E-Money License in the UK: The best of the best
E-Money institutions are a necessary step for your business.
It’s the big leap you need to take if you want to make your business more stable and measurable.
If you want to go global… It’s the way to go.
An e-money institution is a financial entity that is authorized for developing services related to electronic money (credit cards and similar) and payments related to it.
It’s a need for your business platform and e-Commerce strategy.
And guess what? We can help you get one in what’s widely considered the best e-Money licensing jurisdiction: The United Kingdom.
God save the Queen, indeed.
The home of football, The Beatles, and -our favorite- free-market, still offers fantastic opportunities for investors around the world. Even as the country had taken some statist steps after one of the most free-market governments in the last few years on the planet, the Margaret Thatcher administration, the UK is still one of the freest economies in the world.
Even better, it has said farewell and regained power over most of its economic policy after finally leaving the European Union.
Yes, to be sure, such a decision poses some challenges for the UK. We will explain the opportunities and difficulties it may bring for the e-Money market in the UK.
You can legally register a British company and get a financial license issued by the FCA, which will allow you to establish an e-Money company in less than 12 months and start operating and obtaining benefits around the world, opening your IBAN, SWIFT, and SEPA accounts and emit your own payment cards.
You’d probably ask: well, what’s the difference between this and a bank? Basically, that an e-Money institution cannot emit loans or keep deposits that accumulate interests. That means that e-Money institutions have lesser regulations and supervision, which makes it a more flexible business structure.
So, what would be the benefits of obtaining such a license in the UK?
● You’ll acquire an English SWIFT code for transactions
● You’ll be able to issue English IBAN accounts for your clients
● You’ll be able to register accounts remotely for individuals and companies
● You’ll be able to issue credit and debit card payments linked to your customer accounts
● Your company will be able to perform bank payments in more than 45 currencies worldwide
● You can accept payments from all international accounts that use the SWIFT system
● Create correspondent accounts in different countries
● Acquire your AML department
● Your financial services are VAT-exempt in the UK
● No restrictions regarding the turnover of the company
Furthermore, e-Money institutions are a pretty much simpler, less regulated version of banks, with the particularity that they cannot make loans nor provide accounts with interests.
Here’s a full list of what an e-Money institution can do:
● Services that allow placing cash on a payment account and all operations needed for operating payment accounts
● Services that allow cash withdrawals from payment accounts and operations required for operating such accounts
● Execution of payment transactions, such as:
● Execution of direct debits
● Execution of payment transactions through payment cards
● Execution of credit transfers
● Executing payment transactions where the funds are conducted through a credit line for a service customer, such as:
● Execution of direct debits
● Execution of payment transactions through payment cards
● Execution of credit transfers
● Issuing payment instruments and acquiring payment transactions
● Remitting money
● Payment initiation services
● Account information services
● Issuing e-money and providing operational services and ancillary services regarding issuing e-money or payment services
● Operating payment systems
Moreover, we haven’t mentioned one of the key advantages of an e-Money institution over a bank. As you may know, the CRS (Common Reporting Standard) was implemented in 2017. That meant national authorities are obliged to automatically exchange financial information on account balances of their customers to foreign tax authorities.
However, as of today, these provisions apply mostly to banks and not AEMIs (Authorized e-Money Institutions).
Types of e-Money institutions
There are two main types of e-Money institutions in the UK: Small e-Money Institution (SEMIs) and Authorisede-Money Institutions (AEMIs).
What’s the difference? SEMIs have an average payment turnover of less than €3m per month. That means the registration process is less expensive and simpler, but they cannot provide their services to other EEA member states.
AEMIs have average monthly turnovers of over €3m. Thus, they pass through a more stringent licensing process and can provide their services in the EEA, for example, through authorized agents in other member states.
What about Brexit?
Clearly, we need to talk about the elephant in the room: Brexit.
The United Kingdom will leave the European Union.
This has both positive and negative effects.
On the one hand, the UK can ignore EU trade restrictions. On the other, its new relationship with the EU will determine most of its future.
One of the main benefits of obtaining a British e-Money license was that it had passporting rights. That meant it had free access to the EU market and allowed you to establish your services in other EU countries without needing to apply for further licenses.
Right now, the UK is on a transition period until December 31, 2020, where it still has passporting rights. Nevertheless, the conditions after that period will depend on the agreement the EU and the UK reach this year.
As of today, e-money institutions operate across the EEA freely with a UK license. They have passporting rights to the EEA and EU as long as the regulator of the other country is notified.
One of the main issues for EU countries is that they don’t have many solid licensed providers in their territories, and, thus, rely excessively on the UK, which has around three-quarters of the e-money firms operating in Europe.
All that means that even if you’re a Eurosceptic and support Brexit, you’re probably a bit anxious about what may happen to the e-money business in the UK as it was clearly benefited from its participation in the EEA.
Does the new state of things mean that UK-based e-money institutions will need to apply for new licenses in the EU to operate or even move their operations from the UK to an EU member?
Let’s not rush to conclusions.
First of all, the UK is still under a special transitional regime until the end of 2020 where British and EU authorities negotiate a deal to regulate the relationships after Brexit.
There are two likely scenarios: the Swiss regime or the Norwegian regime.
The Swiss regime means UK companies would lose passporting rights, but will easily reach specific agreements for financial services to approve passporting rights for these specific industries. The Norwegian scheme would mean the UK would retain its passporting rights.
The UK depends too much on its passporting rights, and the EU depends too much on the UK’s financial services. And they both know it.
The biggest export of the UK to Europe is financial services, and as we said, more than 75 % of the e-payment providers in Europe are located in the UK.
It’s almost impossible that the parties don’t reach a deal that at least keeps things as normal as possible.
That means it’s still a good time to get the most valuable and reputable e-money license on the planet.
Why the UK? Five reasons to acquire an e-payments license in the UK
The best jurisdiction in the world
If you get an e-payments license in the UK, you’re playing in the big leagues.
UK licenses are widely regarded as the best in the world and the top jurisdiction that holds almost three-quarters of the European market.
Full EEA access
Yes, yes. We know that, in principle, that’s only until the end of this year. However, as we explained, the relationship regarding financial services between the UK and the EU is a marriage by convenience. They need each other. The possibilities of not reaching a bilateral agreement, or, at least, individual agreements with most EU members are scarce.
That means that, in all likelihood, the British e-payment licenses will still hold passporting rights.
One of the freest economies in the planet
According to the Index of Economic Freedom, the UK is the 7th freest economy on the planet. Even if some statist measures have been taken in the last 20 years, the spirit of Margaret Thatcher still lives. Businesses enjoy top trade and business freedom in the country, and with Brexit, we’ll likely see a new tax regime that will improve the fiscal health of the UK.
Reliable regulatory authority
The FCA (Financial Conduct Authority) is the regulatory body on the matter. It is widely known for its fair rules, clear instructions, and up-to-date information. Yes, the process is stringent, but you can’t keep your reputation as the best unless you are good at identifying risks. If you are a legit business with sufficient expertise, you’ll get fair treatment.
Become a bank
From an e-payments license, you can transition into a bank. That means you don’t have to start the process from scratch. Instead, you can turn your e-payments provider into a bank through another fair and swift process in one of the top banking jurisdictions in the whole world.
Who are we, and what can we do for you?
Mundo experts have more than 20 years of providing financial solutions for investors and high-net-worth individuals across the world.
With our unparalleled network of experts across the world, we can help you protect your legacy and expand your business.
Our core value is freedom, and we can help you live freely! With Mundo, you can have more freedom to invest, protect your assets, travel around the world, and do business.
That is why we offer only the best of the best among the financial products on the planet.
That’s why we offer the UK e-payments license.
With our British partners, we can help you get the e-money license that’s been widely considered the best in the world for years.
Now, let’s walk you through the process.
First, you must submit the following documents along with your application (the list is not exhaustive, for a full list, please contact us right here :
● Company statutes
● Operation program
● Business plan
● Proof of capital over the minimum required
● Description of measures taken to protect the funds of the customers
● Description of the responsibility agreements and internal administrative, accounting, and risk management mechanisms
● Descriptions of the internal control mechanisms established to comply with obligations related to preventing financial terrorism and money laundering
● Description of the organizational structure
● ID information of the individuals that hold qualified shares or voting rights and evidence of the aptitude of these individuals to guarantee the correct management of the institution
● ID of the directors, especially the responsible persons for the activities related to the emission of e-money from the institution and their good reputation
● Information of the company that will conduct audits
● Address of the registered office
Only collecting all these documents already feels bothersome. However, in Mundo, we’re here to make it simpler for you.
We can help you get the license in five easy steps
● Documentation: our experts prepare the necessary documents for the application
● Company formation: our experts we’ll help you open your company and bank accounts and any other corporate matters
● License application: Here we’ll formally submit the application alongside the required documents
● Following the process: we keep in touch with the FCA to see if everything is going well
● Final decision
The overall process can be optimized if we conduct some of the steps at the same time. For example, the first two stages can be done jointly and take somewhere between one to two months. At the same time, obtaining a license takes somewhere between two to six months, as the official reviewing term is three months, which can be extended for an additional three months.
The general process may be extended if you need to do the following:
● Prepare the business model and plan
● Occupy the directive positions
● Prepare the IT system
● Prepare the accounting system
● Hiring of third parties such as the auditing company
And we can help you with everything. But, as infomercials say: wait, there’s more! What if your e-money institution goes so well you want to take the next step: turn it into a bank. We can also help you with that!
Become a bank
Setting up a new bank doesn’t only need consent from the FCA but also the PRA (Prudential Regulation Authority).
We have plenty of experiences with these processes and have carried out various successful registrations for our clients. Thus, we know where exactly to focus on when filling the application. The most vital areas are:
● The business plan
● The senior management of the company
● The financial resources
● The IT system and strategy
● And the outsourcing services
The process is somewhat lengthy, but it can be summed up in five stages:
● Early steps: You’ll meet up in your experts to see if actually setting up a bank is the best option
● Pre-application: This step is incredibly helpful, as we’ll help you prepare the application and get it as polished as possible. We’ll conduct various meetings to see how the process goes and help you improve your profile
● Application: We’ll help you submit the documents and the application
● Mobilization: Here we’ll help you build your new bank: secure investments, recruit key staff, and enhance your IT system
● After authorization: We won’t leave you on your own after you get the license. We’ll keep with you to help you deal with the first steps of your banking business in the UK.
In Mundo Offshore, we want to see you thrive as a business and as a person. That’s why we offer you the possibility of getting an e-money license in the best jurisdiction in the world: The United Kingdom.
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