Electronic Money Institution (EMI)
Refers to the class of licenses Financial Institution
Alternative name: E-Wallet licence
Electronic Money Institution is a licence for the issuance of electronic money. It allows the issuance of own quasi-currency. The issued electronic currency can be used outside the payment system website. It can be withdrawn and converted into any other currency. The Electronic Money Institution licence also allows the use of its quasi-currency for servicing payments of third-party organisations. Typical examples are PayPal, PerfectMoney. Electronic Money Institution is practically a bank, but without the right to issue loans. The licence allows opening sub-accounts for clients within its own bank account and thus creating an “electronic wallet”. At the same time, the “Know Your Client” rule applies to such structures in a distorted form in the form of limits on transactions.
Restrictions imposed on transactions on client sub-accounts, as a rule, depend on the degree of client identification and differ depending on the jurisdiction. Currently, the provisions of legislation governing this issue are changing dynamically around the world, and therefore it is recommended to conduct a separate clarifying study for each new project.
The EMI licence allows linking existing bank payment cards to client sub-accounts. It is also possible to issue cards of major vendors (VISA, MC). In addition, it is possible to create your own card payment system based on EMI.
Electronic wallet based on EMI
An Electronic Money Institution licence is required when it is planned to create a user’s electronic wallet on the website with the possibility of withdrawing funds, or the wallet currency is supposed to be used for settlements on other platforms (websites owned by third parties). If the internal currency is created without the need to withdraw funds outside the system, an EMI licence is NOT required to create an electronic wallet.
Other features
The Electronic Money Institution licence includes all the features provided by the Payment Institution licence. Only a banking licence provides a wider range of tools.
Requirements for owners, licensing procedure, costs and terms
Such a tool as own electronic quasi-currency provides ample opportunities for fraudulent transactions and money laundering. In connection with this feature of the electronic money institution, the owners of the company applying for a licence are subject to a thorough due diligence, which lasts from 3 to 6 months.
In addition to many other documents, the final list of which depends on the specific jurisdiction, a general mandatory requirement is to confirm the availability of funds to launch the project declared in the business plan and confirm the legality of their origin. This requires the provision of statements from personal or corporate accounts of the company owned by the future owner, as well as confirmation of payment of taxes on the relevant amounts.
Basic requirements for the beneficiary:
1. No tax arrears;
2. No outstanding criminal record;
3. Availability of a current account with a bank.
If some documents are missing, alternative evidence may be requested.
Also, to control the activities carried out under the licence, there is always a requirement to establish a financial company and have its head office in the jurisdiction of licensing, as well as to include several directors from among the citizens/subjects of this jurisdiction in the management of the licensee. The number of directors varies from two to five people. In addition, if not all, then most of the directors must be citizens/subjects of the licensing jurisdiction.
To provide additional financial guarantees of law-abidingness, after the approval of the owners and directors, to activate the licence, it is necessary to deposit capitalisation into the company’s current account. The amount of capitalisation may vary, however, for example, within the European Union for licences of the Electronic Money Institution type, it is fixed at a fixed figure of 350,000 euros. These funds must be in the account with a local bank during the entire term of the licence.
Our services
Preparation of a “passable” set of documents, consultation of the beneficiary for passing the interview, submission of documents to the supervisory authority, selection and hiring of directors, negotiations with the licensor, approval of the Business Plan and preparation of financial forecasting for the first three years of operation. Carrying out these and other actions aimed at obtaining a licence will cost approximately 30,000 – 40,000 euros, depending on the jurisdiction, plus a reward of 10,000 euros upon obtaining a licence. The duration of the procedure is from 3-4 months to six months.
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* In the Russian Federation, there is a unique organisation called WebMoney. It operates without an appropriate licence and calls its currencies anything but “currency”. Currently, it is impossible to create another structure functioning on this principle. WebMoney is an exception to the rule, which became such due to its transformation into a system-forming enterprise even before the emergence of a legal framework regulating this kind of business. Please do not ask how to make a “second WebMoney” – this is impossible. Alexey Zarin
Moscow, 2013