Apply for EMI in the UK

August 17, 2023
Apply for EMI in the UK

Innovative technologies make it possible to improve many processes in various areas of business. In the financial industry, one of the most recent breakthroughs is considered to be the emergence of e-money. This has led to the fact that in many countries begun to appear regulators on the circulation of such funds. The emergence of EMI licenses in UK was not an exception.

To work with e-money you ought to get a permission from a special regulator in the UK: the Electronic Money Institution (EMI) License. But before issuing such a document, the representatives of the corporation need to understand the essence of e-money and for what purposes they need a permission.

Basic EMI in UK terminology

When the regulator allows an applicant to obtain an E-money License UK, it has to check the skills of its employees. Therefore, it is important to know the basic terminology that applies to EMI licenses in UK.

According to local legislation, e-money refers to the value of financial assets that are held in electronic format, issued when funds are received to make revenues and accepted as a means of payment by non-issuers. E-money`s can also contain plastic cards, which are used to pay for goods and services in retail stores on online platforms.

As e-money institutions refer to organizations that provide e-money-related usefulness during their activities. This refers to both transfers and processes for issuance of them. But only those companies that have received the appropriate licenses will be able to conduct these activities. They are called EMI-authorized companies.

Who doesn’t need a license

Most companies will indeed need an EMI license in UK. But there are also companies for which there are exemptions at the legislative level. This means that they can carry out transactions without EMI license throughout the UK, but are required to notify the regulator for any such transactions. Entities covered by such an exception include:

  • headquarters offices with limited liability;
  • the British CB (not applicable to credit-transactions);
  • Government agencies acting as authorities;
  • National Savings Bank.

Authorization is also not required for credit-institutions and community banks, that work on e-transactions. But in case they will offer to issue e-money, they need to obtain the appropriate license.

Kinds of EMI

A total of 2 types of companies can act as EMI in UK: Small E-money institution and Electronic Money institution. The former can be engaged in issuing e-money, furnishing payment-services and account info on British territory. But they are not allowed to operate with volumes exceeding 5 million euros and with an average monthly amount of transactions not exceeding 3 million euros.

Also, companies with small EMI in UK licenses can keep no more than a quarter of a million euros of e-money. If they plan to keep more finances, they ought to have seed money in their accounts. To keep a million euros a month the amount of funds should be 50 thousand euros. To keep 2 million euros it should be 100 thousand euros. In other words, small associations need to keep their funds in their accounts at all times. And the amount of such funds should be above the limits prescribed by local law.

If the company turnover exceeds 3 million Euros, then these corporations are classified as Electronic Money institution. For them, the licensing process is stricter and more complicated.

Conditions for acquiring a license

The process to get EMI license in UK is regulated by the FCA (Financial Conduct Authority). Without the regulator’s approval, it is impossible to obtain a license to operate in the UK. Therefore, the founders of businesses are striving to obtain one. But they need to meet certain EMI license requirements. Among them:

  • having a minimum capital of 350 thousand euros for an authorized business;
  • prescribed procedures for the protection of client’s funds and whether they have an insurance policy covering such risks;
  • availability of a positive reputation;
  • availability of employees with necessary qualifications;
  • the average amount of current capital for the storage of electronic money must be at least 2% of the amount of funds held by the legal entity.

In addition, the corporation must meet additional prerequisites that will tip the scales in your corporation’s favor:

  • only legal entities that are already registered may apply;
  • proof that the legal entity will provide services in the UK;
  • sound governance arrangements and a multi-year business plan;
  • developed indemnification mechanisms and protections for potential customers’ funds;
  • no lawsuits against the management and employees;
  • availability of a UK office;
  • provision of information on each co-founder whose shareholding exceeds 9.99%.

Applicants should remember that they are required to submit all documentary evidence for each of the above conditions from the regulator. Otherwise, you should not expect to receive a positive decision on your application.

Stages of obtaining

Application for EMI license in UK takes place in several stages, which each applicant passes through. In the beginning, the corporation must register as a legal entity, choose the appropriate form of ownership and only then submit an EMI license request.

In the second stage, the company is tested for suitability. During it they check the skills of the personnel, the availability of the necessary assets, and the prescribed approaches for the operation of the legal entity as a licensee.

The third stage is the authorization of the corporation. It is most correct at this time to conduct due diligence on each of the board representatives and the founders. Also, the corporation prepares documents for the compliance department and other administrative orders.

The fourth stage means preparing the necessary documentation. For this purpose, a meeting is held with representatives of the regulator. At this meeting, representatives of the legal entity receive a list of documents that need to be prepared.

The fifth stage is compliance with the requirements of the economic format. It is not only the presence of all the funds in the accounts and paid office. Also, the regulator will check the availability of qualified personnel and risk insurance contracts.

The sixth step is the immediate application. If you skip over and try to apply for a license right away, it’s likely to be rejected. But if all of the previous steps have been done correctly, there will be no problems with the application.

At the last stage, legal entities wait for the regulator’s decision. The deadline for its adoption is 6 months, but it is possible to receive an answer more quickly.

Who can help with registration

Our staff is ready to help you in the prompt preparation of the documentation for EMI license in UK. We have a team of experienced experts ready to help you at any of the above-mentioned stages of application. Each specialist has repeatedly contacted the UK regulator and can close the matter as quickly as possible.

Compared to your competitors, you will get a quicker response from the regulator and be able to start your business while your competitors fix their mistakes. For an initial consultation, contact our experts in any way that is convenient for you.

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