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Licensing of FinTech Companies Providing Services in single Europen Market

Licensing of FinTech Companies Providing Services in single Europen Market

Fintech companies, banks, E-money institutions, insurance companies, investment funds, forex companies and other finance institutions in Europe are subject to higher regulation and risk management requirements.

Licensing of the Finance Institution in one of the member states within the European Union (EU) opens business opportunities to act and provide services in all other EU countries, enjoy benefits of a Common Market without any restrictions and advantages of Single Euro Payments Area (SEPA). SEPA – more than 500 million citizens, over 20 million businesses and European public authorities making and receiving payments in Euro at a low cost, under the same basic conditions, rights and obligations, regardless of their location in Europe. SEPA allows arranging electronic credit transfers and direct debits in all of Euro area at a low cost just as easy as at home.

Fintech Company or other Finance Institution registered in Lithuania provides significant competitive advantage and opens up European financial market at significantly lower incorporation and operational costs. Lithuania and primarily its capital Vilnius became a new hub for the Fintech companies focused on international financial markets. Favorable regulatory and tax environment, excellent infrastructure, fastest internet and quality talent pool makes Vilnius attractive for large international companies as well as Fintech startups.

In October 2016 UK based leading financial services provider REVOLUT and Bank of Lithuania signed a memorandum of understanding. REVOLUT is planning to establish a financial institution in Lithuania and gain access to the Bank of Lithuania managed payment systems ensuring cross-border payments in Euro.

UK giant Barclays Bank operates Barclays Technologies Centre Lithuania in Vilnius, offering IT and other services to Barclays businesses across the world.

Nasdaq – the world’s largest provider of securities trading technology has established Nasdaq technology and business support competence center in Vilnius.

Industry leader WireCard Bank AG recommends Lithuania and ECOVIS ProventusLaw as a gateway to European financial markets.

“From our perspective, they fully handle all aspects of financial or corporate matters with a highly professional dedicated team. Their knowledge of the financial services industry within their local market is supporting us in our efforts across Europe. I would not hesitate in recommending ECOVIS ProventusLaw as a strong and reliable law firm for any dealings with the regulatory body in Lithuania and as a gate for the international financial services companies to Europe,” – Mr. Oliver Bellenhaus, WireCard Bank AG.

REGULATION

The Bank of Lithuania combines the functions of a central bank and the financial supervisory authority (regulator). The regulator comes out from the watchdog’s role and simplifies regulatory procedures avoiding unnecessary paperwork. Getting most popular Payment Institution or E-money Institution license within less than 2 months in Lithuania is reality. In most of the jurisdictions, such process usually takes around 12 months.

Lithuanian Specialized bank license allows provide almost all banking services, except investment management and public offering of securities. Registered capital requirement of Specialized bank is only EUR 1 000 000. Regulatory behavior and significantly lower finance institution incorporation, licensing and maintenance costs is what makes Lithuania preferred jurisdiction for the finance business people from around the world.

“We understand what kind of dangers establishment of small foreign financial technology companies might have, nevertheless the process will not be stopped due to that,” – Chairman of the Board of the Bank of Lithuania Mr. Vitas Vasiliauskas in his interview to the business newspaper Verslo Zinios on 9 December 2016

The reasons why Lithuania is one of the top jurisdictions in EU for E-money and Payment Institution licensing:

– No particular requirement for company management to reside in Lithuania.

– Application for a license submitted without establishing a company. Incorporation of the company starts only after the license granted.

– Fast licensing process. Issue of the license of Payment or E-money institution within period of 3 months and even faster.

– The documents can be submitted in English and amended “on the go” instead of formal writing forth and back.

– Possibility to get own sorting codes for IBAN accounts for the clients. The Bank of Lithuania creates an infrastructure for instant payments that according to European Instant Payments Initiative will guarantee pan-European reach.

– Non-banks have direct access to SEPA. SEPA-MMS is the pan European retail payment system managed by the Bank of Lithuania.

– Remote client verification. Innovative “know your customer” processes for remote client verification allows to open the accounts without physical presence of the client.

– Easy passport of the license to other EU jurisdictions. The passporting to other EU countries takes 1 month and is free of charge.

– No sanctions for the first year. The Bank of Lithuania is committed to support start-ups and not to punish them during the first year of operation for minor infringements.

– Startup visa. Special visas for the citizens of non-EU/EEA countries running innovative businesses in Lithuania.

ECOVIS EXPERIENCE

ECOVIS International is a leading global consulting firm having over 4,500 professionals operating in over 65 countries. ECOVIS ProventusLaw is Lithuanian member firm of ECOVIS International. ECOVIS ProventusLaw has long experience consulting international clients and licensing finance institutions. Our experience starts from the incorporation of first modern NSEL 30 Index fund in Lithuania and fund’s management company 15 year ago. Recently we licensed European branch of California based e-payment company Alternative Payments, servicing over 100 000 websites around the world, advised national post operator AB Lietuvos Pastas and leading mobile telecommunications service provider UAB Omnitel getting their Payment Institution licenses. Currently we service Fintech companies from European countries, US, China, Israel, UAE, Singapore, Philippines, seeking license for European market.

More about Fintech at www.ecovis.com/lt/fintech

Inga Karulaitytė – Kvainauskienė