Australian AFSL vs EMI in Lithuania: pros and cons

Australia is a well-developed country, which is a tasty morsel for all businessmen. The state has a developed financial services sector, and start-up entrepreneurs have good support from the government in the form of incentives and investment programs. In Lithuania, EMI (Electronic Money Institution) is popular with businessmen. Let’s analyze all the pros and cons of this license, as well as its differences from the Australian AFSL (Australian Financial Services License).

Our company has been working for many years in the field of establishing and licensing commercial structures around the world. Our experts are highly qualified professionals who are truly committed to their work.

Australian AFSL: pros and cons

To begin with, we will analyze the advantages of registering financial institutions in Australia, namely:

• favorable environment to create and develop your financial projects and conduct R&D;
• you can quickly get a license;
• appealing tax-rate for foreign firms;
• transparent taxes;
• you can also multiply your earnings if you allow others to provide their services under your license. People who want to do this will also be required to pay you a certain fee for using your license.

Now consider the main advantages of financial services provider who will own a personal AFSL license.

1. They will be able to present themselves as independent of any major licensees or dealer groups.
2. They will have freedom of action and will not be limited by any organizations or groups.
3. Independent financial advisers will be able to personally own their business without intermediaries and will have full control over it, independently managing their time and resources.
4. They will also be entitled to apply more efficient and effective compliance procedures than those imposed on them by large corporate licensees.
5. They will be free to make their own decisions and use any appropriate tools, so they will not have to attend training programs for products they do not intend to represent. This contributes to a more efficient, fair and just financial system.

AFSL-license is issued by the local regulator – Australian Securities and Investments Commission (ASIC). Obtaining a payment license in Australia is quite difficult and requires next-mentioned:

• proper preparation of all documents;
• correctly formed business-plan;
• confirmation of presence of starting capital amount;
• cash flow forecast;
• sending specially-filled application form;
• carrying out compliance procedures and outsourcing procedures;
• internal policy and other documents.

You will definitely need to register with AUSTRAC; it’s another local regulatory body. For those interested in registering an Australian financial company and obtaining an electronic money license in Australia, it is also mandatory to familiarize yourself with the following requirements:

1. The presence of an Australian company.
2. The presence of at least one local director with experience in the financial sector.
3. Ability to confirm the financial stability of shareholders.
4. Business-plan.
5. No criminal records for all employees of the enterprise.

EMI in Lithuania: pros and cons

What will the EMI license give entrepreneurs? You’ll be able to engage in the following activities:

• serve over-the-counter foreign exchange contracts;
• engage in e-money transfers;
• issue and maintain debit cards;
• provide investment products.
• serve crypto-currency accounts and payments including crypto-exchange;
• provide insurance services;
• issue loans.

This permit is issued by the Bank of Lithuania. In Lithuania, you will be given a choice of two types of licenses that are related to electronic money: Payment Institution and EMI. The latter is wider and includes all the features of the PI-license. PI has the right to accept money into the account only together with the payment order to be executed. Funds from the PI payment account should be credited to the beneficiary’s account within 24 hours. An EMI holder has the right to provide clients with the following service list:

• issue e-money (electronic wallets, prepaid cards, etc.);
• make international money transfer;
• credit cash to payment accounts and withdraw cash from accounts;
• carry out all operations with payment accounts;
• perform direct debiting;
• deal with crypto-currency;
• perform credit transfer;
• issue payment instruments;
• acquiring payment transactions.

Benefits of an EMI-license in Lithuania

In Lithuania, you will be able to obtain permission on transparent and favorable terms, on the basis of which you will have the right to provide a fairly wide service range. Permission also has a number of advantages.

1. A fairly short period of receipt (from 6 to 12 months): it all depends on the applicant and submission of all necessary documents. If the commission has questions to the applicant, the procedure may be delayed.
2. No restrictions on the validity period: a license in Lithuania is issued for an indefinite period.
3. Possibility of certification of the license for other EU countries.
4. There will be no need to go through the licensing procedure again.
5. It will be necessary to use English in office work.
6. Documents to the state regulator can be prepared in English. Moreover, the country’s legislation is consistent with EU law, so it does not require in-depth study.
7. Access to the SEPA zone.

Through the generated account in the CENTROlink payment system operated by the Central Bank of Lithuania, you will be able to directly access the Single Euro Payments Area. You will be able to remotely check any customer as part of the KYC procedure. A special advantage of the Lithuanian license is also that its holders are allowed to identify clients using such means as digital signature, electronic copies of documents, video communication, and the like.

Regulatory sandbox for startups

Under the control of the Central Bank, enterprises have the right to test innovative products in the course of real activities. If the violation committed by the company is minor, then the regulator will not impose fines and sanctions in the first year of development. But only a project that meets certain criteria is eligible to access the regulatory sandbox.

List of documents for getting a license

The first step in obtaining a license is to submit an application and a certain package of documents. The applicant is obliged to provide the state regulator with a package of documents, which includes:

• application form;
• Statute of the EMI-company;
• confirmation of authorized capital;
• beneficiaries and directors data;
• a document confirming the presence of a physical office;
• a business-plan and program of action, which includes a projected budget for three financial years ahead;
• a set of internal policies: a description of measures to protect customer funds, control, risk management and accounting, AML, organizational structure (including branches);
• auditor’s conclusion.

Conventionally, in the process of obtaining an EMI license, there are 5 stages.

1. Preparation of all necessary documents for company registration: company charter, details of beneficial owners and directors, technical documentation for e-wallets, AML policies and certificates, and similar documents.
2. Creation of a legal entity including paying any necessary fee. In addition to registering a company, you will need to register the legal address of the company, a local telephone number and resolve the issue of renting real estate for an office.
3. Start of operation of a legal entity. You will need to apply for a VAT number and open a bank account, as well as sign a contract for accounting services.
4. Preparation for licensing. You will need to prepare a business plan, a description of the organizational structure and plan for risks.
5. Applying for and obtaining an EMI license. All the documentation you have collected you need to send to the Central Bank. If there is such a need, then also provide additional documents and information in response to requests. The result of all these actions will be approval for obtaining a license for your company.

The whole charge depends on individual nuances and business-scope of commercial projects.

Conclusion

Applying for a license is a rather complicated and lengthy procedure, but each company that has received a license helps to solve the main difficulty of the current global economic situation for a large transnational business. Our company makes it possible to obtain an EMI/AEMI license in Lithuania in accordance with all requirements and laws. We also offer our services to help you apply to set up AFSL structures in Australia should you encounter any difficulties in the process.

The author of this article is Denys Chernyshov – CEO and founder of the world-famous law firm Eternity Law International.