Electronic money (e-money) institution (or EMI) is a licensed financial institution which engages in e-money related and payment services (as would be described in details in this article). The full license for e-money is not restricted to either time or area of activities.
These requirements are completely relative to e-money services and stored value facilities (SVF) in Hong Kong. In order to do this, you require authorization from the Hong Kong Monetary Authority (HKMA). The HKMA rules for giving an opportunity to obtain an ENI license are quite complicated to understand.
However, there is the option of applying for a limited license for an e-money institution. The limited license holder (owner) would be able to provide services in the territory of Hong Kong; but certain restrictions will be applicable in relation to the turnover of the company.
Advantages of obtaining a license for e-money in Hong Kong
This financial structure provides solutions to current world economic situations for large transactional business - banking services and international transfers (especially in USD currency). Certain distinguishing features of this financial structure includes:
- Remote (via the Internet) account openings, both to individuals and legal entities.
- Issuance of Visa or MasterCard linked to the customer's account.
- Authorized payments to banks around the world in USD/EUR/GBP and other currencies.
- The ability to accept payments from any international account in the SWIFT.
- Independent decision-making on payments and account opening.
- Possibility of opening correspondent accounts around the world.
Allowed Activities with e-money license in Hong Kong
Here is a list of allowed activities with an EMI license, they include:
- Services enabling cash to be deposited/withdrawn into a payment account for operations, which are required for operating a payment account.
- Completion of payment transactions, including transfers of funds from a payment account with the user’s payment service provider or with another payment service provider:
- Completion of direct debits, including one-off direct debits;
- Completion of payment transactions through a payment card or a similar device;
- Completion of credit transfers, including standing orders.
- Completion of payment transactions where the funds are covered by a credit line for a payment service user:
- Completion of direct debits, including one-off direct debits;
- Completion of payment transactions through a payment card or a similar device;
- Completion of credit transfers, including standing orders.
- Issuing of payment instruments and/or acquiring of payment transactions.
- Money remittance.
- Payment initiation and account information services.
- Issuing e-money, provision of operational services and closely related ancillary services or provision of payment services.
- Operation of payment systems.
- Business activities other than issuance of electronic money, with regards to the applicable Community and national law, etc.
Licensing of electronic money institution in Hong Kong: Requirements
Licensing process involves a lot of requirements for approval, despite the fact, the process is straightforward in Hong Kong with regards to EMI activities. At the initial stage, the future owner of the EMI license should:
- Be at least 18 years old;
- An initial capital of not less than 225 thousand US dollars for the EMI license type;
- Owning a bank account for individual or corporate purposes;
- To have available documents confirming income (tax declaration or certificate from tax control authorities);
- Do not have restrictions or prohibitions from Hong Kong officials;
- Acquisition (or long-term lease) of real estate (building or office) for the company.
Other tasks relating to the licensing of e-money institution which may require additional time include:
- Preparation of business model and business plan;
- Corporate structure, corporate management and reporting arrangements;
- Compliance, risk and anti-financial crime framework.
- Filling in the management positions (certain qualification and experience requirements are applicable);
- Background of any Directors and anyone who will be responsible for the management of the provision of e-money and SVF services.
- Preparing description of IT system (and other planned technical solutions);
- Preparing the accountancy system description;
- Contracting third parties (e.g. auditing company).
Documents for licensing electronic money services in Hong Kong
Main list of documents to be submitted alongside the application includes:
- Articles of association;
- A program of operations;
- A business plan, including a forecast budget for the first three financial years which demonstrates that the electronic money institution is able to operate soundly and employs the appropriate internal control systems, procedures and resources;
- A description of the measures taken for safeguarding electronic money holders’ funds, and where payment services not relating to issuance of electronic money are to be provided, also a description of the measures taken (to be taken) for safeguarding payment service users’ funds;
- A description of the management roles and internal control mechanisms applied, including administrative, risk management and accounting procedures;
- A description of the internal control mechanisms established in order to comply with obligations in relation to prevention of money laundering and terrorist financing;
- A description of the structural organization, including the intended use of branches, agents, natural or legal persons through which the electronic money institution intends to distribute or redeem electronic money or other entities to which activities will be outsourced, and a description of participation in payment systems;
- The data on the identity of persons holding qualifying holdings in the authorized capital and/or voting rights of the electronic money institution, the size of their holdings in the authorized capital and/or voting rights, also evidence of the suitability of these persons taking into account the need to ensure the sound and prudent management of an electronic money institution;
- The identity of directors, including the persons responsible for the management of the electronic money issuance activities of the electronic money institution as well as evidence that they are of good repute and meet the requirements set forth by the legislation;
- The address of the residential office.
Process of obtaining a license for electronic money in Hong Kong
On receiving the decisions by the regulator, the HKMA agents will review all components of the project to ensure that it has been fully completed and that you are confident in your on-going regulatory obligations and compliance framework. Usually, it takes from 3 to 6 weeks.
Also, all the activity would pass the next three phases for obtaining an EMI license. They are:
Phase 1: Pre-application
- Analysis (Gap Analysis and Planning)
- Business Summary Development
- Pre-Application Engagement
Phase 2: Documentation
1. Detailed Regulatory Business
2. Risk Management Workshop
3. Risk Management and Controls Framework Design and Documentation
Phase 3: Application
- Application completion and submission
- HKMA Liaison and Decision.
Cost of Electronic Money Institution license in Hong Kong
The cost of EMI license in Hong Kong is about 250 000 Euro or more (depends on the type of license, license time and other supplied services).
Law and Trust International proposes obtaining a necessary Hong Kong EMI license according to the requirements and laws. We give a high specter of opportunities for a very interested person. Law and Trust give:
- Well-Qualified law assistance;
- Submitting the documents and liaising with HKMA;
- Filling the required papers and applications;
- Legal support and representation of your interests in the Hong Kong Monetary Authority, when drafting agreements with third parties (audit companies, service providers)
- Registration of companies, TMs, services and intellectual property;
- Opening bank accounts;
- Creating a legal opinion for the payment system, working with cryptocurrencies, banking systems.
After the process of obtaining the necessary license, we would deliver it personally or via courier services. If you are interested in getting your EMI license in Hong Kong, please contact our lawyers for free consultation.