EMI License in Lithuania

In 2023, this has translated into a necessity for higher operation efficiency and a focus on market needs within the realm of fintech-to which the agility of the Lithuanian Fintech ecosystem has been nothing short of remarkable. Proven economic resilience, openness to innovation, and other major advantages continue to keep the country among the very top choices for receiving a FINTECH license, including an electronic money institution license. Today, payment institutions licensed in Lithuania serve close to 25 million customers. customers throughout the EU, about 10% of the Union’s adult population. Evidently, a Lithuanian EMI license remains the key to a successful and viable e-money business in the European Union and elsewhere.

For a seamless EMI license acquisition experience and to take full advantage of what a Lithuanian e-money license can offer, one is strongly advised to consult reputable EMI license consultants. Our team here at Regulated United Europe has over six years of experience in helping fintech businesses launch their operations in the most favorable European jurisdictions. Be it a startup or an established business, we will be delighted to guide you through such processes as applying for an EMI license or acquiring a ready-made company with an EMI license in Lithuania. In case you wish to receive a consultation on how to obtain an EMI license in Lithuania, please contact us directly; otherwise, this article will provide a general overview of what a Lithuanian EMI license truly is.

How to Purchase a Ready Company with an EMI License in Lithuania

If you have an e-money business vision for immediate entry into the Lithuanian or European market, we recommend buying a ready company with a full-fledged EMI license. The time needed for the acquisition, depending on such factors as the difficulty of the deal, the speed of negotiations, and unforeseen problems that may arise, we will make sure at least all legal issues are resolved in the shortest possible time.

This can be further expanded into key steps for a fully operational e-money institution:

• Due diligence of EMI’s history, compliance, and legitimacy
• Filing for approval of the acquisition in most cases with the Bank of Lithuania
• Your proof of sufficient funds and relevant competence to operate an EMI compliant with the regulatory requirements
• Terms, agreements, and amendments negotiation
• Execution of contracts, legal documents, and change of ownership

EMI License Offer in Lithuania

What Is an EMI License?

A license for an EMI is a legal permit from regulatory bodies that permits a financial body to issue electronic money within a particular area or region. Electronic money refers to a pre-paid monetary value issued to circulation and held on the electronic devices that can be used for making payments. Apart from issuing and storing electronic money, EMIs are entitled to offer a number of other financial services. Note that in the absence of such a license, all of the above activities can be treated as criminal and will be punished by regulatory bodies.

With an EMI license in Lithuania, you are entitled to perform the following activities:

• Issue electronic money
• Store electronic money on customers’ behalf
• Issue payment instruments, such as prepaid cards or virtual cards, that can be used for electronic payments.
• Transfer funds within the country or abroad.
• Allow customers to approve and authorize direct debits from their accounts.
• Issuance of payment cards intended for transaction execution.
• It executes online e-payments securely for goods and services bought.
• Perform currency exchange for customers where the transaction involves different currencies.
• Provide payment account services, which include account management and transactions.
• Process e-payments, including on behalf of merchants or other payment service providers.
• Offer business-specific e-money services, such as payroll services or bulk payments.
• Payment Initiation Service means initiating the payment transaction directly from the customer’s bank account.
• Account information service-AIS would involve accessing and aggregating financial information from various bank accounts or financial institutions into one consolidated view.

While the EMI license is significant for the Lithuanian fintech sector, other business industries could also explore the possibilities and advantages of having such a license. Sectors like e-commerce, digital marketplaces, gaming platforms, or even industries related to loyalty programs or gift card services might leverage the flexibility and ease provided by an EMI license to extend their existing payment solutions toward better customer experiences.

The versatility of e-money services means opportunities for a variety of different business models wanting to either facilitate transactions, provide new ways of making and receiving payments, or further expand in every direction in a fast-changing digital commerce landscape. One of the newest examples of taking this route is a subsidiary of very popular online second-hand fashion marketplace Vinted, obtaining a Lithuanian EMI license to provide payment services to Vinted customers across Europe. It means proof that an EMI license has considerably more potential than it looks from the first look and invites you to research it further.

Types of Lithuanian EMI Licenses

In Lithuania, you can choose from two types of EMI licenses:

• A license of an electronic money institution (EMI) which is a regular EMI license
• A license of an electronic money institution for restricted activities, which does not include certain activities.

An ordinary EMI license can carry out all the activities above and is designed for established financial institutions and other large businesses with a robust operational structure and a substantial customer base within Europe. This license allows its holders to provide services to the entire European Economic Area without applying for separate licenses in each country. Acquiring and maintaining a regular EMI license requires satisfying more serious regulatory requirements.

If you do not yet plan to cover the whole EU/EEA market, it is recommended to obtain a limited activity EMI license, allowing e-money operations solely within the territory of the Republic of Lithuania. The license is intended for startups that have relatively low volumes of electronic money transactions and seek a low barrier to entry with the aim of providing services to consumers based in one country. The kind of arrangement is ideal for testing and piloting e-money products before undertaking any rollout into newer territories. Limited institutions are subjected to lighter licensing and management arrangements but are restricted in terms of maintaining average outstanding electronic money and/or turnover of payment transactions.

Your EMI will be entitled to a restricted activity license if the average of outstanding electronic money of the EMI for the last six months does not exceed 900,000 EUR per month, other than in the case described in paragraph 7 of Article 12 of the Law on Electronic Money and Electronic Money Institutions. If your EMI obtains a license for restricted activity and then exceeds this limit, you will need to apply for a standard EMI license no later than 30 days from the date of such disclosure.

Advantages of Acquiring a Lithuanian EMI License

There are plenty of weighty reasons why more than 80 electronic money institutions have chosen this small but friendly and promising jurisdiction for a home for their operations and why you should follow their example, too. From efficient regulations to passporting rights within the EU, from technological infrastructure to a highly qualified talent pool, Lithuania offers an excellent business climate for EMIs to leap forward and project business growth in the years to come.

Key benefits of holding an e-money license in Lithuania include:

• The regulatory framework in Lithuania is quite progressive, very well adapted to EU directives, especially when it comes to welcoming fintech businesses, including e-money institutions. This means you can expect clarity and efficiency in the process of obtaining an EMI license.
• The regular EMI license provides passporting rights in the EEA, meaning a circle of 30 prosperous countries; this includes the fact that Lithuanian EMIs can operate and provide services across several EEA member countries without having to procure separate licenses in each jurisdiction, thus achieving huge market reach.
• The government is very active in Lithuania in supportive ways, through initiatives, funding opportunities, and partnerships developing the sector, building a strong ecosystem for a company that wants to become an EMI licensee within a broad fintech hub.
• Smoother and faster entry into the market is assured by Lithuanian jurisdiction, as compared to most other European jurisdictions, due to the fact that its financial regulator, the Bank of Lithuania, has provided a process for licensing e-money and other financial institution providers.
• Lithuania boasts of its technological infrastructure, with high-quality internet connectivity and speed. It stands in 10th place in the world in fixed broadband speeds! The government is committed to further investing in the build-up of 5G technology, which, among many other benefits, means quicker and more efficient transaction processing.
• The country is home to a highly skilled workforce with strong work ethics, particularly in IT and financial technology sectors, providing an environment favorable to innovation and technological developments.
• Compared to some other EU jurisdictions, Lithuania offers a cost-effective business environment with lower operational costs, thanks to the favorable tax regime, streamlined bureaucratic processes, and fairly competitive labor costs.

All these will act as a catalyst for the success of your electronic money institution in the European or even international market, by undertaking a position credible enough to ensure trust from millions of customers across borders, seeking practical solutions for their needs. By accessing these benefits now, you are potentially able to seize lucrative opportunities and build resilience while the market is relatively less competitive.

Regulations for E-Money Institutions in Lithuania

The Lithuanian regulatory framework for e-money institutions has been imposed by an award-winning authority—the Bank of Lithuania—which constantly and relentlessly looks for ways to improve its value proposition for innovative businesses. Your country’s regulatory framework is correctly aligned with directives and standards outlined by the EU. You might expect a harmonious environment for the development of your EMI within Lithuania and beyond. Such an environment creates clarity and facilitates consistency for EMIs wherever in Europe they might choose to operate, leading to a greater focus on innovation, streamlined operations, and reduced costs.

The following EU regulations have had their influence on the Lithuanian regulatory framework:

• The Electronic Money Directive, or Directive 2009/110/EC, which regulates the issuance of and operation with e-money and EMIs within the EU by setting a standard on customer protection, initial capital, cross-border operations, and much more.
• Directive (EU) 2015/2366, or the Second Payment Services Directive, lays down the regulatory standards for payment services provided within the EU. These apply to those EMIs that, in addition to e-money, offer payment products and related services.
• AMLDs of the European Union: These provide a legally binding requirement for adequate measures on AML/CFT, including customer due diligence, enhanced scrutiny in high-risk cases, and the establishment of an appropriate and adequate risk assessment framework.
• General Data Protection Regulation (GDPR) establishes principles for the lawful, fair, and transparent processing of personal data and is highly applicable to EMIs since they process sensitive financial information and personal data while transactions are made by their customers.

The Lithuanian regulatory framework governing EMI licensees consists of various acts and regulations:

• The Law on Electronic Money and Electronic Money Institutions is considered the main legal act regulating the activity of EMIs in Lithuania because it provides the establishment, operation, and supervision of EMIs, with an emphasis on prudential rules, transparency, and consumer protection.
• The Act of the Republic of Lithuania on Financial Institutions defines financial services, establishes the requirements concerning founders, participants, and executives of financial and credit institutions providing these services, and establishes the terms and conditions for authorization as a financial institution, including as EMI.
• The Republic of Lithuania Law on Payment Institutions establishes the procedure for licensing and termination of activities of payment institutions and supervision thereof and applies to EMIs providing payment services as defined in this Law.
• The Law of the Republic of Lithuania on the Prevention of Money Laundering and Terrorist Financing: it laid down measures for the prevention of money laundering and terrorist financing, provided for the implementation of a risk-based approach, and the establishment of robust compliance programs.
• The Republic of Lithuania Law on Legal Protection of Personal Data regulates how personal information gets used and what rights the consumers have over their data, how to protect those rights, and what responsibilities everyone has when handling personal information.
• The Rules for the Issuing of Licenses to Electronic Money Institutions and Payment Institutions establish a procedure concerning the submission and consideration of applications for an EMI or PI license and forms and templates which applicants have to fill in. Therefore, compliance with these regulations makes EMIs operate in a similar fashion to any other licensed business-carrying institutions in Lithuania. Together with our team, we can assist you through in-depth analysis, offering an extensive overview of the regulatory framework applicable to your EMI business model and actionable insights supported by broad experience in the European Fintech industry.

How to Get a Lithuanian EMI License?

Acquiring a license of EMI in Lithuania is pretty easy to get since there is a very transparent regulatory framework and flexibility of the regulator, promoting innovative businesses. You have choices: you can apply for a brand-new Lithuanian EMI license with the Bank of Lithuania or acquire a ready-made company with a fully functional EMI license. Our team is able to professionally guide you through any of these processes; please contact us directly with specific offers to discuss the details.

Generally speaking, when weighing these options, one should consider business objectives, financial wherewithal, operational capabilities, risk tolerance, and timelines. For instance, a new EMI license procedure is longer and requires many resources to create a fully compliant operation structure. At the same time, you have full control over that structure, corporate policies, branding, and other important aspects. In putting up a new EMI company, you will be able to build from scratch an idea of what your brand is, what its reputation is, and mold it into the light of what you think and believe in. Definitely quite helpful in creating a differentiated brand identity within the financial services marketplace, which may differentiate you from competitors right from the very outset and may also convey more rightfully to your target customers.

A ready-to-buy company with an EMI license is perfectly ideal for investors intending to enter the market without going through the lengthier licensing process. This way, it gets you in front of competitors who are probably working at meeting the application requirements. You may have potentially higher upfront costs associated with buying an established e-money institution and will have to put up with adjustments to the acquired company’s pre-existing structures, policies, and operations that may not align with your intended direction. That being said, our lawyers can readily assist in finding an off-the-shelf company in Lithuania with an EMI license that will come closest to the strategic direction and take the minimum possible time for acquisition.

Not being exactly sure which of the two variants would suit your business model and whether it is the right time for starting an EMI, note that doing nothing could mean missed opportunities in the market which, sooner or later, will come back with redoubled strength. Strongly recommended is that you take immediate action so as not to lose your competitive edge. If you are still in doubt about whether Lithuania is the right jurisdiction to satisfy your needs, then bear in mind that it is a destination where one can minimize the risk of making a costly decision and maximize the potential for successful and fully supported market entry.

Eligibility Criteria for EMI License Applicants in Lithuania

If you decide to apply for a Lithuanian EMI license, there will be a list of legal prerequisites for your EMI and individuals involved in the business. The purpose of these prerequisites is only financial institutions that can maintain the integrity of the financial services market and comply with the EU-wide standards are granted the EMI license. The Bank of Lithuania will also be looking for proof that, at the moment of authorization, your EMI is as compliant as any already in operation. As a means to prove this, you will have to provide a host of detailed documents and verifiable information. While most documents can indeed be presented in English, should you happen to need certified translation services, we’re here for you.

The main EMI license requirements in Lithuania:

• Be legally established in Lithuania as either UAB (Private Limited Liability Company) or AB (Public Limited Liability Company)
• Have a registered office in Lithuania
• Establish the general meeting and the board, appoint head of the institution (for restricted EMI activities, the board is usually not required unless it’s a public company)
• The minimum capital for a standard EMI license application would be 350,000 EUR.
• Clearly and correctly outline procedures and processes, in an ideal manner according to the nature and scale of your EMI, that are to be applied for electronic money issuance. In this context, the outline of an organized structure of segregating activities, defining clear roles and responsibilities, and tracking risks is what one would look at.
• Operational setup: robust, including secure IT systems, risk management protocols, and compliance procedures.
• Apply AML/CFT measures effectively, including reportable procedures to FCIS and the Bank of Lithuania. The directors of the company and other key personnel should be fit and proper, possessing the integrity and competence to fulfill the requirement of their positions.
• The suitability of the EMI and its shareholders or holders of voting rights refers to the fact that bodies with a qualifying holding in the EMI’s authorized capital and/or voting rights have to be able to guarantee sound and prudent management, enjoying high repute and also being financially sound.
• Pay to the STI a state levy for granting an EMI license in the amount of 1,463 EUR for applicants for a standard license and 1,235 EUR for applicants for an EMI license with restricted activities.

Applicants for an EMI license with restricted activities are exempt from the following:

• Initial capital requirement
• Own funds requirement
• The requirements for the fitness and propriety of shareholders or holders of voting rights

The following documents shall be submitted to the Bank of Lithuania by applicants for the EMI license:

• Bank of Lithuania application form
• Documents confirming the legal status of the applicant (for example, articles of association)
• A document confirming the right of a representative to represent the applicant
• A document confirming the payment of a stamp duty for license issue
• A specific program of operations, which shall include a description of the type of services to be offered, according to the model in Annex 6 to the Rules for the Issuing of Licenses to Electronic Money Institutions and Payment Institutions. A clear business plan, which shall detail the extent, scale, and type of electronic money services to be provided.
• Documentary proof of possessed minimum capital, such as a copy of the annual financial statements of the previous financial year, an extract from a public register specifying the registered capital, or a statement from a bank or licensed institution in Lithuania, confirming your company’s deposited funds in a savings account;
• A description of measures taken (or to be taken) for safeguarding consumer funds.
• Means corporate governance arrangements and internal control mechanisms, including administrative, risk management and accounting systems. Structure organisation – description, including detailed organisational chart describing the various departments’ responsibilities Annex 10 to the Rules for the Issuing of Licenses to Electronic Money Institutions and Payment Institutions
• Questionnaires filled in by the heads of the applying company head of administration, heads of structural subdivisions, and in cases provided by the law, board members, or members of the supervisory board. A contract of professional indemnity insurance, other documents confirming the liability coverage, with indications and proofs of the calculations of the coverage amount.
• Questionnaire referring to the EMI’s operational risk, including information on internal control mechanisms, outsourcing and management of cybersecurity as provided for in Annex 11 to the Rules for the Issuing of Licenses to Electronic Money Institutions and Payment Institutions

We know that this is a lot to take in, and you’re better off concentrating your efforts on creating great e-money products and services rather than having to worry about how to deal with regulatory requirements. It would be our greatest joy to take that headache off your shoulders by ensuring the application package is highly aligned with the legal demands. That way, you will maximize your chances of success. Please feel free to contact us at any time to assist you in acquiring an EMI license in Lithuania.

Lithuania EMI License Application Process

The application for the EMI license is considered within three months if all the documents are submitted and done in the right form. In cases where part of the documentation is missing or incomplete, the Bank of Lithuania shall have three months from the date when the information has been provided. You need to make a high-quality application; otherwise, your market entry will be delayed by regulatory red tape.

Main steps of applying for an EMI License in Lithuania:

• Accurately prepare all the needed information and documents
• To pay the state levy to the national tax authority
• To file the application package to the Bank of Lithuania
• The Supervision Service and other structural units of the Bank will verify and assess your documents
• The authority will maintain regular contact and, when necessary, create meetings with representatives of the applying financial institution.
• The Supervision Service may send remarks based on which your EMI will have to get rid of any pointed deficiency.

By now, you can probably tell that receiving a license of Lithuanian EMI can be a Faroese step for your e-money business. Remember the grounds such as access to the European market, a fin-tech-friendly environment, accelerated regulatory processes, and a possibility to keep cost-effective operations. All that may favorably influence the development of your company. Do not miss your chance to benefit from the opportunities of the rapidly developing financial services market supported by experienced lawyers, business developers, and financial accountants. We have over six years of experience in helping numerous businesses secure EMI licenses in Lithuania and would like to offer our legal know-how to you, too. Contact us now for a personal EMI license consultation in which we will discuss your next immediate steps to lasting success.

Also, lawyers from Regulated United Europe provide legal services for obtaining a Lithuania crypto license.