SEMI license in Latvia

Latvia is in a leading position as one of the leading countries in attracting fintech companies. Unlike other lawfullment, the Bank of Lithuania demonstrates its loyalty by regularly issuing licenses and offering various initiatives aimed at developing the FinTech sector. Following the UK’s exit from the EU, Lithuania has become Europe’s No. 1 jurisdiction with the largest number of FinTech licenses issued.

SEMI – is a Small electronic money institution license in Latvia, and such a financial business-company is created in order to provide all the needed banking operations on accounts. Based on the current situation in the world, such institutions are in great demand, as they greatly simplify the conduct of international activities for every modern businessman.

General information 

You may offer payment services and certain other financial services with an e-money license, but you may not act as a bank or use the word “bank” in your name or marketing materials.

Institutions that work with virtual money can usually:

• Accept consumer money and convert it to electronic money, but do not process it.
• Customers can use e-money accounts as digital wallets, but they cannot use an overdraft or earn interest.
• Offer direct debits, standing orders, account-to-account transfers and debit cards, but not credit as a stand-alone product.
• Offer some products for digital financial services like currency exchange

Requirements for SEMI license in Latvia

Obtaining an SEMI license is very popular in Latvia. Despite the decrease in the total number of payments made, the cost of non-cash payments is generally increasing. The Financial and Capital Market Commission supervises all electronic market institutions licensed by the Small e-money license in Latvia, all of which are subject to the rules set out in the Law on Payment Services and Electronic Money. The EU e-money directive is also aligned with Latvian regulations governing electronic payment institutions (EMDs).
First of all, it is important to understand that this activity is carefully checked by the state. Therefore, in order to get a SEMI license in Latvia , you will need a properly prepared set of documents that will fully comply with all the requirements of the jurisdiction. In addition, you need to enroll a company in the country.

Main demands, that you need to note and follow:

• There are no minimum capital requirements, but the total number of shares or voting rights held by shareholders holding 10% or more of the share capital or voting rights is sufficient to meet the requirements of section 21 of the Act;
• The average amount of virtual money circulated by an SEMI in Latvia license for sale in the course of economic activity does not exceed two million euros;
• The management committee and legal address (official residence) of the registered institution must be located in the Republic of Latvia;
• Only the territory of the Republic of Latvia can be used by such an institution for commercial purposes; payment services and e-money services cannot be offered or provided by a registered institution outside of country or through the use of international payment systems;
• Members of the board or council of a digital money institution must be of good standing and have the necessary education and experience.

How to obtain a SEMI license in Latvia?

In order to obtain an e-money license in Latvia, you need to go through several stages. The first step is to prepare for the application. At this stage, you should have a ready business plan, a description of the planned business, a description of the structure of the shareholders (participants) of the commercial company, confirmation of the initial capital, information about the members of the board and council. , important shareholders and the person who is directly responsible for the management of the institution’s activities, a description of the mechanisms of continuity of the institution’s commercial activity, PMK and other necessary documents in accordance with the Regulations of the KRFC No. 138.

The next step is to submit all the necessary documents to the Financial and Capital Market Commission (FCMC). If there are gaps in the submitted documents, the Commission may ask the corporation to fill them in or provide additional information. If the application is completed, the FCMC sends a letter to the entrepreneur informing them that the review of the application for authorization has begun.

Within a month from the moment of receipt of the application, the KRFC begins its consideration. If the information in the application is not sufficient to resolve the issue of the permit, the term of consideration of the application may be extended.

Benefits of acquiring SEMI license in Latvia

1. Relatively short time to obtain a license for electronic money or a payment institution. The entire licensing process, depending on the completeness of the submitted documents, usually takes from 6 to 12 months.
2. Effective legal framework in line with EU laws and regulations. Also, all documentation for obtaining a license can be submitted in English.
3. Direct access to the Single Euro Payments Area (SEPA) through the CENTROlink payment system operated by the Bank of Lithuania (Central Bank).
4. Lithuania has a regulatory sandbox that allows start-ups to test their innovative products in a real environment under the guidance and supervision of the Bank of Lithuania. Provided that your project meets the criteria of the regulatory sandbox and the application has been approved, the Bank of Lithuania undertakes not to penalize companies for minor violations during the first year of operation.
5. Possibility of certification of the license for all EU countries. As a result of the UK’s exit from the EU and the lack of a financial services cooperation agreement between the EU and the UK, some UK licensed companies subsequently moved to the EU, not wanting to be tied to just one market. One recent example is Revolut, which moved its customers from a British company to a Lithuanian one.