More Details about Permission for Banking Establishments
Banking organizations with a basic license are prohibited from opening representative offices and branches on territory of a foreign state. They are also prohibited from acquiring rights of claim against foreign persons, carrying out leasing operations and issuing sureties and bank guarantees. The same applies to correspondent accounts, unless they are needed to participate in a foreign payment system. Banks with a basic license cannot issue loans or otherwise place funds in foreign financial institutions or with individuals subject to the laws of another state. Basic bank license for sale allows you to make deals with securities only from the first level of the trade organizer.
Where there is a carrot, there is usually a carrot as well, and for banks with a basic license there are also some concessions. They do not need to disclose information about the risks being undertaken, their management and assessment. In addition, banks with a basic license do not have to report their capital and the instruments included in its calculation. The basic license allows not appointing the head of the internal control department – his/her functions can be performed by the head of the risk management department.
Starting from money receipt in bank, neither their legal nature nor their economic essence changes. The client remains the owner of the money, which is recorded in bank documents via indicating person who deposited cash and number of monetary units indicated on the banknotes. The client continues to exercise powers of use and orders in relation to money, paying in accordance with agreement terms. The fact that the money continues to belong to the client confirms the bank’s obligation to pay the client interest for the use of the funds transferred to him/her. If the client lost ownership of the money deposited in the bank, then he would not receive any interest.
Note that in this case, no transformation of property rights to money into obligations does not occur, and such a transformation is not provided for by law. Both those and others exist in parallel. Accordingly, the legal nature of the funds in the bank can be defined as property-obligatory. Upon termination of the contractual relationship with the bank, the obligation relationship is terminated, the real relationship is retained. The rest of the funds are returned to the client. At the same time, it does not matter that not the same bills that he handed over to the bank are returned to the client, since, being generic things, money is determined in civil circulation not by its physical properties, but solely by the numerical ratio to a certain abstract unit.
What Is Permission for an E-Money Companies?
Financial technology world is highly regulated and in order to provide services or become an e-money issuer, you need to obtain an e-money permission. In addition, it is worth understanding the essence of such a phenomenon as digital currency.
The argumentation of the supporters of the obligatory nature of electronic money does not differ in any way from the argumentation of the supporters of the obligatory nature of non-cash funds, who regard these funds as obligations arising on the basis of an agreement between bank and holder of e-money. Supporters of informational nature of electronic money argue that electronic money is legally significant information-digital impulses, a certain sequence of numbers symbolizing banknotes of a coin, that this is information recorded in specialized data banks. In a narrow sense, it is “information in digital form about funds amount previously provided to issuer.” In a broad sense, it is a financial product – a service “which can be provided (issued) only by a credit facility”.
Despite numerous advantages of using e-money, people are reluctant to switch to this type of payment; the main reason for this situation is the lack of a perfect legislative framework. The PayPal payment system enjoys great confidence; the high level of trust in this system is explained by the presence of necessary license for e-money. PayPal carefully monitors its reputation and in order to remain a leader and operate in accordance with the law, the payment system receives licenses in every state and in every state.
Main Features that Make a Difference
A payment institution differs from an e-money issuer by fact that in addition to a range of payment services e-capital company has ability to issue digital currency.
Regulation is different too. Services provision by payment intitutions is regulated by PDS2 act (Order 2015/2336/EU), and e-money issuers’ operations are regulated by EMI directive (Directive 2009/110 / EC).
Compared to a payment facility, e-money issuer should have a larger start-up capital and go through more rigorous vetting to obtain a license, so sometimes some banks may see a big advantage in working with EMI over API.
Key Requirements for the E-Money Permission Applicant
Today’s world, the world of Internet technologies and mobile applications, the world of communications and instant information exchange requires new solutions from all spheres of our life. New demands and challenges are equally or even more related to the sphere of cash flow. Today’s demanding clients in terms of speed and convenience of settlements are often no longer satisfied with the Internet banking service provided by classical credit institutions. Clients are looking for faster, more convenient, but equally secure options for mutual settlements and payment transfers.
Assess the requirements of selected regulation body and get a list of required documentation. Once you have decided on permission and jurisdiction, you can start preparing documents. Required documents list and requirements is different in each jurisdiction, but usually they include information about your company, team, technical solution, partners, various policies, for example, security policy or compliance with AML concepts, etc.
Submit documents and answer questions from the regulator. After receiving documents, regulator reviews all data and asks for clarifications or other documentation. In very rare cases, documentations are confirmed by control authority without additional questions, but basically the regulator asks for clarifications or additions. The duration of this process is influenced by the speed of communication on the part of the candidate, as well as the correctness of documents and answers to the regulator’s questions.
Payment assumes an amount of 5 thousand pounds for a regular type of permit and 1 thousand for a small one.
Official Banking Licensing
Carrying out banking operations by legal entity without a permission, if getting such a license is mandatory, entails the collection from such organization of entire amount received as a result of these operations, as well as fine collection in double amount of such amount to the federal budget. Licensing period is 6 months, provided that everything is fine with the applicant, and a year if it is necessary to send anything to the regulator. The amount – 25 thousand pounds – is payable to the state treasury.
