Licensing of electronic money instiutions
An electronic money institution is a commercial company that has received a licence to issue electronic money or a legal person that, in accordance with Article 5.1 of the Law on Payment Services and Electronic Money, does not need to receive a licence to issue electronic money.
An electronic money institution does not need a licence issued by the Financial and Capital Market Commission and it is entitled to commence its activity in Latvia after registration with the commercial register for performing commercial activity provided that it has notified the Financial and Capital Market Commission in writing about the intended commencement of activity and it complies with the following conditions:
1) the average outstanding electronic money within the commercial activity of an electronic money institution does not exceed five million euro. Where an electronic money institution also performs any of the activities referred to in Paragraph 1 of Article 36.1 of this Law and the volume of electronic money is not known, an electronic money institution uses the volume of the issued electronic money to calculate the average outstanding electronic money. An electronic money institution that has not performed commercial activity for full six calendar months determines the average outstanding electronic money on the basis of the commercial activity plan unless the Financial and Capital Market Commission has requested an electronic money institution to amend the plan;
2) the restrictions set out in Paragraph 1 of Article 21 of the Law on Payment Services and Electronic Money do not apply to any of the persons referred to in Subparagraph 10 of Paragraph 1 of Article 11 of this Law. To commence its activity, an electronic money institution submits to the Financial and Capital Market Commission a relevant notification (filled-in Annex 4 to the Financial and Capital Market Commission's Regulations No 64 of 15.04.2011; Regulations on Granting Payment Institution and Electronic Money Institution Operating Licences, Registration of Payment Institution and Electronic Money Institution, Documentation and Reporting) and documentation and information referred to in the Law on Payment Services and Electronic Money.
In case an electronic money institution fails to comply with above criteria it is required to receive a licence for the operation of an electronic money institution, by submitting to the Financial and Capital Market Commission a relevant application (filled-in Annex 1 to the Financial and Capital Market Commission's Regulations No 64 of 15.04.2011; Regulations on Granting Payment Institution and Electronic Money Institution Operating Licences, Registration of Payment Institution and Electronic Money Institution, Documentation and Reporting), appending documentation and information referred to in the Law on Payment Services and Electronic Money and regulatory requirements of the Financial and Capital Market Commission.
An electronic money institution shall ensure that on the day when the decision to grant a licence for the operation of an electronic money institution is taken its initial capital is at least 350 000 euro.
The Financial and Capital Market Commission takes a decision on granting or refusing to grant a licence and notifies the applicant within three months after receiving of all necessary documents; where it refuses to grant the licence, it also specifies the reason for refusal. The Financial and Capital Market Commission grants the licence for the operation of a payment institution for an indefinite time.
At the same time for the purpose of prevention of such outstanding electronic money in Latvia that is not issued in compliance with laws and regulations, namely, it has been issued by the subject who in accordance with provisions of Directive 2009/110/EC and the Law on Payment Services and Electronic Money is not authorized to issue electronic money, the Financial and Capital Market Commission points out that activities of those commercial companies that deal with distribution of electronic money issued by foreign issuers in the Republic of Latvia (except activities of representatives of electronic money institutions licensed in a EU Member State and operating on a cross-border basis in Latvia under the freedom to provide services) shall be deemed as the issue of electronic money, and such commercial companies shall be registered with the register of electronic money institutions in accordance with provisions of Article 5.1 of the Law on Payment Services and Electronic Money or shall obtain a licence to issue electronic money pursuant to Article 11 of above Law.
The Law on Payment Services and Electronic Money and other relevant regulatory rules for electronic money institutions are available on the Commission’s website at: http://www.fktk.lv/en/law/electronic_money_institutions/laws/