Electronic Money license in the UK – Procedure to

obtaining the EMI (E-money) license in the UK

In this article, we will look at the process to obtain the electronic money institution
(EMI) or commonly known as the e-money license, in the UK.

The UK regulator – Financial Conduct Authority

The Financial Conduct Authority in the UK regulates firms that provide regulated
services, including, consumer credit, payment services, e-money, lending, insurance
and investment services.
If you wish to issue electronic money services in the UK, such as prepaid cards or
electronic wallets, you will require an Authorised Electronic Money Institution license
from the Financial Conduct Authority.

Definition of E-money

As per Article 2(2) of Directive 2009/110/EC, “e-money” means “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 someone other than the electronic money
issuer”. Prepaid cards and electronic wallets are examples of electronic money.

EMI E-money license options

In the UK, you have two options with regards to the EMI license.

Option 1 – Small EMI license

Key features of the small EMI license
- Application fee of £1,000,
- Cannot issue more than €5m e-money and €3m in turnover for payment services,
per month,
- Cannot passport into Europe.

Option 2 – Authorised EMI license

Key features of the authorised EMI license
- Application fee of £5,000,
- No turnover restrictions in issuing e-money,
- Able to passport into Europe.

Timescales – how long it takes to obtain the EMI e-money license

Depending on who you talk to, you will hear different timeframes with regards to the
time it will take to obtain the license. The truth is that this will depend on the
completeness and strength of your license application. It is essential that you provide
all the required information in your application at the time of submission. Equally, it is
important that the information you provide is comprehensive and complete. Provided
that you have a well completed application, you should allow 4 months from the date
of submitting your application to the FCA case officer to consider your application.

Key issues to consider

- Mind and Management

Regulation 6 of the E-Money Regulations 2011 (EMRs) and Regulation 5 of the

Payment Services Regulations 2017 (PSRs) require firms to incorporate in the UK.
This means that your head office and registered office must be in the UK. You will
require a physical office as virtual offices will not be accepted.

The FCA has provided the following guidance on the mind and management
requirements:
1. You must have more directors in the UK than overseas.
2. Your board meetings must be held in the UK.
3. The day to day decision making must be made in the UK
4. You may have an overseas director in your UK company
5. Your CEO must reside in the UK
6. Your MLRO (money laundering reporting officer) and ideally your compliance
officer must reside in the UK. You may wish to contract some services back to your
group/overseas office as long as the day to day decision-making of the UK company
is conducted in the UK and the company is genuinely being controlled here.
7. If you outsource any functions, you must ensure that this done so with executed
contractual agreements in place.

- Segregating client funds

You will be required to segregate client funds. You also have the option to obtain an
insurance policy however, the number of insurance products in the market for
electronic money institutions are limited and so the popular option is to obtain a bank
account in order to segregate client funds. This is usually an area where such
businesses struggle due to, again, fairly limited options in the market and knowing
who to approach and how to approach them. We are seeing a number of challenger
banks targeting this area and able to help clients by making introductions.

Important information and documents you must submit in your E-money license
application

The FCA will expect to see the following information as part of the license
application:

- Details and structure of your company,

- Your programme of operations,
- A regulatory business plan,
- Details about your organisation structure,
- Evidence of your initial capital,
- Your measures to safeguard client funds,
- Details of your compliance and governance arrangements,
- Your procedure to manage security incidents and customer complaints,
- Details of your business continuity arrangements,
- Your policy on providing access to sensitive payment data,
- Security policy,
- Your AML/CTF internal controls policy,
- Details of your shareholders (holding more than 10%),
- Details of your management team, and,
- Details of any outsourcing arrangements.

Cost calculation of obtaining the EMI e-money license

Initial capital requirement – EUR 350,000 (for authorised EMI only)

FCA fee - £5,000 (one-off)
Office rent (based in London) - £18,000 (per year)
Annual FCA fee - £1,776 (on average)

About

Buckingham Capital Consulting is an international consulting firm, specialising in

payment services, electronic money, banking and investment services. We are able
to advise you on the best course of action and strategy based upon your business
plan and financial product or service. We can you with licencing, compliance,
operational setup and related services, including, obtaining banking facilities. For
more information, visit our website on www.buckinghamcapitalconsulting.com