One of the largest steps you will take when developing a fintech is applying for an Electronic Money Institution (EMI) license. It is not only paperwork, but proving to regulators that your business is safe and compliant. In other words, you have to demonstrate that your business can hold customer funds in a responsible manner.

To streamline the process, the following is a list of the full checklist of what you will need to prepare. Consider it as your guide to becoming licensed without mindless setbacks.

A sustainable business plan

The regulators would like to see whether your business is sustainable. Your plan should include:

• An easy explanation of your products and services.
• Customer segments and target markets.
• Financial projection (typically 3 years).
• Scaling and growth plans.

Tip: Make it realistic. Unrealistic figures are suspicious.

Good governance and management

The individuals of your fintech are as important as the idea itself. You will have to demonstrate that you have a fit and proper leadership team. This includes:

• CVs and background checks of directors and key personnel.
• An indication of experience in finance, compliance, or risk.
• An effective organizational hierarchy and duties.

Capital requirements

All the EMI applicants should have a specified minimum amount of initial capital. The minimum amount depends on the jurisdiction. But it is generally of at least €350,000.

You’ll need:

• Evidence of finances (bank statements or other similar documents).
• A description of the source of funds to comply with AML regulations.

Anti-money laundering and compliance framework

This is usually the most examined section of the application. Before you get your EMI license, regulators want to ensure that you have anti-money laundering (AML) and compliance in mind. Prepare:

• A detailed AML policy.
• Customer due diligence (CDD/KYC).
• The processes of transaction monitoring and suspicious activities reporting.
• Designation of a Money Laundering Reporting Officer.

IT and security systems

Regulators want to see robust systems on the first day because Fintech is digital. Be ready to provide:

• Your description of payment infrastructure.
• Cybersecurity measures. This may include data encryption, access controls, and disaster recovery.
• Monitoring and updating plans.

Security of client funds

You will have to demonstrate that you will never lose customer money even when your company faces trouble. This usually means:

• Isolated bank accounts with reputable banks.
• Definite protection policies and controls.
• Periodic reconciliation processes.

Risk management framework

Demonstrate that you are aware of the risk that your business is in and that you have strategies to deal with it. This includes:

• Operational risk policies.
• Fraud prevention measures.
• Business continuity planning.

Outsourcing agreements where applicable

In case you are outsourcing part of your business, such as IT hosting, compliance audits, or payment services, then you will require:

• Signed agreements.
• Custodial and accountability policy.
• Evidence that you can still control and supervise those functions.

Final thoughts

An EMI license application is not a box-ticking exercise. It is a test of whether you are prepared to operate a financial institution. With this checklist ready, you will save weeks and months of back-and-forth with regulators.

Consequently, you can create a business that people will trust from the very start. Think about it this way: when you manage to please the regulator, you are already halfway to pleasing your customers.

 

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