European EMI license acquisition and application

• The regulation of EMI licenses is based on the EU's unified legal framework to ensure market transparency, consumer protection and financial stability. The following are the core regulations:

  1 Electronic Money Directive (EMD, 2009/110/EC)

  • Defines electronic money as "monetary value stored in electronic form, based on a prepaid mechanism, and widely accepted."
  • It stipulates the minimum capital requirement for EMI (35 euros) and client funds protection mechanisms (such as segregated accounts).
  • Licensed institutions are required to undergo regular audits to ensure operational compliance.

  2 Second Payment Services Directive (PSD2, 2015/2366/EU)

  • Expand the scope of payment services to include Account Information Service (AIS) and Payment Initiation Service (PIS).
  • Introducing Strong Customer Authentication (SCA) requirements to improve payment security.
  • Promote Open Banking, requiring banks to open APIs to licensed third parties.

  3 Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF)

  • Based on the EU's 5th and 6th Anti-Money Laundering Directives (AMLD5/AMLD6), EMIs are required to implement strict customer due diligence (KYC) and transaction monitoring.
  • A compliance officer is required to report suspicious transactions to regulators on a regular basis.

  4 General Data Protection Regulation (GDPR, 2016/679)

  • Keep customer data secure and prevent unauthorized access or disclosure.
  • EMI is required to formulate data protection policies and clarify the data processing and storage procedures.

  5 Single Euro Payments Area (SEPA)

  • EMI can be connected to the SEPA system to achieve efficient and low-cost cross-border payments within the Eurozone.
  • The clearing and settlement standards of SEPA must be met.

  6 Regulatory bodies Each EU country has an independent regulatory body responsible for issuing EMI licenses, such as :

  • 立陶宛: Central Bank of Lithuania (Lietuvos Bankas)
  • 英国: Financial Conduct Authority (FCA)
  • 卢森堡: Committee for Financial Sector Supervision (CSSF)
  • 马耳他: Malta Financial Services Authority (MFSA)

1 Features

• EU accessibility :
  • Through the “passport” mechanism, licensed institutions can operate freely within the EEA without the need for additional permission.
  • For example, the Lithuanian EMI license can be used directly in countries such as Germany and France.
• Low entry barrier :
  • The minimum capital requirement is 35 euros, which is much lower than the banking license (usually more than 500 million euros).
  • The application process is simplified and the approval time is usually 3-12 months.
• Flexible business scope :
  • Supports multiple services including electronic currency issuance, payment processing, account management, etc.
  • Innovative technologies such as blockchain and cryptocurrency can be integrated.
• Strict compliance requirements :
  • Subject to AML/CTF, GDPR and client funds protection regulations.
  • Submit regular financial and compliance reports.

2 Advantages

• Broad market :
  • Covering approximately 5 million consumers in the EEA, the market potential is huge.
  • Access to SEPA and SWIFT systems to support efficient cross-border payments.
• Brand reputation :
  • Licensed institutions are backed by authoritative EU supervision, which enhances the trust of customers and partners.
• Innovation support :
  • Suitable for fintech startups, allowing testing of new business models (such as digital wallets, DeFi).
  • Some countries, such as Malta, offer regulatory sandboxes to support blockchain innovation.
• Cost-effectiveness :
  • The application and maintenance costs are lower than a banking license.
  • Countries such as Lithuania offer online applications and English support, reducing language and process barriers.

1. Company Establishment

1. Legal entity registration :
   • Applicants need to register a legal entity in an EU member state, usually a limited liability company (such as UAB in Lithuania, Ltd in the UK, SARL in Luxembourg).
   • The company must have a clear business scope and focus on electronic currency issuance and payment services.
   • Lithuanian regulations :
     • Register a UAB (limited liability company) with a minimum registered capital of €2,500 (it is recommended to directly inject €35 to meet EMI requirements).
     • You need to provide the company name, shareholder information, and registered address. The registration process can be completed remotely, takes about 1-2 weeks, and costs about 500-1,000 euros.
   • Other countries :
     • 英国：To register a Ltd, the cost is about 100-500 pounds and a local registered address is required.
     • 卢森堡: Registration of SARL costs approximately 1,000-2,000 Euros and requires proof of source of funds.
     • 马耳他: Register a company, the cost is about 1,000-3,000 euros, and supports blockchain-related businesses.
2. Registered address :
   • A legal office address is required for inspection by regulatory agencies and document delivery.
   • Some countries require a physical location of operations (such as a leased office) rather than just a virtual address.
   • Lithuanian regulations :
     • You need to rent actual office space (not vacant), with a rent of approximately 500-2,000 EUR/month.
     • Provide a lease contract as application material.
   • Other countries :
     • 英国: A physical office address in London or another city is required and the cost is higher (£1,000-5,000/month).
     • 卢森堡: A local office address is required, with a rent of approximately 1,000-3,000 Euros/month.
     • 马耳他: Virtual offices are supported, but operational capabilities must be demonstrated.
3. Shareholders and Beneficiaries :
   • The identities of all ultimate beneficial owners (UBOs, individuals or entities holding more than 10% of the shares) must be disclosed.
   • Provide the shareholder's passport, proof of address and proof of source of funds.
   • Lithuanian regulations :
     • Submit a copy of the beneficiary's passport and a police record certificate.
     • The regulator may require an interview with the beneficiary to confirm business intentions.

II. Minimum capital requirements

1. EU Standards :
   • According to the Electronic Money Directive (EMD, 2009/110/EC), the minimum registered capital is35 euros.
   • Capital needs to be deposited in an EU-approved bank account (such as SEB and Swedbank in Lithuania) to support business operations and customer funds protection.
   • The source of capital must be legal, and a bank statement or proof of source of funds must be provided.
2. National differences :
   • 立陶宛 :
     • The minimum amount is 35 Euros, and in some cases an additional deposit is required (12.5-75 Euros, depending on the size and risk of the business).
     • The capital needs to be fully deposited before application and can be used for initial operations.
   • 英国 :
     • €35 + additional working capital (usually £50-£100, depending on the complexity of the business).
     • The FCA may require higher capital if financial sustainability is required.
   • 卢森堡 :
     • EUR 35, with detailed disclosure of the source of funds (e.g. investment, loan).
     • Additional liquidity reserves may be required.
   • 马耳他 :
     • 35 Euros (entry level), blockchain-related businesses may require higher capital (50 Euros).
     • Supports partial deduction with crypto assets (regulatory approval required).
3. Use of funds :
   • Support technology development, compliance system construction and customer funds protection.
   • It may not be used for dividends or non-business related expenses.

3. Management Team

1. Qualification requirements :
   • Senior executives and key management personnel must have expertise in finance, payment, IT or related fields.More than 5 years of professional experience.
   • Pass a “Fit and Proper” assessment by the regulator to demonstrate its competence and ethical standards.
   • No criminal record, no bankruptcy record, no major financial violation record.
2. key role :
   • Chief Executive Officer (CEO)：Responsible for overall strategy and business operations.
   • Chief Compliance Officer (CCO): Responsible for AML/CTF and regulatory compliance.
   • Chief Technology Officer (CTO): Responsible for payment system development and security.
   • Financial Director: Manage financial reporting and auditing.
   • At least 1-2 senior executives are required to participate in operations full-time.
3. National regulations :
   • 立陶宛 :
     • Executives do not need to reside in Lithuania but are required to communicate with the regulator regularly (online/offline).
     • Submit each executive’s passport, criminal record certificate (notarized required), resume, and recommendation letters (2-3 letters).
     • Regulators may require executives to participate in interviews to confirm their professional capabilities.
   • 英国 :
     • At least one senior executive must be based in the UK and familiar with FCA regulatory requirements.
     • A detailed background check report is required and the approval process is strict.
   • 卢森堡 :
     • At least one local executive is required who is familiar with Luxembourg financial regulations.
     • Submit executives’ educational background and professional certifications.
   • 马耳他 :
     • Executives need to demonstrate understanding of blockchain/payment technology (if involved in innovative business).
     • Remote management is supported but requires a local compliance representative.
4. other requirements :
   • Executives need to receive ongoing training and stay up to date on the latest regulatory requirements (e.g. AML, GDPR).
   • A statement of responsibility must be signed, committing to fulfilling compliance obligations.

IV. Compliance Framework

1. Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) :
   • Develop a detailed AML/CTF policy including:
     • Customer Due Diligence (KYC): Verify customer identity, address, and source of funds.
     • Transaction monitoring: Use software (e.g. Sumsub, ComplyAdvantage) to detect suspicious activity.
     • Suspicious Activity Report (SAR): Report unusual transactions to regulators.
   • Equip a full-time compliance officer to be responsible for policy implementation and employee training.
   • Lithuanian regulations :
     • Submit an AML/KYC manual covering risk assessment and customer classification (high/low risk).
     • Providing contracts with AML software vendors (such as Chainalysis).
     • The compliance officer must have more than 3 years of relevant experience.
2. Data Protection (GDPR) :
   • Develop data protection policies to ensure customer data is encrypted, stored and processed legally.
   • Conduct a Data Protection Impact Assessment (DPIA) to identify data processing risks.
   • Appoint a Data Protection Officer (DPO) who will be responsible for GDPR compliance.
   • Lithuanian regulations :
     • Submit data protection policy and DPIA report.
     • Proof that data storage complies with EU standards (e.g. AWS EU region servers).
     • A mechanism for deleting customer data (“right to be forgotten”) needs to be in place.
3. Client Funds Protection :
   • Set up a segregated account to separate customer funds from company operating funds to prevent misappropriation.
   • Further protection may be provided through a bank guarantee or insurance mechanism such as AIG's professional liability insurance.
   • Lithuanian regulations :
     • Cooperate with Tier-1 banks (such as SEB, Swedbank) to open segregated accounts.
     • Submit segregated account agreement and bank certificate.
     • Regular reporting of client fund balances is required.
4. Auditing and reporting :
   • Contract with independent auditing agencies (such as EY, PwC) to audit finance and compliance regularly.
   • Submit monthly/quarterly financial reports in compliance with International Financial Reporting Standards (IFRS).
   • Lithuanian regulations :
     • Submit audit agency contract and audit plan.
     • The first audit must be completed within 6 months of the issuance of the license.
5. Other compliance requirements :
   • Establish a customer complaint handling mechanism to ensure quick response (within 30 days).
   • Comply with Strong Customer Authentication (SCA) requirements and use multi-factor authentication (such as SMS verification code, biometrics).
   • Lithuanian regulations :
     • Submit a complaint handling flow chart.
     • Prove that the payment system supports SCA (such as 3D Secure).

V. Operation Plan

1. business plan :
   • Submit a detailed 3-5 year business plan that includes:
     • Market analysis: Target customer group, competitor analysis, market size.
     • revenue model: Transaction fees, subscription fees, value-added services, etc.
     • Financial Forecast: Income, expenditure, and profit forecasts, with a cash flow statement attached.
     • Business Model: Such as digital wallets, cross-border payments, and payment gateways.
   • Demonstrate business sustainability and market competitiveness.
   • Lithuanian regulations :
     • Submit a market research report to prove EU market demand.
     • Financial forecasts must be reviewed by a certified public accountant.
2. Risk Management :
   • Develop a risk management strategy to address the following risks:
     • Market risk: Exchange rate fluctuations and intensified competition.
     • credit risk：Customer default, partner bankruptcy.
     • Operational risks: System failure, employee error.
     • technical risk: Cyber ​​attacks, data leaks.
   • Provide emergency plans (e.g. backup systems, crisis communications).
   • Lithuanian regulations :
     • Submit risk assessment report and response measures.
     • Demonstrate sufficient capital buffers to cover unexpected losses.
3. Organization :
   • Provide a company organizational chart to clearly define the responsibilities of each department (compliance, technology, customer service, etc.).
   • Prove that there is sufficient manpower to support business operations (usually an initial team of 10-20 people).
   • Lithuanian regulations :
     • Submit employee list and job descriptions.
     • A local compliance and customer support team is required (can be outsourced).
4. Payment system access :
   • Demonstrate the ability to access SEPA, SWIFT or other payment clearing systems.
   • Provide partnership agreements with banks or payment processors.
   • Lithuanian regulations :
     • Access to CENTROlink (Lithuanian payment system) or SEPA.
     • Submit banking cooperation agreement (e.g. SEB, Luminor).

6. Technology and Security

1. payment system :
   • Develop or procure a PCI DSS (Payment Card Industry Data Security Standard) compliant payment platform.
   • Support high concurrent transactions (at least 1,000 TPS, transactions per second).
   • Integrate anti-fraud systems to detect abnormal transactions.
   • Lithuanian regulations :
     • Submit payment system architecture diagram and functional description.
     • Prove that the system supports SEPA Instant Credit Transfer.
2. IT Infrastructure :
   • Ensure that the system complies with ISO 27001 (Information Security Management) standards.
   • Use cloud services (such as AWS, Azure) or build your own servers, which must be stored within the EU.
   • Implement network security measures (e.g. firewalls, DDoS protection).
   • Lithuanian regulations :
     • Submit IT security assessment report (third-party certification required).
     • Provide contracts with IT vendors (e.g. Marqeta, Solaris).
3. Security Testing :
   • Perform penetration testing and vulnerability scanning regularly to ensure that the system has no major security risks.
   • Provide test reports to prove system stability.
   • Lithuanian regulations :
     • Submit the penetration test reports for the last 6 months.
     • An emergency response plan (such as a data breach handling process) is required.
4. user experience :
   • The payment platform needs to support multi-language and multi-currency transactions.
   • Integrate mobile payments (such as Apple Pay, Google Pay).
   • Lithuanian regulations :
     • Submit a UI prototype or beta app.
     • Prove that the system supports at least English and the local language.

VII. Other requirements

1. Application fee :
   • An application fee is payable to the regulatory authority and varies by country.
   • 立陶宛: €1,463 (EMI license), expedited service may cost extra.
   • 英国: Approximately £5,000.
   • 卢森堡: 5,000-10,000 EUR.
   • 马耳他: 3,000-5,000 EUR.
2. 保险 :
   • Some countries require the purchase of professional liability insurance (PLI) or cyber security insurance, with coverage usually ranging from 50 to 200 million euros.
   • Lithuanian regulations :
     • Insurance is recommended (such as AIG, Chubb), but not mandatory.
     • Submit insurance intent letter (if any).
3. Customer Support :
   • Establish multi-channel customer support (such as phone, email, online chat), with a response time of no more than 24 hours.
   • Provide a customer complaint handling mechanism, which must be resolved within 30 days.
   • Lithuanian regulations :
     • Submit a list of customer support processes and teams.
     • Need to support English and local language.
4. Regulatory Communication :
   • It is necessary to maintain regular contact with regulatory authorities and respond to their inquiries.
   • Lithuanian regulations :
     • Provide pre-application meeting minutes, if available.
     • Ensure executives are available for regulatory interviews (online/offline).