Incorporation of a E-Money Institute in Cyprus, Germany, Malta or United Kingdom ( E-Money License) Formation of a Bank, Bank License, Asset management company, Offshore Bank License, Bank License Cayman Islands, Offshore Bank Belize

Incorporation of a E-Money Institute in Cyprus, Germany, Malta or United Kingdom (E-Money Licence)

Our law firm incorporates E-Money Institutes (EMI / E-Money Licence) in the most popular countries, mainly in Cyprus, Germany, Malta and the United Kingdom.

The initial capital depends to inland laws of financial services companies; for EMI it is EUR 350,000.00 to EUR 1,000,000.00.

In UK it is possible to incorporate en EMI with an initial capital of 2% of the liabilities of the EMI. General requirements for an EMI licence are:

Incorporation of a corporation
Proper place of management in the country where the license is granted
One or two directors who are fit & proper in terms of the applicable laws
Connection to a Certified Public Accountant

Provision of nominee directors is not possible due to inland law.

If the EMI is set up on Cyprus, our law firm can provide a resident as director. In other cases, the director(s) has to move their main residence into the country, where the place of management is. Exemption:

The EMI has its place of business within the EU
At the place of management premises have been established in a business-like manner from where the management and business of the company are run
A person resident within the EU but abroad the country of the place of business is manager of the EMI

Please be aware, that within the context of financial services the laws of the country where the company is incorporated and the laws of the countries to where services are offered are applicable.

Resumen breve sobre el tema fundación de un banco

In the EU / EEA mutual acknowledgement applies: An Institute with approval in one country of the EU / EEA may offer its services in all other countries of the EU / EEA as well without further licences for each country.

In all other cases it is common, that a financial services company may offer its services abroad the home country, as long as the relevant financial or monetary authorities work together, there are existing agreements on information exchange and the application requirements are comparable. Examples to this would be financial services companies in Switzerland or the U.S.A.

E-Money Institution Cyprus (EU)

Conditions for granting of authorisation: Under the Law, an application for authorisation as an electronic money institution shall be submitted to the relevant competent authority and shall be accompanied by any information, document or evidence prescribed in a Directive to be issued by the competent authority under the Law. The competent authority shall grant an authorisation if the information and evidence accompanying the application complies with all the requirements. Before granting an authorisation, the authority may consult other relevant public authorities. The authority shall grant an authorisation only if, taking into account the need to ensure the sound and prudent management of an electronic money institution, the electronic money institution has robust governance arrangements, including:

a clear organisational structure with well-defined, transparent and consistent lines of responsibility;

effective procedures to identify, manage, monitor and report the risks to which it is or might be exposed, and
adequate internal control mechanisms, including sound administrative and accounting procedures. According to the law, the arrangements, procedures and mechanisms shall be comprehensive and proportionate to the nature, scale and complexity of the services provided by an electronic money institution.

Furthermore, where an electronic money institution issues electronic money and is also engaged in other business activities, the competent authority may require the electronic money institution to establish a separate entity for the issuance of electronic money if the other business activities of the institution impair or are likely to impair, either the financial soundness of the institution or the ability of the authority to monitor the institution’s compliance with its obligations under the Law/Directives. The competent authority shall refuse to grant an authorisation if, taking into account the need to ensure the sound and prudent management of an electronic money institution, it is not satisfied as to the suitability of any shareholder or member that has a qualifying holding. In addition to this, where close links exist between an electronic money institution and another person, the authority shall grant an authorisation only if those links do not prevent the effective exercise of its supervisory functions. Within 3 months of the receipt of an application, the competent authority shall inform the applicant concerned whether the authorisation has been granted or refused. The authority shall also give reasons if it refuses to grant an authorisation.

Initial Capital –

Own funds The competent authority shall not authorise an applicant as an electronic money institution unless the applicant holds initial capital of at least €350,000. The authority shall issue Directives to determine the composition of own funds. Electronic money institutions are required to hold, at all times, own funds as determined in a Directive issued by the competent authority. Safeguarding requirements: Electronic money institutions are required to safeguard funds that have been received in exchange for electronic money that has been issued. Audit provisions: For supervisory purposes, an electronic money institution shall provide separate accounting information for activities other than the issuance of electronic money and payment services, and shall provide an auditor’s report in relation to all such accounting information.

E-Money Institution England (UK)

(2) The application must comply with the requirements of, and any requirements imposed under, regulation 12.

(3) The total business activities of the applicant immediately before the time of registration must not generate average outstanding electronic money that exceeds 5,000,000 euro.

(4) The monthly average over the period of 12 months preceding the application of the total amount of relevant payment transactions must not exceed 3,000,000 euro.

(5) The applicant must immediately before the time of registration hold such amount, if any, of initial capital as is required in accordance with Part 1 of Schedule 2.

(6) The applicant must satisfy the Authority that, taking into account the need to ensure the sound and prudent conduct of the affairs of the institution, it has—

(a)robust governance arrangements for its electronic money and payment services business, including a clear organisational structure with well-defined, transparent and consistent lines of responsibility; and

(b)effective procedures to identify, manage, monitor and report any risks to which it might be exposed, which are comprehensive and proportionate to the nature, scale and complexity of electronic money to be issued and payment services to be provided by the institution.

(7) The applicant must satisfy the Authority that—

(a)the directors and persons responsible for the management of its electronic money and payment services business are of good repute and possess appropriate knowledge and experience to issue electronic money and provide payment services;

(b)it has a business plan (including for the first three years, a forecast budget calculation) under which appropriate and proportionate systems, resources and procedures will be employed by the institution to operate soundly; and

(c)it has taken adequate measures for the purpose of safeguarding electronic money holders’ funds in accordance with regulation 20.

(8) None of the individuals responsible for the management or operation of the business has been convicted of—

(a)an offence under Part 7 of the Proceeds of Crime Act 2002 (money laundering)(1) or under the Money Laundering Regulations 2007;

(b)an offence under section 15 (fund-raising), 16 (use and possession), 17 (funding arrangements), 18 (money laundering) or 63 (terrorist finance: jurisdiction) of the Terrorism Act 2000(2);

(c)an offence under the 2000 Act;

(d)an offence under the Terrorist Asset-Freezing etc. Act 2010(3) or the Al-Qaida and Taliban (Asset-Freezing) Regulations 2010(4);

(e)an offence under these Regulations or the Payment Services Regulations 2009; or (f)any other financial crime.

(9) The applicant must be a body corporate whose head office is situated in the United Kingdom.

(10) The applicant must comply with a requirement of the Money Laundering Regulations 2007 to be included in a register maintained under those Regulations where such a requirement applies to the applicant.

Bank license: Service of our law firm

Our Law-firm incorporates banks, financial services institutes in the EEA (e.g. U.K., Germany, Switzerland and Liechtenstein), U.S.A. and Offshore (Cayman Islands, Belize and St. Vincent). Further we set up New Zealand financial services institutes with licence to operate bank business (OFC).

For a S.W.I.F.T connection you always need an A-licence-bank. On your request we can offer a broad list of services needed to set up a bank with S.W.I.F.T:

Incorporation of the company of the bank
Apply for admission to hold an appropriate licence
Setup of a place of business at the jurisdiction of your bank
Recruiting of fit & proper personnel for the management of the bank according to international banking law
Connecting to a rating agency (Rating, Basel II & III), e.g. Moodys, S&P
Connection to Society for Worldwide Interbank Financial Telecommunication (S.W.I.F.T., appointments at S.W.I.F.T.), Swift-Code and IBAN
Connection to deposit guarantee fund o Banking Law (general terms and conditions of the bank, credit agreements, due diligence, compliance, etc.)
Representative offices or branches in other countries
Tax planning and routing of dividends e.g. by setting up a holding

Banks within the European Economic Area (EEA) have to proof an minimum initial capital of EUR 5 million in some countries this might be even more (e.g. Liechtenstein, Spain, Luxemburg).

Less minimum initial capital is needed for e-money institutes or banks in countries abroad EU/EEA like Cayman Islands.

One option could be to setup a bank in a foreign country with a representative office or a branch in other countries including EU/EEA. Although there are differences in the banking acts for example by the initial capital, but there are general rules in almost every country:

As a rule two fit and proper directors are needed of whom one has to be resident in the country where the bank has its permanent place of establishment. A “fit & proper” director is defined in most banking acts as a person who has

(a) honesty, integrity and reputation;

(b) competence and capability; and

A place of management in a business-like manner is needed, i.e. offices have to be rented etc.
The form of the company hast to be a corporate entity, often a Public Limited on Shares / Corporation.
The initial capital has to be paid up.
No banking business may be transacted, except by a person who is in possession of a valid licence granted by the Authority authorising him to carry on such business.
Auditing by independent certified accountants
Evaluation by an independent rating agency (e.g. Moody’s, Fiths, S&P, Euler-Hermes,…).
Membership in a deposit guarantee funds.

In the range of banking regulation the laws of the country apply where the bank has its place of establishment as well as the laws of the countries to whom the services are offered.

However, banks within the EU/EEA may offer their services throughout the whole EU/EEA without separate licensing in each country of this region. Furthermore the following facts of case have to be considered as a rule: Banks under the control and government of public administration and/or the regarding central bank may offer their services in other countries without anew licensing. If necessary, this might be only a duty of disclosure is needed or a simplified approval process. Legal fees for the application of a bank licence depend on the efforts and services needed.

In general these fees are around GBP 49,000.00. In addition fees for government bodies, financial & monetary authorities and central banks will apply. Also third party costs have to be in line of a budget: S.W.I.F.T, internet-banking systems, deposit guarantees fund, rating agency, notary public, etc. pp.

Formation of a Bank, Bank License: Basic Considerations regarding the Formation of a Bank (Deposit Bank)

International banking law is an extremely complex legal practice area. “Forming a bank on the fly” is a contradiction in itself. Please consider that many dubious providers offer their services via the Internet, these providers are neither tax accountants specialized in international tax law or attorneys specialized in bank law, nor do they have sufficient knowledge and expertise in the area of national and/or international law. So-called “bank formations” by such providers are seldom worth the paper on which the supposed license is documented. We provide services to clients who have already lost more than 100,000 Euro to such providers, in which cases a bank formation was not realized. When forming a bank – or a financial services company with the approval for providing bank services domestically and internationally – there are numerous laws that must be complied with in the seat country in which the bank is to be formed, as well as compliance with the domestic laws of the “provider country”.

Key issues include among others:

What objectives are being pursued with the formation of a bank?
Which services is the bank to offer?
In which countries are the bank services to be offered and in “which form”?
Where is your “permanent residence” (location of unrestricted tax liability); Where do the shareholders reside in terms of tax liability?

A Brief Overview of the Terminology

Asset Management Company:

Asset management companies may receive funds from third parties, invest such funds, and distribute profits from such investments as defined by (term). An asset management company is, however, not a bank as defined by the respective provisions (may not offer any bank typical services), and consequently an asset management company is not a deposit bank. Examples of asset management companies: Asset Management Company Liechtenstein, Asset Management Company Panama or Belize.

Bank:

Banks are defined as deposit banks, which may offer bank typical services (invest and distribute third-party funds, provide loans, lawful currency, etc…). Banks as defined by (term) are, as a rule, subject to the supervision and oversight of the relevant agency and/or the country’s Central Bank. As a rule, the banks must comply with the Basel II and III-Accord and as such must commission an auditing firm.

E-Money Institutes:

Contrary to this, some countries (for example Germany and the U.K) know the terms E-Bank (EMI). “ClickandBuy” for example is an E-Money-Institute. E-money is electronically (including magnetically) stored monetary value, which is:

represented by a claim on the issuer;
issued on receipt of funds for the purpose of making payment transactions;
is accepted by a person other than the electronic money issuer; and Types of e-money include pre-paid cards and electronic pre-paid accounts for use online.

The minimum initial capital for an EMI starts at EUR 350,00 e.g. in the U.K., Malta, Germany and Ireland, which are preferred locations within the EU.

Investment Bank:

An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client’s agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities. Unlike commercial banks and retail banks, investment banks do not take deposits. The equity capital required for investment banks are, as a rule, lower than that of a full-service bank (equity capital for an investment bank in the EU/EEA is approximately EUR 730,000.00).

Financial Services Companies with Bank Services License:

These financial services companies may offer bank typical services. Typically such financial services companies may only offer their services to customers outside of the seat country, consequently the term “offshore financial services company with a license for bank services” is utilized. The New Zealand Financial Services Company is an example of this. These institutes are, as a rule, subject to the supervision and/or oversight of the relevant oversight agency or the country’s Central Bank.

Offshore Bank:

The term offshore bank is not defined and for this reason is utilized to describe a number of institutes. It can be defined as: deposit banks as defined by (term), which can only be active outside of the seat country, in other words “offshore”. Such an institute can be subject to the oversight and supervision of the relevant agency and/or Central Bank or not. Deposit banks are often defined as an offshore-bank, which is subject to the supervision and oversight of the respective agency and/or the country’s Central Bank and may offer bank services in the seat country, however the offshore-bank’s seat country is located in typical tax-havens.

Incorporation of a E-Money Institute in Cyprus, Germany, Malta or United Kingdom (E-Money Licence)