Regulations for EMI license in UK

The Financial Conduct Authority (FCA) in the UK acts as the regulatory and supervisory authority for Electronic Money Institutions (EMIs) under the Electronic Money Regulations 2011. The primary objectives of the FCA include:

  • Ensuring consumer protection through compliance with regulations, promoting transparency, and maintaining market integrity by preventing financial crimes and safeguarding customer funds.
  • Upholding high standards for market conduct and financial stability by ensuring EMIs have sufficient capital, liquidity, and robust AML practices to prevent misuse of the financial system.
  • Encouraging competition within financial services to benefit consumers, fostering a fair environment for both new and existing firms to offer innovative services.
  • Ensuring strict adherence to Electronic Money Regulations and Payment Services Regulations by authorizing, supervising, and enforcing regulatory standards on EMIs.
  • Facilitating innovation and maintaining a resilient financial infrastructure by ensuring EMIs operate efficiently, setting guidelines for operational resilience, and requiring contingency plans for disruptions.

Taxation of EMI companies in UK

  • Corporate Tax – 25%. A lower rate of 19% applies to companies with profits not exceeding £50,000
  • VAT Tax – 20%
  • Dividends Tax – Dividends paid to UK residents are subject to dividend tax rates, which start at 8.75% and vary depending on the taxpayer’s total income. There is no withholding tax on dividends paid to non-UK residents.

Types of EMI licensing in UK

License typeDescription
EMI LicenseComprehensive financial services including issuance of electronic money, execution of payment transactions, management of electronic payment systems, and provision of operational risk management solutions
Small Electronic Money Institution (SEMI) LicenseOffers electronic money services and payment services on a smaller scale, suitable for businesses with lower operational volumes and capital requirements. Must not exceed €5 million in average outstanding e-money or €3 million per month in payment.
Authorised Payment Institution (API) LicenseCovers a broad range of payment services including executing payment transactions, issuing and acquiring payment instruments, and money remittance. Suitable for businesses engaging in extensive payment.
Small Payment Institution (SPI) LicenseProvides a range of payment services on a smaller scale, with lower capital requirements. Ideal for smaller businesses looking to offer payment services without the need to issue electronic money. Limited to operating within the UK and must not exceed €3 million in average monthly payment.

With EMI license in UK you can provide following services:

  • services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account
  • services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account
  • execution of payment transactions, including transfers of funds on a payment account with the payment service provider of the payment service user or with another payment service provider: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders
  • execution of payment transactions where the funds are covered by a credit line for a payment service user: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders
  • issuing and/or acquiring of payment instruments
  • money remittance
  • execution of payment transactions where the consent of the payer to execute a payment transaction is given by means of any telecommunications terminal equipment, digital or IT device and the payment is made to the telecommunications network or IT system operator, acting only as an intermediary between the supplier of the goods or services and the payment service user
  • Account information services
  • Issuance of e-money

Overview of requirements to obtain EMI license in UK

  • Incorporate a company under UK companies law.
  • Appoint an Executive Director, Compliance Officer, IT Specialist, and Internal Audit Officer.
  • Contribute required minimum paid-up capital
  • Establish a physical office in the UK.
  • Ensure all board members and staff meet the Fit and Proper criteria set by the FCA, maintaining high standards of integrity and professional conduct.
  • Keep client funds and company funds separate to ensure proper safeguarding and compliance with regulatory requirements.

Estimated time frames to obtain EMI license in UK

Company formation

1 week

Documents preparation

4-8 weeks

PI / EMI license obtainment from FCA*

6-10 months

*The timeline also depends on the workload of FCA and any clarifications and queries that FCA may request in relation to the application.

Legal services for obtaining EMI license in UK

Basic Package

25,000 EUR initial set up

  • Turnkey company formation
  • Legal address for 1 year
  • Corporate documents
  • Due diligence for shareholders and key directors
  • Overview of the business plan
  • Overview of financial forecasts
  • Overview of an organizational structure
  • Analysis of the internal documents
  • Applying for the license

Registration of the EMI / PI licensed company under the minimum regulatory requirements

Additional services on request

  • Preparation of individual business plan
  • Preparation of required documents for the licensing
  • Accounting services
  • Assistance in opening bank account, including segregated and safeguard accounts
  • Connection with SEPA system
  • Connection with SWIFT
  • Connection with card issuance programme
  • Apostilled corporate documents
  • Introduction to confirmed software provider
  • Legal support

Ready-Made solution

available on request

  • Registered company
  • Legal address for 1 year
  • No debts, no liabilities – clean company
  • Active license
  • Corporate documents
  • Assistance with transfer of ownership

Edgar Mironov

Head of FinTech Projects

Requirements for EMI licensing in UK

List of required documents

  • License Application: The official application form for the EMI license in UK.
  • Business Plan:
A detailed business plan outlining strategic objectives, service offerings, market analysis, and financial projections.
  • Curriculum Vitae (CVs) and Qualifications:
CVs for shareholders and key team members demonstrating their expertise and relevance to the electronic money industry.
  • Organizational Structure:
Outline of the company’s structural hierarchy and reporting lines.
  • Internal Policies and Manuals:
Internal operational, compliance, and client management manuals.
  • IT Infrastructure Documentation:
Details of IT infrastructure, including agreements with software providers or descriptions of proprietary software.
  • KYC/AML Agreements:
Agreements with providers for Know Your Customer (KYC) and Anti-Money Laundering (AML) services.
  • Programme of Operations:
Detailed plan describing the company’s operational processes.
  • Source of Funds/Wealth (SoF/SoW):
Documentation verifying the origin of funds and wealth for shareholders owning more than 10% of shares.
  • Draft Service Agreements:
Preliminary service agreements for clients.
  • Articles of Association/Memorandum:
Foundational corporate documents.
  • Methods of Safeguarding:
Strategies to protect client funds and data.
  • Cloud Computing Services:
Details of agreements with cloud service providers.
  • ICT and Security Management:
Documentation of information and communications technology and security management protocols.
  • Civil Liability Insurance:
Evidence of adequate insurance coverage to manage potential risks.
  • Non-criminal Record:
Clean criminal record certificate for significant shareholders and key team members.
  • Business Address Approval:
Confirmation of a physical office location in the UK, demonstrating compliance with local regulations.

Business premises requirements

  • To obtain a EMI license in UK it is necessary to set up a physical office in the UK to accommodate staff, facilitate data management, and strengthen the operational foundation, as required by the regulatory authority.

Share Capital and Government Fees

  • Minimum Share Capital: For obtaining PI license in UK the minimum share capital is 20 000 EUR and for obtaining full EMI license in UK – 350 000 EUR. In addition, it is necessary to have extra capital reserve to ensure a capital adequacy ratio of at least 1.3 – 1.5 EUR is advisor.
  • Government Fees: The application fees for PI is 1500 GBP and for EMI license in the UK is 5000 GBP

Bank account requirements

  • Safeguarding Account: Detailed arrangements for the establishment of a safeguarding account to manage funds separately from those of non-electronic money holders.
  • Operational Bank Accounts: Necessary for managing daily operational expenses and transactional purposes, facilitating the processing of customer transactions through current accounts.
  • Current Account: For transactional purposes, allowing for the receipt and sending of payments related to the services offered.

Personnel Requirements

  • Management Board: Comprising at least three members, with the CEO potentially included as a board member.
  • Local Executive Director: Fluent in English, overseeing operational management in the UK.
  • AML and Compliance Officers: Ensuring adherence to regulatory standards and anti-money laundering regulations.
  • IT Security Officer: Can be an outsourced role, responsible for implementing and managing IT security measures to safeguard data and operational integrity.
  • Internal Audit Officer: Can be outsourced, conducting ongoing internal compliance checks and operational audits

Not sure about the number of staff you need to employ for your PI/EMI project? Contact Legalaes experts to define the right personnel structure for your business model.

Roadmap of the project

For more detailed road map of the project and commercial offer – get in touch with our Forex professional.

Edgar Mironov

Head of FinTech Projects

1

Documentation Preparation

Necessary documents are collected and organized from shareholders and team members, including passports, non-criminal records, Source of Funds/Wealth (SoF/SoW), and relevant educational certifications. All participants are ensured to meet the stringent standards required for operating within the UK financial system.

2

Company Incorporation

The company is incorporated under UK companies law, clearly defining the shareholding structure and detailing the percentage of shares held by each shareholder, establishing the legal foundation for the business.

3

Application Pack Preparation

A comprehensive application pack is compiled, including all necessary documents and fulfilling regulatory requirements to streamline the submission process to the Financial Conduct Authority (FCA).

4

Local Team HR Services

The HR processes are managed for establishing the local team, including executive directors and compliance officers, ensuring they are equipped and knowledgeable about the UK’s regulatory environment.

5

Application Submission

The completed application along with the documentation pack is submitted to the FCA, officially initiating the licensing process.

6

Bank Account and Safeguarding Setup

A bank account and a safeguarding account are set up, ensuring compliance with regulatory mandates to protect customer funds.

7

Regulatory Follow-Up

Continuous support is provided in addressing any inquiries or requests for additional information from the FCA, typically involving multiple rounds of communication to ensure compliance with all regulatory concerns.

8

License Approval

The process of receiving approval from the FCA is facilitated, the initial board meeting is conducted to formalize operational procedures, and premises for the company’s operations are secured to establish a strong business presence in the UK.

9

Finalizing Bank and Safeguarding Accounts

The establishment of bank and safeguarding accounts with payment institutions is completed, ensuring all financial infrastructure is in place prior to license operation.

10

Operational Launch and Additional Services

Support is provided for the start of operations under the new license, including the integration of additional services such as SWIFT applications and card issuing through partnerships with major networks like Mastercard and Visa.

Advantages of the EMI license in UK

Links for legislation related to EMI business in UK

Establishes the legal framework for the issuance and operation of electronic money institutions in the UK, setting out core principles and operational standards.

Defines regulatory requirements for payment services in the UK, focusing on making payments safer, more efficient, and enhancing consumer protection.

Governs the interchange fees for card-based payment transactions, ensuring transparency and fairness in the fees charged between payment service providers.

Comprehensive legislation covering the regulation of financial services and markets, including provisions relevant to EMIs.

Amends existing regulations to reflect changes in the electronic money, payment services, and payment card interchange fee sectors.

Sets out the measures to prevent money laundering and terrorist financing, including the transfer of funds and information requirements for payers.

Updates the 2017 regulations to incorporate new international standards and address emerging threats.

Provides the legal framework for the recovery of criminal assets, including measures against money laundering and the financing of terrorism.

Regulates the processing of personal data, ensuring privacy and protection for individuals within the UK.

UK EMI license regulatory body

These descriptions provide a quick overview of each act’s main purpose and its role in the regulatory landscape for obtaining EMI license in UK.

FAQ about EMI license in UK

1. Why choose the UK for starting your EMI venture?

The UK is renowned for its prestigious finance and banking sector, making it a highly attractive destination for establishing an Electronic Money Institution (EMI). Obtaining an EMI license in the UK enhances your credibility, attracting investors, partners, and clients. Furthermore, it allows you to legally offer services within the UK, leveraging the country’s robust financial infrastructure.

2. Who would be suitable to apply for a UK EMI license?

The Financial Conduct Authority (FCA) assesses applicants based on their reputation, prior experience in the financial sector, and potential contributions to the UK economy. While there is no definitive profile, candidates must demonstrate compliance with regulatory standards and the ability to add value to the financial landscape.

3. I'm licensed in other jurisdictions as a payment provider, would that help?

Yes, having a license from another country indicates compliance with international regulations and serious intent to expand your business. This background can expedite the application process and enhance your credibility with the FCA.

4. Would I be able to utilize the CHAPS system?

Yes, holding a UK EMI license allows you to utilize the Clearing House Automated Payment System (CHAPS), which is essential for high-value, time-critical payments. CHAPS provides efficient, irrevocable sterling payments and is integral to the UK’s financial system, supporting both high-value and cross-border transactions.

<< 1 >>


EMI license in Lithuania 2024

Business activity: Payment institution, Digital bank

EMI license in Cyprus 2024

Business activity: Payment institution, Digital bank

MSB License in Canada 2024

Business activity: Payment institution, Digital bank