Register a license for electronic money in Lithuania

03.10.2023

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Electronic Money (E-Money): Definition and Specifics

Electronic money, often referred to as E-Money, represents a transformative facet of modern finance. The European Central Bank defines them as monetary value that is stored electronically, enabling it to be used for payments across various devices through the utilization of information technology. This encompassing concept embraces widely recognized payment systems, such as PayPal, among others. Electronic money, issued by authorized issuers, serves as a versatile instrument for non-cash payments within the national payment currency.

Functions and Utility of Electronic Money:

E-money owners, empowered by specialized software, can engage in a multitude of financial activities. These activities encompass purchasing goods, transferring electronic money to other electronic wallet holders, exchanging it for alternative forms of electronic currency, gifting it, and receiving electronic money from other individuals. Essentially, electronic money holds equivalence with traditional currency and can circulate indefinitely within the digital realm.

Categorization of Electronic Money:

Electronic money can be categorized based on the technology employed to store its monetary value, falling into two primary types:

Hardware-Based:

This category encompasses physical devices or tokens that serve as repositories for electronic money. Notable examples include payment cards (e.g., debit or credit cards) and hardware-based electronic wallets.

Software-Based:

In this scenario, electronic money resides electronically within software applications. Virtual cards, payment accounts, and various digital wallet solutions align with this category.

Regulatory Oversight and Issuance:

The issuance of electronic money is a prerogative held exclusively by authorized institutions, namely banks and electronic money institutions (EMIs). These entities are mandated to obtain a license to issue electronic money, thereby ensuring stringent regulatory oversight and upholding the integrity of the electronic money market.

E-money represents a fundamental evolution in the realm of finance, offering versatility, convenience, and efficiency in non-cash transactions. Its definition encompasses a broad spectrum of digital payment solutions, underpinned by innovative technologies. Furthermore, regulatory controls by authorized institutions ensure the safety and stability of electronic money, making it an integral component of modern financial ecosystems.

Brief Overview of the Lithuanian Electronic Money Market Pros

Lithuania, located in Northern Europe, known for its openness and innovation in various financial services, including e-money. Several crucial aspects make Lithuania's electronic money market appealing:

EU and Eurozone Membership: Lithuania's status as a member of the European Union (EU) and adoption of the euro currency enhance the credibility and stability of its financial system. This stability is crucial for e-money service providers, as it instills trust among both clients and investors.
Advanced Financial Infrastructure: Lithuania has made significant investments in its financial infrastructure. The country boasts modern banking and payment technologies, facilitating the creation and management of electronic money.
Transparent Regulation: Lithuania maintains a transparent and accessible regulatory environment for companies holding registered e-money licenses. The Lithuanian Financial Regulatory Service, known as the Bank of Lithuania, actively fosters an environment conducive to the development of financial technologies.
Access to the EU Market: Lithuania's EU membership enables companies licensed in the country to offer their services across other EU member states without the need for additional permits. This opens up a vast and integrated market for e-money service providers.
Consumer Protection: Lithuania places a strong emphasis on protecting the rights of financial services consumers. This includes measures to ensure data security, efficient dispute resolution mechanisms, and the provision of necessary information to consumers.
Support for Innovation: Lithuania actively encourages innovation in the financial sector by providing efficient mechanisms for registering and managing e-money licenses. This supportive environment has led to the growth of fintech startups and electronic money service providers.
International Cooperation: Lithuania collaborates closely with EU and global regulators, ensuring consistency and coordination in financial regulation. This international cooperation contributes to a stable and harmonized regulatory environment.

Obtaining an e-money license in Lithuania provides access to its domestic market and serves as a gateway to the broader EU market. This strategic advantage substantially enhances a company's growth prospects and competitive edge. The combination of EU membership benefits, regulatory excellence, and market expansion opportunities makes Lithuania an optimal choice for electronic money service providers looking to thrive in the European financial landscape.

Basic Requirements for Companies Seeking an Electronic Money License in Lithuania

Legal presence in Lithuania:

Requirement	Description
Company Status	The organization must be registered as a legal entity within Lithuania.
Contact Address	The organization must have an official address in Lithuania for communication with regulatory authorities.
Certified Manager	The company must have a manager who meets specific criteria and holds a license issued by local regulators.
Continuous Operation	The organization must operate continuously in Lithuania, including conducting management meetings and other corporate events.
Mandatory Presence	Legal presence within Lithuania is a critical criterion for obtaining an electronic money license. The organization must adhere to all local regulations and maintain a physical office in Lithuania to facilitate interactions with regulatory authorities.

Initial Capital and Financial Indicators:

Requirement	Description
Initial Capital	The company must possess a sufficiently high initial capital, earmarked to guarantee the safety and liquidity of client funds. Specific requirements for initial capital are determined by the regulator and may vary based on the company's size and the nature of its activities.
Financial Stability	The company must demonstrate financial stability and the capability to manage risks effectively. This includes evidence of the company's ability to navigate financial challenges and maintain liquidity during stressful scenarios.
Compliance with Security Standards	The company must guarantee the security of customer data and funds in alignment with stringent security standards. This encompasses the utilization of modern technologies and data protection measures.
Financial Reporting	The company must provide regular financial reports and requisite documentation as stipulated by the regulator. This serves as a mechanism for monitoring the company's financial activities, ensuring transparency with clients and investors.

Adhering to these financial requirements is a pivotal aspect of the process of obtaining an electronic money license in Lithuania. It underscores the reliability and safety of the company's operations within the electronic money market, contributing to a robust and trustworthy financial ecosystem.

Securing an Electronic Money License in Lithuania: A Strategic Roadmap

The journey to obtain an Electronic Money License in Lithuania unfolds through a meticulously planned series of stages, each demanding adherence to stringent regulatory prerequisites. Let's navigate the key milestones:

Preliminary Assessment and Readiness:

This initial phase is the bedrock of a successful licensing journey, necessitating comprehensive analysis and meticulous preparation. Here's how to set the stage:

Business Model Scrutiny: Start by dissecting your company's business model and intended payment services. This scrutiny is essential to align your operations with the rigorous requirements of an Electronic Money Institution (EMI) license.
Corporate Architecture Exploration: Examine your corporate structure with a discerning eye, scrutinizing subsidiaries, affiliates, and related entities for transparency and compliance.
Ultimate Beneficial Owner Verification: Validate the individuals who wield ownership or control over your enterprise. This step is imperative to meet anti-money laundering and anti-terrorism financing criteria.
Funding Source Evaluation: Scrutinize your funding sources to ensure their legitimacy and alignment with regulatory standards.
Personnel Qualifications: Identify key roles within your organization and ensure that the individuals occupying these positions possess the qualifications and experience demanded by EMI licensing prerequisites.
License Application Requirement Clarification: Clearly outline the document requisites for your application by engaging with the Bank of Lithuania, the regulatory authority. Tailor your company's documents accordingly.

Document Compilation and Submission:

This phase involves the meticulous compilation and submission of crucial documents, the lifeblood of your licensing quest. Key documents include:

License Application: Craft a formal application for the coveted EMI license.
Business Blueprint: Elaborate on your company's business model and strategic vision in comprehensive detail.
Security Protocol: Present a comprehensive document outlining the measures and policies in place to safeguard client data and financial assets.
Legal Status Portfolio: Incorporate essential constituent documents and unveil your corporate structure.
Financial Records: Provide financial statements to substantiate your company's fiscal stability.
Internal Control Scheme: Offer insights into your internal control mechanisms and operational procedures.
Audit Findings Reports: Disclose the results of audits, inspections, and security assessments conducted by third-party entities.
Personnel Dossiers: Furnish information regarding the management team and key personnel within your organization.

License Acquisition and Ongoing Commitments:

Upon receiving regulatory approval, securing an electronic money license is just the beginning. Subsequently, your company will be entrusted with fulfilling these pivotal obligations and stages:

License Procurement: The regulatory authority bestows your company with an electronic money license, granting the privilege to execute financial transactions and deliver electronic money services not only in Lithuania but also potentially across other EU nations.
Obligations and License Stipulations: Your company must diligently adhere to all stipulations outlined in the license. These encompass stringent requirements for security, transparency, risk management, and reporting. Compliance may entail periodic audits, client fund assurance, and the implementation of robust anti-money laundering and counter-financing of terrorism policies.
Continuous Oversight: Vigilantly monitor your operations, ensuring ongoing compliance with regulatory mandates. This encompasses meticulous scrutiny of customer transactions, detection of suspicious activities, implementation of rigorous internal controls, and robust risk management.
Routine Reporting: Uphold the obligation to regularly submit comprehensive reports to the regulatory authority. These encompass financial statements, compliance reports for anti-money laundering and counter-financing of terrorism, and a gamut of other mandated reports.
Adaptation to Regulatory Evolution: Remain agile in the face of legislative changes. Your company must promptly adapt to shifting laws and regulations related to electronic money activities. Compliance necessitates adherence to evolving rules, the fortification of security protocols, and unwavering adherence to existing regulations.
Regulatory Audits: Prepare for periodic inspections and audits initiated by the regulatory authority. These examinations are designed to verify adherence to all license conditions and safety standards.
International Standards Adherence: Embrace and uphold international standards for combating money laundering and thwarting financial support to criminal organizations. International agreements such as FATF serve as guiding beacons.

Compliance with these mandates and regulatory imperatives is not only a legal requisite, but also a testament to your company's commitment to ensuring the financial stability and security of its operations. It fosters trust among both clientele and the regulatory body, laying the foundation for a prosperous journey as an electronic money service provider in Lithuania.

Cost and Terms of License Registration

Government Fees and Other Financial Obligations:

Commitment	Details
Government Fees	- Includes payment of the registration fee for obtaining an e-money license in Lithuania and other fees established by the regulator.
Initial Capital	- The company must have sufficient initial capital in accordance with the requirements of the regulator, starting from 350 thousand euros.
Additional Financial Guarantees	- Depending on the specifics of the business and risk assessment, additional financial guarantees or obligations may be required.
Audit and Consulting Services	- Audit and consulting services may be required to ensure compliance with security and transparency standards.
Other Additional Costs	- Companies may also face other additional costs associated with the licensing process.

Financial obligations and government fees can vary based on your specific situation and company size. It is advisable to seek guidance from professional lawyers and consultants with expertise in electronic money license registration in Lithuania to accurately determine all financial obligations and expenses.

Approximate Time Frame for Application Consideration and License Issuance:

The estimated time frame for reviewing an electronic money license application in Lithuania may vary depending on specific circumstances and the decision of the regulator. However, Lithuania is generally known for its efficient and prompt registration procedure. Here are general indicative time frames:

Preparation and Submission of Documents: The duration of this stage depends on the company's preparation of the necessary documents and can range from several weeks to several months.
Application Review Process: The regulator begins reviewing the company's application after receiving all necessary documents. Typically, this stage can take from 3 to 6 months.
Obtaining a License: After successfully completing the application review process and fulfilling all regulatory requirements, the company is issued an electronic money license.

The total time required to obtain a license can vary from 6 months to 1 year. However, in some cases, especially if the company is well-prepared and meets all requirements, the process can be expedited.

It's important to note that the exact timing for application consideration and license issuance depends on the individual circumstances of each company, its compliance with regulator requirements, the current workload of the regulator, and the volume of applications received for consideration. It is recommended to coordinate timelines with professionals experienced in registering e-money licenses in Lithuania to gain a better understanding of the specific time frame for your company.

Guidance for Securing an sEMI License in Lithuania

Here are instructions for an individual planning to obtain an sEMI license in Lithuania:

Step 1:

Assess Your Eligibility

Categorize Your Business: Categorize your enterprise into one of the following niches: a startup, a tech platform, or a traditional business seeking diversification into the realm of financial products.

Step 2:

Prepare Your Documentation

Craft a Comprehensive Business Blueprint: Develop a comprehensive business plan that outlines your intended activities and presents financial forecasts for the upcoming year and elucidates your strategic vision.
Solidify Your Financial Credentials: Gather concrete evidence of your financial stability, which may include bank statements or meticulously audited financial reports.
Illuminate Your Leadership and Ownership: Assemble comprehensive profiles of your management team and owners, shedding light on their professional backgrounds, qualifications, and any previous affiliations within the financial sphere.
Detail Your Internal Processes and Policies: Construct documents that meticulously delineate your internal procedures and policies. This entails, among other aspects, the crafting of a robust Anti-Money Laundering (AML) policy, a cogent risk management strategy, and an array of other regulatory procedures.

Step 3:

Initiating the Application

Ensuring Document Completeness: Before application submission, verify the completeness and accuracy of all requisite documents, encompassing your business plan, financial stability proof, management profiles, and internal procedural documents.
Submission to Regulatory Authority: Present your meticulously prepared application, alongside the supporting documentation, to the Lithuanian regulatory authority overseeing sEMI licenses.

Step 4:

The Regulatory Appraisal

Brace for a Rigorous Review: Prepare for a meticulous examination by the regulatory authority, who will scrutinize your application for alignment with established prerequisites and standards.

Step 5:

The Verdict – Approval Denial

Regulatory Determination: Following their comprehensive evaluation, the regulatory body will issue a determination regarding the issuance or refusal of your coveted sEMI license.

Step 6:

Navigating Compliance and Sustained Obligations

License Adherence: In the event of approval, rigorously adhere to the conditions delineated within your sEMI license. These conditions encompass pivotal aspects such as security protocols, transparency mandates, rigorous risk management, and the imperative reporting requisites.
A Vigilant Watch: Maintain a vigilant watch over your operations, ensuring steadfast compliance with the regulatory mandates. This entails meticulous scrutiny of customer transactions, fortification of internal controls, and a meticulous risk management approach.
Evolution Adaptation: Stay attuned to the evolving legislative landscape, particularly regarding laws and regulations related to electronic money activities. Display the agility to swiftly adapt your operational paradigm to remain in consonance with newly instituted rules.
Regulatory Audits: Prepare for periodic inspections and audits instigated by the regulatory authority. These scrutinies aim to ensure the unwavering adherence to the stipulated license conditions and the encompassing safety benchmarks.
International Accord: Comprehend the gravity of adherence to international standards governing the fight against money laundering and the thwarting of financial support to criminal entities. International accords such as those framed by FATF provide a roadmap to follow.

SEPA System and Key Characteristics of Transactions in Lithuania

Designed to simplify euro-denominated bank transfers across European Union countries and select others, the SEPA system has fundamental characteristics:

1. Common Payment Format:

SEPA introduces standardized procedures and formats for transactions, encompassing transfers, direct debits, and credit card transactions.

2. Broad Coverage:

SEPA's reach extends to 27 EU nations, including Iceland, Norway, Liechtenstein, Switzerland, Monaco, and San Marino.

3. Expedited Processing:

SEPA transactions typically enjoy swifter processing compared to traditional international transfers, often concluding within a single business day.

4. Transparent Fees:

Under SEPA, banks are prohibited from levying additional charges, ensuring cost transparency for customers.

5. Standardization:

SEPA relies on uniform bank coordinates, utilizing IBAN (International Bank Account Number) and BIC (Bank Identifier Code), which reduces the likelihood of payment errors.

Why Lithuania Stands as an Optimal SEPA Transactions Hub

Cutting-Edge Infrastructure: Lithuania has committed substantial resources to modernize its banking system, rendering transaction processes swift and efficient.
Embracing PSD 2 Standards: Lithuania has proactively embraced new regulations, including the PSD 2 directive, which not only bolsters security but also enhances flexibility within payments.
Supportive Regulatory Framework: The Lithuanian Central Bank actively participates in and supports SEPA initiatives, offering reliable backing to banks and payment institutions.

Given its favorable business environment, progressive regulation, and active involvement in SEPA initiatives, Lithuania emerges as an ideal platform for transactions within this system.

How the sEMI License in Lithuania Elevates SEPA Transaction Efficiency

It's worth noting that a Small Electronic Money Institution (sEMI) license in Lithuania grants permission for activities related to electronic money issuance and payment transactions. This license delivers the following benefits in the context of SEPA transactions:

Speedy Implementation: sEMI licenses enable companies to swiftly commence SEPA transaction operations in Lithuania, without the need for a full EMI license or banking license.
Enhanced Flexibility: sEMI-licensed entities can offer an array of payment services, including international transfers, direct debits, and payment cards, all seamlessly integrated within the SEPA framework.
Cost Efficiency: Due to their comparatively lower transaction volumes compared to larger banks, sEMI institutions can provide customers with more competitive fees.
Fostering Innovation: sEMI license holders often channel their efforts toward innovative solutions, thereby improving user experiences and expediting transactions within the SEPA system.

The Impact of PSD 2 Standard on SEPA Transactions in Lithuania and Its Advantages

PSD 2, the Payment Services Directive 2, represents a revision to the European Payment Services Directive, introduced to enhance competition, bolster payment security, and stimulate innovation. Here's a look at the benefits and impact of PSD 2 on SEPA transactions within Lithuania:

Pioneering Open Banking:

PSD 2 introduces the concept of “open banking,” enabling third parties to access customer banking data (with consent) to offer novel financial services.

Augmented Security:

PSD 2 introduces stringent customer authentication requirements, elevating payment security standards.

Encouraging Innovation:

PSD 2 paves the way for fintech companies and other innovators to introduce fresh payment solutions and services within the SEPA framework.

Enhanced User Experience:

As fintechs and other innovators furnish more convenient and personalized solutions, customers are enjoying an improved and streamlined payment experience.

In sum, the implementation of the PSD 2 standard in Lithuania has elevated the transparency, security, and innovation within SEPA transactions, rendering them more cost-effective and user-friendly for end consumers.

Our team of experts is ready to provide you with detailed advice and full support in the process of obtaining an e-money license in Lithuania. To contact us, fill out the feedback form.