An EMI license allows a company to issue electronic money and provide payment services without becoming a bank. EMIs can hold client funds, process payments, and offer digital wallets, but cannot accept deposits or use client funds for lending. Typical applicants include digital wallets, payment platforms, prepaid providers, transfer applications, and certain crypto-fiat projects.
EU EMIs operate under PSD2 and EMD2, with national regulators supervised within a framework coordinated by the European Banking Authority. EU authorization may provide passporting rights across the EEA without additional authorization. The FCA supervises UK EMIs, but Brexit ended automatic UK access to EU markets, making a separate EU license necessary for European operations.
EU applicants need initial capital of at least EUR 350,000 and must maintain ongoing own funds at the higher of EUR 350,000 or 2% of average outstanding electronic money under Method D of EMD2; similar UK requirements apply. Regulators assess management fitness, organizational structure, business plans, financial projections, and risk controls. Safeguarding requires client funds to be kept separate from institutional assets through segregated accounts or permitted insurance or guarantees.
The process covers company incorporation, management appointments, documentation preparation, application submission, regulator interaction, and final authorization. Applicants must provide a credible business model, operational processes, financial projections, and risk framework, then respond promptly to regulatory questions. AML/KYC controls must cover customer identification, transaction monitoring, and risk management, and obligations continue after authorization through reporting, audits, and compliance maintenance.
Jurisdiction selection affects market access, timelines, regulatory scrutiny, and future scalability. Common licensing problems include unrealistic business plans, weak compliance controls, inexperienced management, documentation inconsistencies, and selecting a jurisdiction without considering long-term expansion. UK firms face detailed FCA review, while EU requirements and procedures can vary by country.
Key2Law says it helps businesses assess their models, select jurisdictions, design legal and governance structures, prepare applications, implement AML/KYC procedures, and communicate with regulators. Its services also include post-licensing reporting and compliance support. The firm presents a structured licensing strategy as a way to reduce risk and support sustainable growth in regulated markets.