allowing operations to begin in approximately four weeks. Contact us to find the most suitable option for your project.
