How to Apply For Electronic Money Institution License and Payment Institution License In Lithuania

How to Apply For Electronic Money Institution License and Payment Institution License In Lithuania

Alex Malyshev

CEO at SDK.finance

Views 759

How to Apply For Electronic Money Institution License and Payment Institution License In Lithuania

25.03.2020 02:00 pm

As a supplier of core payments and transaction engine software, SDK.finance knows what difficulties our customers face in the process of applying for an Electronic Money Institution License and Payment Institution License In Lithuania. 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, CNB usually encourages 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 CNB. After that CNB 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, CNB 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 (March 2020), the amount of fee is 1,463 EUR. 

When submitting an application to CNB the applicant shall 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 payment data; 

  • 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 transfer services; 

  • at least 50,000 EUR where the payment institution intends to execute only payment initiation services;   

  • 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 March 2020 constitutes 898 EUR. 

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