EMI License in Lithuania

The Bank of Lithuania has set explicit transparent requirements, that can be found within the EMI law text directly. Any applicant should make their best effort to fulfill these criteria before carrying out an application for the Electronic Money Institution license in Lithuania.

Documents to prepare for the application

In the first place, it is important to keep in mind that the EMI license can only be granted to a company registered in Lithuania.

Incorporating a legal entity in Lithuania is then necessary and the documents to proceed are as follows:

• Certified copy of the passport of all the beneficial owners;

• Certified proof of address of all the beneficial owners;

• Detailed business plan (also required at later stages);

• Renting of physical office space with a legal address (can’t be an empty room);

• A minimum share capital deposit of 2.500 EUR (this amount will have to be raised to 350,000 EUR for the license application).

As the company is registered under the UAB form (“Uždaroji Akcinė Bendrovė”, a Limited Liability Company), the application to the Bank of Lithuania for the Electronic Money Institution license can be carried out as soon as the project has prepared and gathered the necessary documents:

• Articles of Association of the UAB company in Lithuania;

• Detailed assessment and schemes of the IT infrastructures of the operation;

• In addendum to the business plan: financial forecasts for the first three years and a detailed organizational chart;

• Raising the authorized capital to 350,000 EUR (if not done at the incorporation stage);

• A set of documents covering different aspects of clients’ protection: safeguarding of funds, monitoring and handling of security incidents, professional indemnity insurance, etc;

• A set of documents describing good business practices: internal control mechanisms, governance, business continuity plan, etc;

• A set of documents pertaining to Anti-Money Laundering and KYC due diligence (see next section);

• Contract with an independent audit firm or equivalent;

• Full profile of the directors and managers of the company: ID, resume, proof of non-criminal record, reference letters, and anything relevant to their experience and professional background.

AML/KYC requirements

The Lithuanian EMI law makes explicit reference to the Law of the Republic of Lithuania on Prevention of Money Laundering and Terrorist Financing and to the Regulation (EU) No 2015/847 of the European Parliament and of the Council of 20 May 2015. In simpler terms: Lithuania applies the EU regulations on Anti Money-Laundering and further expends the requirements by its own domestic law.

A licensed EMI is liable to identify all of its customers at the beginning of the business relationship. Additional identification is mandatory if the customer conducts operations or transactions of above a certain amount (depending on the nature of the operation and defined in Chapter 3 Article 9 of the Lithuanian AML law).

Due diligence must be conducted proportionally to the level of risk and nature of the customer and business relationship. Lithuanian law distinguishes Simplified Due Diligence from regular Due Diligence. Articles 10 and 11 of the Lithuanian AML law define the classification to rule by, however, it is the company’s responsibility to implement workable risk assessment matrices and to apply the right level of due diligence in its systems. Usually, a proper KYC software provider is a great assistance for that purpose.

Electronic Money Institutions are liable to report transactions to the Financial Crime Investigation Service (FCIS), the financial intelligence unit of the Lithuanian Ministry of Interior. Naturally, this implies constant monitoring of the customers’ transactions and direct contact with the teams of the FCIS. The collected information from the monitoring activity of the EMI must be kept for 10 years. Every document pertaining to clients must be kept for 10 years after the termination of their business relationship (if it happens).

The transactions that must be reported are suspicious operations, with doubt or certainty regarding money laundering or financing of terrorism, as well as any transaction exceeding 15,000 EUR.

Share capital requirements

The Bank of Lithuania expects every applicant and holder of an Electronic Money Institution license to declare and hold a minimum share capital of 350,000 EUR. The authorized capital should never fall below this sum.

It is worth noting that this amount of 350,000 EUR is common among all the Electronic Money Institution frameworks of the European Union, existing and upcoming. This is therefore an implicit requirement for any company willing to engage in stablecoin (EMT or ART, under the new MiCA Regulation in Europe) issuance or service provision in the future.

After preparing the documents and systems and building a team as required by law, the board of the project can decide to start the application process. There are a few milestones to keep in mind when looking for how to get an EMI license in Lithuania. Having a roadmap ready helps significantly in organizing the project and further operations. Our team can assist in wide measure with this matter.

In this subsection, you shall find generalistic information about the process of getting an EMI license in Lithuania.

Registration of a Lithuanian company

The law explicitly requires candidates for the Electronic Money Institution license to have their head office and legal entity based in the Republic of Lithuania. Article 11§3 of the EMI law clearly states the following: “An electronic money institution shall be required to have a head office in the Republic of Lithuania”.

The preferred company form to apply for the EMI license is the Limited Liability Company or “UAB” in Lithuania. This company structure has a minimum share capital of 2,500 EUR required at incorporation. It shall be duly noted by project managers that the share capital requirement for the license is 350,000 EUR. Therefore, it is advised to start with this amount of share capital.

The incorporation of a Lithuanian limited company is simple. It takes up to two business weeks and only requires certified documents for the ultimate beneficial owners of the company. A short business plan shall accompany the incorporation file, however, as for the share capital, it is advised to immediately proceed with the detailed business plan that will be required in later stages.

A Lithuanian company can be opened remotely without the necessity to travel to Lithuania.

Application for the EMI license

The first step in the licensing process is to book a pre-application meeting with the Bank of Lithuania. This way, the project can be exposed and a preliminary response can be given in order to further guide the project’s team with the application process.

To apply for the EMI license in Lithuania, the company must disburse a license application fee of 1,463 EUR. The application process will not start until this fee has been paid.

The company can now file the application for assessment, including all the required documents. After review, the Bank of Lithuania will answer with a first round of comments.

The company is then asked to provide a response to the comments of the Bank of Lithuania. If changes shall be made to the operations and documents, they should be implemented in the shortest delays. After that, the response and changes are carried out to the Bank of Lithuania for further assessment. This leads to a meeting between the applicant and the regulator, in the premises of the Bank of Lithuania.

The supervisory authorities for the EMI license then give a second round of comments. These comments must be implemented in the final version of the business project. This version will be presented to the Bank of Lithuania for a final decision. Any change brought into this final version must be commented on for the regulators to see.

Finally, if the final version of the business project is deemed to comply with all the requirements of the Electronic Money Institution framework, the Bank of Lithuania grants a license to the project.

Follow-up with the regulatory authorities

The license is provided on an indefinite term. One of the duties of the licensed company is to establish regular contact with the Bank of Lithuania and with the Financial Crime Investigation Service (for AML-CFT and KYC duties).

The regulator has the legal right and duty to inspect and sanction Electronic Money Institutions if they consider it necessary, at any time.

In the same fashion, the Bank of Lithuania shall update the licensed entities about any development in law and any important notice from the side of the State of Lithuania.

Once your project has successfully secured the Electronic Money Institution license in Lithuania, a certain number of legal and corporate obligations apply for the remainder of its existence. It is important to acknowledge these obligations and to set up the human and technical resources to answer them.

Compliance with the law

Provided the nature of the activity of Electronic Money Institutions, the Lithuanian EMI law is set in order to protect customers’ funds and interests, as well as the civil society (by the enforcement of AML-CFT rules and subsequent due diligence procedures by the EMI).

First, every single requirement laid out for the application process holds true once the license is granted. These requirements must be observed at all times by the licensed company, according to Article 13§10 of the EMI law.

It stands repeating that the minimum share capital of 350,000 EUR must stay at or over this amount at all times.

State fees

The license is granted for an indefinite period of time and there is no state fee to disburse on a yearly basis.

Accounting and financial statements

As stated in Article 28 of the EMI law: “An electronic money institution must keep accounts in accordance with the Law of the Republic of Lithuania on Accounting.”

The EMI’s accounting systems, methods, and procedures will be analyzed by the Bank of Lithuania as part of the application process. They shall be in line with the specificity of the activities operated by the company and with, as described in law: “correctness of segregation of electronic money issuance, provision of payment services and other business carried out”.

The production of yearly financial statements is mandatory in Lithuania.

Audit requirements

Electronic Money Institutions’’ financial statements must be audited by an audit firm or certified auditor meeting the requirements of the Law on Financial Institutions and the Law of the Republic of Lithuania on the Audit of Financial Statements.

An EMI in Lithuania is also held responsible for having its own internal audit function.

As the Electronic Money Institution license requires companies to operate from the Republic of Lithuania, the matter of taxes is important to acknowledge.

Corporate income tax

Electronic Money Institutions in Lithuania are subject to the standard corporate income tax rate of 15% on the totality of the profits realized by the company (in and out of Lithuania).

Personal income tax for domestic workers

In case your EMI hires domestic personnel in Lithuania, the personal income tax rate applicable is 20% for yearly income below 101,094 EUR and 32% for any amount exceeding this part (with the exception of the initial 101,094 EUR, staying in the 20% rate bracket).

VAT on financial services

The standard VAT rate in Lithuania is 21%. Companies in Lithuania are liable to get a VAT number.

However, financial services are not subject to VAT in Lithuania.

The legal framework defining the Electronic Money Institutions in Lithuania

In short: the Lithuanian Electronic Money Institution framework was established on December 22nd, 2011 with the passing of Law No XI-1868 of the Republic of Lithuania on Electronic Money and Electronic Money Institutions. The legal framework is also supported by the 2002 Law on Financial Institutions, the 2000 Law on Companies, and the 1999 Law on Payments (last amended simultaneously with the EMI law in 2018).

The EMI law was last amended on April 17th, 2018 with amendment No XIII-1094. The consolidated version linked hereby represents the current applicable law.

Chapter X of the EMI law defines the Bank of Lithuania as the supervisory authority for licensed institutions, giving it the power to inspect and sanction licensees.

EMIs are therefore market participants licensed by the Bank of Lithuania, which has the right to issue electronic money. Electronic money is pre-paid monetary value, held on electronic devices, which can be used for payment purposes.

The legal basis of Electronic Money Institutions

The reference text for the EMI license in Lithuania is the amended law on Electronic Money Institutions. An official translation can be found on the website of the Bank of Lithuania and has been linked to in the previous paragraph. This law text describes what is electronic money, who is an issuer of electronic money, the conditions for issuing or “redeeming” electronic money, etc.

The law further establishes the requirements that a company should meet in order to apply for and eventually receive the license. It also establishes what is permitted by the license and expands on how the operation should function in that regard. This includes information pertaining to the management team of the project. More information can be found in the section “Requirements” on this page.

The enforcement of the law is applied by the Bank of Lithuania, as explained in the same law. The central bank of the country has the authority over licensed EMIs and is responsible for issuing and revoking the licenses and for everything relative to the legal framework and its enforcement.

The regulator: the Bank of Lithuania

The Bank of Lithuania is a national institution of Lithuania, founded in 1922. The Bank of Lithuania has full power over the Electronic Money Institutions, as it is designated by law as the supervisory authority. It is responsible for assessing the applicants for the license, issuing and revoking licenses, enforcing compliance with AML/KYC regulations and with the EMI law, inspecting the licensees, and sanctioning wrongdoers or malevolent actors.

The Bank of Lithuania hosts the funds of the electronic money institution, providing them with banking facilities and access to multiple currencies. This answers a frequently asked question regarding banking for the EMIs in Lithuania: this part of the operation is directly managed by and within the Bank of Lithuania.

For an electronic money institution company in the Republic of Lithuania, the Bank of Lithuania is subsequently the main point of contact for most matters.

The regime of Electronic Money Institution license for restricted activities in Lithuania

For starters or smaller projects, an alternative to the Electronic Money Institution license is available: the Authorized Electronic Money Institution license.

For a lower application fee and the removal of the share capital requirement (350,000 EUR for a regular EMI), a company can provide electronic money services under the following conditions:

However, this license is hardly interesting to most international projects, given the fact that such a restricted license is not valid outside of Lithuania. For this reason, LegalBison does not offer legal services pertaining to the application for the Electronic Money Institution license for Restricted Activities in Lithuania.

Lithuanian Electronic Money Institutions and Stablecoins in the context of the MiCA regulation in Europe

The European Union’s regulation “Markets in Crypto Assets” (MiCA) was enforced on June 30th, 2024 for stablecoin issuers (and December 30th, 2024 for all participants).

The MiCA regulation will set in European law that stablecoins are considered as electronic money, making their issuance and provision exclusive to electronic money institutions. In other words, any company willing to offer services implying stablecoins, whether they issued the token or not, must be licensed as an electronic money institution for that purpose.

This includes any crypto exchange platform willing to offer the buying and selling of stablecoins such as Tether or USDC to their clients.

In a reciprocal manner and though this is already the case before the enforcement of MiCA in Europe, licensed Electronic Money Institutions are liable to get a so-called crypto license if they are willing to provide services related to virtual assets. It is possible to apply for a crypto license in Lithuania or other EU jurisdictions. MiCA introduces the passporting of crypto licenses. However, before enforcement, it is technically legal to operate in the whole union with any European crypto license.

Issuing an Electronic Money Token (EMT) in Lithuania

The MiCA regulation imposes the necessity of an entity willing to issue an Electronic Money Token (EMT), a crypto-asset whose value derive from a single fiat currency, to secure an Electronic Money Institution license, such as the Lithuanian authorization.

This is a requirement among others (compliant white paper, proper notification of the National Competent Authority) that a crypto-asset issuer in the European Union must be cognizant of.

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Online Banking Services with an EMI license in Lithuania

As an electronic money institution receives funds from its clients, it shall automatically credit their accounts with the monetary equivalent of electronic money. This money can be seen as a credit line. The client can then freely use its electronic money the same way as they would with a classical bank account.

Provided the IT nature of the whole operation, it is easy for electronic money institutions to provide digital banking services to their clients. Most EMIs on the market are actually considered to be better at online banking than the traditional actors of the banking industry.

For a newly licensed EMI to provide online banking services, it is important to have solid software and development teams in place. It is a legal requirement to have good practices and infrastructures on the matter.

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Remittance & Money Transfer with an EMI license in Lithuania

Provided that Electronic Money Institutions are plugged into the banking systems directly through the Bank of Lithuania, they can easily offer money transfer or remittance services.

Making use of the credit they hold in the form of electronic money, clients of an EMI can instruct a remittance order through banking networks such as SEPA (the internal European banking infrastructure) of the international SWIFT system.

Though the EMI license in Lithuania is set in the geographical and legal context of the European Union, a Lithuanian-licensed EMI company is able to operate globally and serve clients from all over the world (with the exception of sanctioned countries). This is under the condition that clients from higher-risk countries (from a compliance point of view) pass the necessary due diligence, as set in the Electronic Money Institution Law and enforced by the Bank of Lithuania.

In a reciprocal fashion, an Electronic Money Institution can receive bank wires from all over the world on behalf of its clients and automatically credit their accounts with the monetary equivalent of e-money.

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Payment Cards (Visa, MasterCard, etc) with an EMI license in Lithuania

Yes, an Electronic Money Institution in Lithuania can issue payment cards to its clients.

Please take careful note: in order to issue cards, an EMI must reach an agreement with a payment card company such as Visa, MasterCard, American Express, or else. The agreement does not come with the license, it has to be negotiated separately. Our team is able to provide expertise and assistance on the matter when requested by our clients.

The issuance of payment cards, especially high-end cards such as Visa Infinite or MasterCard World Elite, is regarded as one of the most interesting aspects of EMIs by the general public. As shown by the success in Europe of various EMI companies, there is a demand for such payment instruments, that are not available to anybody from the traditional banks.

Convenient and critical in an increasing number of countries in the world, the offering of payment cards is a true marketing asset for electronic money institutions in Lithuania.

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Provision of IBAN Accounts with an EMI license in Lithuania

It may sound like something natural for citizens of Europe and North America, but not all the banks in the world provide their clients with an IBAN account.

This is possible for an electronic money institution to provide their clients with an IBAN account, effectively connecting them to the global banking network. The IBAN number allows the client of an electronic money institution to receive bank transfers from all over the world (usually for a small fee depending on the country).

On the technical level, these accounts are purely electronic and managed by the informatical infrastructure of the electronic money institution in Lithuania. The funds are deposited in an actual bank account for clients’ deposits and the EMI provides their clients with segregated accounts, corresponding to the e-money equivalent of their deposits. The segregated account is granted an IBAN number and is then connected to the global banking system. The software side is also liable to synchronize the flow of money with the balance of electronic money on the accounts of clients.

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Cash Deposit & Withdrawal with an EMI license in Lithuania

Though technically difficult to set up, an electronic money institution is legally allowed to do cash deposits if it wants to offer such a service.

Cash withdrawal is made simple thanks to the provision of payment cards (see the section above in the list of permitted services with the Electronic Money Institution license).

Services related to cash are still important for many individuals all around the world. In this regard, it is worth paying attention to the next point of this list, which is the ability to exchange currency. Provided that the electronic money institution has set the necessary system and potentially needed legal entities abroad for that purpose, it can legally accept cash deposits in non-Euro currencies. The deposit and exchange to EUR or USD is performed thanks to the Bank of Lithuania, where Electronic Money Institutions hold their client funds.

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Currency Exchange with an EMI license in Lithuania

Making use of the currency reserves of the Bank of Lithuania, Electronic Money Institutions can offer currency exchange services to their clients.

It is very important to understand that this is not Forex. This does not allow for trading services. Especially, it does not allow for leverage. It is true that EMI companies in Lithuania are offering such services, the reason for this is that they are also operating under other licenses that specifically permit these kinds of activities.

The Electronic Money Institution Law of the Republic of Lithuania explicitly states that licensed entities are allowed to offer currency exchange services to their clients in cash only. This means that derivatives such as CFDs, often used as a trading instrument by investment platforms and the like, are not allowed with this license.

The provision of derivatives, securities, and cryptocurrency by an electronic money institution is only legal under the umbrella of another license. See the next part for more information.

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Investment Services & Crypto with an EMI license in Lithuania

No, an Electronic Money Institution licensed company in Lithuania cannot provide investment services or cryptocurrency to their clients.

The question arises, as many EMIs in Lithuania are offering such a service. In order for your EMI to do the same, it is important to know the reason for this, as these existing companies are certainly operating legally.

In order for your EMI company to provide investment services or digital asset services to its clients, it will be required to obtain a crypto license in Lithuania. Such a license can be obtained in other jurisdictions than Lithuania, and still work with a Lithuanian EMI.

Such setups are complex and require careful planning with our team of experts.

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