How to Get an Electronic Money License in the EU (Latvia)?

Empire Global
4 min readOct 25, 2022

The customer’s monetary value, which is electronically recorded and saved on an electronic medium, is referred to as electronic money in the European Union. When the issuer receives funds from third parties equal to or more than the issued monetary value, it issues electronic money that is accepted as payment by other businesses. It is possible to offer a variety of financial services across the European Union by obtaining a license for the generation of electronic money in any member state.

You can offer payment services and some other financial services goods with an e-money license, but you cannot act as a bank or use the word “bank” in your name or marketing materials.

E-money institutions can, in general:

  • Accept consumer money, and convert it to electronic money, but do not handle it.
  • E-money accounts can be used by customers as digital wallets, but they cannot be overdrawn or generate interest.
  • Offer direct debits, standing orders, account-to-account transfers, and debit cards, but not lending as a stand-alone product.
  • Offer some products for digital financial services, such as currency exchange

You can link to the Single Euro Payments Area with the license for the creation of electronic money, which enables you to send and receive payments in European currency on the same terms and at competitive rates throughout all of Europe. E-money licenses issued in EU nations can travel with their holders, allowing them to provide their services throughout the rest of the EU and EEA. Despite this, applications are only approved by national financial services regulators. The ECB is not a party. Additionally, the license application procedure is simpler and quicker.

Customers’ money must be kept secure by e-money institutions in a segregated account with an authorized bank. Being reliant on external providers as an e-money institution can limit your flexibility. The majority of e-money licenses contain transaction volume restrictions, which might limit how quickly and greatly you can scale.

Positively, e-money licenses were created to enable non-banks to compete with banks. There is more operational flexibility because there are limitations on the services you are allowed to provide. And this enables you to innovate more quickly and with greater agility.

Prepaid cards, electronic wallets, and other types of e-money that people and businesses can use to make payments are all considered to be part of an EMI.

What are the requirements an EMI must meet to obtain a license in Europe?

  • establishing a physical office and local staff as part of an operational presence in a European nation
  • having enough resources, both financial and non-financial, to manage and run the EMI
  • demonstrating the necessary managerial and personnel expertise to run the EMI
  • having EUR 350,000 in immediately accessible startup money in a bank account in the nation where the EMI is submitting the licensing application

What are the requirements for an Electronic money license in Latvia?

Obtaining an EMI license in Latvia is very popular. Despite a decrease in the overall number of payments made, the value of non-cash payments as a whole is increasing. The Financial and Capital Market Commission oversees all electronic market institutions with a Latvia EMI license, and they are all subject to the rules outlined in the Law on Payment Services and Electronic Money. The EU’s electronic money directive is also complied with by Latvian regulations governing entities that accept electronic payments (EMD).

Requirements are:

  • There is no minimum capital requirement, but the total amount of shares or voting rights held by shareholders who own 10% or more of the share capital or voting rights are sufficient to meet the requirements of Section 21 of the Law;
  • The average amount of electronic money that is circulated by an electronic money institution in the course of business activity is not more than two million euros;
  • The management committee and the registered institution’s legal address (official seat) must be located in the Republic of Latvia;
  • Only the area of the Republic of Latvia may be used by such an institution for commercial purposes; payment services and electronic money services may not be offered or provided by the registered institution outside of Latvia or through the use of international payment systems;
  • Members of the electronic money institution’s board or council must have a spotless reputation and possess the necessary education and expertise.

How to obtain an EMI license in Latvia?

To obtain an electronic money license in Latvia, you need to go through several steps. The first step is preparation for submission of the application. In this phase you must have a ready business plan, a description of your planned business, a description of the structure of the shareholders (participants) of the commercial company, proof of initial capital, information regarding members in the management board and council, important shareholders, and the person directly responsible for the management of the operation of the institution, description of the institution’s commercial activity continuity arrangements, AML and other required documents following FCMC Regulations No 138.

In the next step apply all necessary documents to the Financial and Capital Market Commission (FCMC). If there are gaps in the documents given, the Commission may ask the corporation to fill them in or submit more information. If the application is complete, the FCMC sends a letter to the entrepreneur informing them that an assessment of the application for authorization is started.

Within one month of receiving the application, the FCMC begins reviewing it. If the information in the application is insufficient to determine the issue of authorization, the time limit for examining the application may be extended.

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