Registered electronic money institution

Preparation for the submission of application: an introductory stage, during which Latvijas Banka organises a meeting with an entrepreneur to discuss its planned activities. At this stage, the enterprise does not necessarily have to be established yet.

What does the entrepreneur do

• Prepares informationon the shareholder, stockholder and officials of the enterprise.
• Prepares information on the planned business model: procedures for the provision of services, organising payment flows.
• Starts the drafting of the necessary documents.

 What does the FCMC do

• Provides advice regarding the applicable regulatory framework.
• Carries out an assessment of the initial business project and procedures
• Assesses whether the authorisation process can be continued
• Provides advice on documents to be submitted

What should be taken into account

• Please refer carefully to the regulatory requirements. 
• Assess the need to attract qualified experts or consultants.
• By attracting consultants, the company shall actively participate in the process to ensure that the end result is in line with the business model and its risks.

Documents to be submitted:

• the CVs of the shareholder, stockholder and officials;
• a description of the service and its provision.

Costs

Preparing for submission of the application and provision of advice by Latvijas Banka are free of charge.

Submission of application: An entrepreneur prepares and submits an application for registration.

What does the entrepreneur do

• Submits a fully completed application for registration and all necessary information, documents in accordance with the requirements of Article 5¹ of the Law and the FCMC regulations No. 138.
• Receives information from Latvijas Banka regarding the starting the examination of the application for registration or on deficiencies to be addressed in the submitted application.
• Provides the necessary additional explanations.

What does Latvijas Banka do

• Carries out an assessment of the completeness of the application within 10 working days (the assessment of the application as to the substance is not yet ongoing).
• If the application is incomplete, Latvijas Banka sends a letter to the entrepreneur indicating the deficiencies identified which need to be addressed.
• If the application is complete, Latvijas Banka sends a letter to the entrepreneur informing that an assessment of the application for authorisation is started.
• Latvijas Banka designates the project manager and gives the entrepreneur access to the project management tool, which will help to follow the process.

What should be taken into account?

• Before submitting the application, please apply for advice offered by Latvijas Banka experts.
• Make certain that the documents to be submitted are complete and of high-quality.
• Prepare documents in accordance with the types of e-money issuance and chosen payment services and the risks inherent in them.
• Check that all necessary documents have been submitted (see a list of documents to be submitted)

List of documents to be submitted

1. A legal person shall apply for the authorisation of an electronic money institution. The application shall be prepared in accordance with Annex 1 to FCMC Regulation No 138 (hereinafter referred to also as Regulations No 138), to which the following are added:

• description of the structure of the shareholders (participants) of the commercial company, indicating the interest (capital, voting rights) of each shareholder or participant and the basis for such holding;
• completed Annexes 5., 7., 11., 12., 14., 15., and 16. to Regulations No 138 and the information and documents specified in these Annexes.

2. Documents resulting from the requirements of Article 5¹ of the Law and Regulations No 138, and shall be submitted together with an application for an electronic money institution registration:

2.1. the programme of operations of the institution, indicating the types of intended payment services (if any intended). If the electronic money institution intends to carry out only the issuance of electronic money, it shall indicate in the programme the information regarding the planned issuing of electronic money; Annex 4 to Regulation No 138;

2.2. the business plan of the institution for not less than the first three financial years, which reflects in detail the operational strategy of the institution, the financial forecasts, as well as the draft balance sheet, profit or loss account, the capital adequacy calculation project, market research plans and other information, as specified in Regulations 138, which demonstrate that the applicant will be able to provide sound, stable and prudent operation of the institution; Annex 5 to Regulations No 138;

2.3. description of the measures taken for safeguarding the money of payment service users and electronic money holders in accordance with the provisions of Section 38 of the Law, including information regarding the fulfilment of the requirements of Paragraph one of the said Section; Annex 7 to Regulations No 138;

2.4. procedures of the institution which ensure the establishment and efficient operation of the internal control system for the prevention of money laundering and terrorism and proliferation financing, including a detailed assessment of the risk associated with the services provided; Annex 14 to Regulations No 138; find more detailed information here;

2.5. information regarding the members of the board and council of the institution, who, upon taking significant decisions on behalf of the institution, cause civil liabilities to the institution, the person responsible for the fulfilment of the requirements for the prevention of money laundering and terrorism and proliferation financing, as well as such person who is directly responsible for the management of the operation of payment services of the institution or the issuing of electronic money, as well as documents (CV, educational evidence documents, Punishment Register statement) which certify the compliance of the relevant persons with the requirements of Sections 20 and 21 of the Law; Annex 15 to Regulations No 138;

2.6. description of the institution's commercial activity continuity arrangements, including effective emergency plans and a description of the regular verification and review procedures for the conformity and efficiency of these plans; Annex 11 to Regulations No 138;

2.7. information to be included in the description of information systems security policy, including a procedure or policy, including a detailed assessment of the risks associated with the services provided, as well as a description of security control and risk mitigation measures; Annex 12 to Regulations No 138;

2.8. policies and procedures for supervision and control of outsourcing functions in order to avoid deterioration of the quality of internal control of the applicant in accordance with Sections 29 to 30 of the Law (if applicable);

2.9. policy and procedure regarding supervision and control of agents and branches within the framework of internal control of the applicant; in accordance with Sections 27 to 28 of the Law (if applicable);

2.10. if the applicant is a subsidiary of a regulated institution in another Member State of the European Union - a description of the management of the group (if applicable).

Costs

2500 euro for examining documents and information submitted for authorisation (should be paid upon official submitting of the application).

450 euro for examining documents and information submitted for obtaining the authorisation of an electronic money institution, if a person intends to offer only an innovative service in the field of electronic payments.

Innovative service in the field of electronic payments - a new or significantly improved electronic payment or electronic money service on the scale of Latvia.

Payment should be made at the time of the submission of application.

Time limit for examining the application

Latvijas Banka starts examining the application within 1 months from confirmation that the application is complete. The time limit for examining the application may be extended if the information provided in the application is not sufficient to take a decision on the issue of authorisation.

Assessment of application: Latvijas Banka carries out the assessment of the application as to the substance.

What does the entrepreneur do

• Follows the examination process by using the project management tool.
• Provides answers to additional information requests by Latvijas Banka as soon as possible, as well as appoints a contact person for more effective communication.
• Corrects the submitted documents according to Latvijas Banka instructions.
• Participates in meetings held by Latvijas Banka.

What does Latvijas Banka do

• Carries out the assessment of the application as to the substance.
• Contacts the contact person of the entrepreneur in case of identification of deficiencies.
• Draws up a letter if deficiencies are identified in the application.
• Continues the examination of the application pursuant to the additions submitted.
• Completes the examination of the application.

What should be taken into account?

• Follow the course of the examination of the application.
• Provide additional explanations and make the necessary corrections as soon as possible.
• Representatives of the entrepreneur are invited to participate in meetings of Latvijas Banka, not just consultants (if any).

Costs

No additional costs associated with the examination of documents during the assessment stage of the application are applied.

Receipt of registration: Latvijas Banka finalises the examination of the application and takes a decision on the issue or refusal to issue authorisation.

What does the entrepreneur do

• Prepares to obtain authorisation and commence operations in accordance with the business plan.
• Designates users of the Latvijas Banka Data Reporting System for future communication with Latvijas Banka and submission of performance reports.

What does Latvijas Banka do

• Prepares a decision on the issue or refusal to issue authorisation.
• Informs the entrepreneur of the decision taken.
• Places information on the website.

What should be taken into account

• Please refer to the information provided by Latvijas Banka on access to the Data Reporting System.
• Please refer to information related to the requirements and procedures for reporting.
• Prepare to commence activities in accordance with the approved business plan and procedures.

Costs

No additional costs associated with obtaining authorisation during the stage of obtaining authorisation.

Supervision: Latvijas Banka supervises activities of the enterprise in accordance with requirements of Law.

What does the entrepreneur do

• Provides answers to Latvijas Banka's requests.
• Prepares reports in accordance with laws and regulations No 244.
• Notifies Latvijas Banka of changes in documents submitted for authorisation.
• Notifies Latvijas Banka of changes in the procedures for the provision of services.
• Reports on material incidents in the course of the issuance of e-money or the provision of payment services.
• Gets acquainted with the enterprise's curator designated by Latvijas Banka.

What does Latvijas Banka do

• Designates the enterprise's curator.
• Assesses compliance of enterprise with the regulatory requirements.
• Requests additional information on the business and performance of the enterprise.
• Examines the reports submitted and supervisory information.

What should be taken into account?

• In case of uncertainties, please contact the curator designated by Latvijas Banka.
• Submit reports and requested supervisory information on a regular basis.
• Notify of changes in the process of the provision of services, as well as changes in documents submitted for authorisation, including in case of changes to the structure officials or participants.

Costs

An electronic money institution that has received a authorisation from Latvijas Banka shall pay 1000 euro per year for financing the activities of Latvijas Banka and additionally up to 1.4 per cent (inclusive) of its gross income related to the provision of electronic money institution services per year, but not more than 100 000 euro per year.

Where an institution offers only an innovative service in the field of electronic payments, it shall pay 1000 euro per year for the financing of the Latvijas Banka's activities for the next three years from the date on which the institution obtains a authorisation.

Innovative service in the field of electronic payments – a new or significantly improved electronic payment or electronic money service on the scale of Latvia.

Latvijas Banka annually issues regulatory enactments for determining the amount of payments for financing Latvijas Banka made by financial and capital market participants and submitting reports, in which the variable part of the payment is determined for each market participant, as well as the procedure for making payments.