The quantity of licenses issued to EMIs in the EU has been growing in the last few years. This is explained by the democratization of the financial sector and the market demands for the creation of new services and products tailored to the digital needs of incoming clients. This is an overview of the main points about e-money institutions. How they operate and why acquiring an EMI license is an essential step – we will consider further in this article.
With the exponentially increasing adoption of digital currencies and the blockchain-based platforms supporting them, the services that cater to the DeFi, the infrastructure is growing in number. However, to integrate services into the EU and international financial frameworks, startups in these sectors must apply for appropriate licenses. One of them is EMI – an electronic-money institution.
An EMI is an entity that is empowered to offer prepaid cards, e-wallets, and other forms of e-money that individuals and legal entities can use as a means of payment. EMIs are required to obtain approval to operate within the EU under the EU Directive 2015/2366. The main objective of this Directive is to protect clients in making transactions via the Internet safely and without any risks. This Directive also frames the obligations for EMIs to offer payment services. Among them is mandatory getting an EMI license. Once it is obtained, an EMI can execute business throughout Europe and beyond.
An organization that holds an EMI license is allowed to execute the following operations:
It should be noted that EMIs cannot take deposits and other redeemable funds that enable any form of return. In this regard, the money received by an EMI is not deemed a deposit. Under article 8.3 of Law 21/2011, they must convert without delay the received funds into e-money.
The number of obligations that must be satisfied by an EMI to obtain an EMI license in Europe include but are not limited to:
When being licensed, an EMI will be required to pass through a special audit (due diligence) in many EU countries. Under the regulations, the entity must have at minimum two managers that are residents of the EU. They must evidence their professional competence to work in the EMI. Additionally to the obligatory requirements set by EU Directive 2015/2366, each EU state may have its own additional rules that must be met by an applicant.
An EMI must prove it has in place high-quality software and strong technology infrastructure, evidenced by a business plan and forecast budget calculation for the first three financial years, procedures for monitoring, handling, and following up on security breaches and customer complaints, internal protocols for combating ML/TF risks, descriptions relating to internal control mechanisms security incidents, access to sensitive payment data, transactions and fraud and how the business will safeguard user funds, etc. Generally, it takes 4-5 months to obtain an EMI license.
Except for the start-up capital and other monetary requirements regarding the licensing of EMIs, there are also respective application fees that need to be paid.
It goes without saying that each application for an EMI license involves also legal fees. Such legal fees differ from case to case and can be assessed based on the scope of the EMI operation.
If you are interested in acquiring an EMI license, do not hesitate to contact our lawyers for a consultation. Also, you can consider EMI licenses for sale:
UK EMI Licensed Company for Sale
SEMI in the Czech Republic for sale
You also have the opportunity to see new offers in the categories “Cryptocoins and licensing of cryptocurrency operations”, “Ready-made companies”, “Banks for sale” and “Licenses for sale”.
The international company Eternity Law International provides professional services in the field of international consulting, auditing services, legal and tax services.