Acquiring Your EMI License: Requirements, Benefits and the Process in the EU and the UK


Disclaimer: The contents of this article are intended to provide a general understanding of the subject matter. However, this article is not intended to provide legal or other professional advice, and should not be relied on as such.




Financial institutions (FIs) are subject to a variety of regulations and requirements, which differ based on several factors, including country of operation. One of these requirements for FIs operating in the European Union (EU) and the United Kingdom (UK), is an Electronic Money Institution (EMI) license. 


This article will discuss the requirements for acquiring your EMI license, which FIs need one and what services an EMI can offer.



What Is an EMI?

An EMI is defined as an institution that is authorized to issue prepaid cards, electronic wallets, and other forms of electronic money, also referred to as e-money, for businesses and individuals. It is a legal entity or body that is licensed to disburse e-money.


E-money is defined as “electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transaction, and which is accepted by a natural or legal person other than the electronic money issuer.”1


In simpler terms, e-money is currency that is stored in banking computer systems and backed up by fiat currency and central banking systems. In even simpler terms, it is an electronic alternative to cash.




What Is an EMI License?

EMI licenses are issued by regulatory bodies and permit businesses to disburse e-money and operate as an EMI. EMI licensing requirements and governing bodies differ for businesses operating in the EU and for those operating in the UK. 


Although some financial regulations have changed since the UK’s decision to leave the EU, financial institutions that wish to operate as an EMI within the UK must still acquire licensing. If your business is a money service business (MSB) or FinTech that wants to operate in these jurisdictions it will most likely need to acquire this licensing. 



What Is a Small EMI and Who Qualifies?

A small EMI is subject to fewer regulations and requirements for licensing in both the EU and the UK. To be considered as a small EMI, your business must meet the following requirements: 


  • Projected to generate less than 5 million euros in outstanding e-money prior to registration
  • Issued e-money with an annual average outstanding amount of 5 million euros or less in the past 12 months
  • Annual turnover of your business from the issuance of e-money is 2 million euros or less
  • Business is not owned by, and does not have any connection to, credit institutions or e-money institutions


The fee for a small EMI application is 1,000 euros.



EMI Licensing in the European Union

EMI’s requirement for licensing in Europe stems from EU Directive 2015/2366. This directive was aimed to protect consumers by improving the safety and security of e-money payments, as well as to protect competition between EMIs. It is important to note that different EU jurisdictions may have additional and/or differing requirements and rules. These requirements and licenses are issued by the country’s central bank. 


With an EU EMI license, an organization can offer:


  • E-money transactions
  • Debit and credit card accounts
  • Money transfers for cross-border payments
  • Merchant services that accept debit, credit and e-money for payment
  • Payment initiation services allowing customers to initiate payments through their bank accounts
  • Customers with consolidated account information in one place



Licensing Requirements

It is important to research any specifics for the countries you will be operating in, as requirements may differ. Requirements for obtaining an EU EMI License generally include:


  • An established operational presence in a European country, including a physical office and local staff
  • Ability to demonstrate adequate financial and non-financial resources to manage and operate the EMI
    • This includes a robust software and technological infrastructure, as well as internal controls and programs to mitigate operational risks, ensure payment security and prevent fraudulent activity 
  • Suitable management and employee experience to operate the EMI, including a minimum of two managers residing in the EU
  • 350,000 euros in start-up capital that is readily available in a bank account in the country where the EMI is applying for the license
  • A segregated client fund account 
  • Must define and disclose:
    • Organization’s business plan and financial projections for a minimum of 3 years
    • Detailed description of the business’s organizational structure
    • Robust internal protocols for combatting money laundering and terrorist financing
    • Procedures for identity verification of individuals looking to conduct financial transactions
    • Detailed procedures for the monitoring, and handling of security breaches and customer complaints
    • Accounting and external audit obligations


There is a fee of 5,000 euros, due when you submit your online application. On average, the process for obtaining an EMI license takes six months.



EMI Licensing in the UK

Unlike EU EMI licenses, EMI licensing in the UK is subject to a singular jurisdiction. EMI licenses in the UK are regulated by the Financial Conduct Authority (FCA). 


With a UK EMI license, a business is allowed to:


  • Issue electronic money
  • Provide payment initiation services
  • Provide account information services
  • Provide money remittance
  • Issue payment instruments or acquire payment transactions
  • Provide services enabling cash to be placed on a payment account, and provide all services required for operating a payment account
  • Provide services enabling the withdrawal of cash from a payment account
  • Provide execution of payment transactions, including the:
    • Transfer of funds to a payment account with the user’s payment service provider, or a different payment service provider
    • Execution of direct debits
    • Execution through a payment card or similar device
    • Execution of credit transfers
    • Execution where funds are covered by a credit line for a payment service user



Licensing Requirements

There are several requirements that businesses must meet in order to obtain an EMI license in the UK. 


A business must:


  • Possess initial capital requirement of 350,000 euros
  • Possess an ongoing capital of 2% of the outstanding e-money issued by the business
  • Possess either a segregated client bank account or an insurance policy to safeguard client funds
  • Prove that they employ a management body of good repute that possesses relevant qualifications and experience


Additionally, businesses must provide the following documents in their application:


  • Company identification details
  • A program of operations
  • Organization’s business plan and financial forecast
  • A detailed description of your business’s organization
  • Documents showing evidence of initial capital meeting requirements
  • Proof of written measures to protect the funds of your clients
  • Written measures for compliance, governance arrangements and internal controls
  • Written procedures for actively monitoring for security threats/incidents and security-related complaints, as well as procedures for the handling and resolution of these potential incidents
  • Written processes for monitoring, filing and restricting access to sensitive payment information/data
  • Written measures for business continuity 
  • Internal controls and programs for anti-money laundering and counter-terrorist financing (AML/CTF) compliance
  • Set principles and definitions for your organization’s statistical data on performance, transaction and fraud 
  • Written details of outsourcing arrangements if applicable
  • Written details of your organization’s qualifying holdings



The Importance of Automation

Obtaining an EMI license requires proof of robust transaction monitoring, customer identification and an AML/CTF program. To meet these requirements in an effective and sustainable way it is necessary to implement AML software solutions. With automated AML solutions like Alessa, you can benefit from:


  • 80% reduction in false positives
  • 60% reduction in admin costs
  • 100% of transactions reviews 
  • 100% of actions logged – ensuring a proper audit trail


Check out our MSB and FinTech solutions for more information on industry-specific features Alessa offers. Contact us today to learn more about how software solutions can help you meet your AML/CTF requirements in order to obtain your EMI licensing.






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