Licensing of Electronic Money Issuance Activities in Latvia

On September 16, 2009, the Council of European Union and the European Parliament adopted Directive 2009/110/EC, which was implemented in Latvia. The financial market is appended by a new participant that is the issuer of electronic money.
Who May Need a License and What It Allows
In accordance with European Union legislation, the issuance of electronic money (EMI) has been legalized in Latvia. Licensed institutions have a wide range of functions, including, but not limited to, the following:
- Issuing electronic money;
- Storing funds;
- Conducting settlements, etc.
The Licensing Process
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Preparation Stage:At this stage, the Bank of Latvia organizes a meeting with the applicant. The planned activities are discussed during this meeting. The applicant must prepare information about the company’s owners, shareholders, and officers, as well as about the sources of capital and the business model. It is also necessary to start preparing the required documents.
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Application Submission:After submitting all the necessary documents, the Bank of Latvia evaluates the completeness of the application within 15 working days. If the application is incomplete, the applicant receives a notification to address the deficiencies. If the documents are formally compliant, the Bank of Latvia appoints a project manager for further communication with the applicant.
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Application Review:Within 3 months after confirming the completeness of the application, the Bank of Latvia evaluates it substantively. The review period can be extended if additional information is required. After the review, the Bank of Latvia makes a decision regarding the issuance of the license.
Requirements for a License Applicant
The applicant must meet the following requirements:
- Be registered as a limited liability company (LLC) in Latvia;
- Have a minimum share capital of 350,000 EUR;
- Have an office in Latvia;
- Have a transparent ownership structure, indicating the shareholders’ stakes;
- Possess sufficient startup capital;
- Develop a reliable business model that considers regulatory requirements;
- Have clear risk management, internal audit mechanisms, and measures to prevent financial crimes;
- Develop plans for safeguarding user funds and ensuring the security of payment data, etc.
In Latvia, companies obtaining an EMI license must comply with specific staffing requirements aimed at ensuring proper governance and regulatory compliance. Key requirements include:
- Management Structure: A board of directors must be formed, consisting of at least three individuals with experience in the financial sector.
Key Positions: The company must appoint key staff, including a director, an AML/CFT compliance officer, and risk management and internal audit heads. - Staff Qualifications: Board members and key employees must possess relevant skills and experience in the financial sector, as evidenced by their resumes and educational documents.
- Compliance with these requirements ensures effective management and adherence to strict standards set by Latvian regulatory authorities.
Required Documents
The following documents must be submitted to obtain a license:
- Resumes of the owners, shareholders, and officers of the company;
- A description of the services provided and their structure;
- Proof of the initial capital;
- A three-year business plan with financial forecasts;
- A description of internal control and risk management mechanisms;
- Anti-money laundering and counter-terrorism financing policy, etc.
Cost and Application Review Time
The application review fee is 5,000 EUR. The fee is reduced to 450 EUR if the applicant intends to provide only innovative services in the field of electronic payments.
Licensed EMIs are required to pay an annual fee of 7,000 EUR to fund the activities of the Bank of Latvia, as well as up to 1.4% (inclusive) of their gross income derived from EMI services, but no more than 100,000 EUR per year.
Obtaining an electronic money issuance license in Latvia is a complex but transparent process, ensuring the reliability of financial operations and the protection of users' interests. Companies wishing to operate in this sector must thoroughly prepare their documents and meet all the requirements of the Bank of Latvia. Our team will provide comprehensive support and guide you through the licensing process.
FAQ
What are the costs associated with obtaining an electronic money (EMI) license in Latvia?
The government fee for submitting an EMI license application is approximately €10,000. However, additional expenses may include legal and consulting fees, as well as other administrative and operational costs.
What types of EMI-related licenses are available in Latvia?
In Latvia, companies can apply for an Electronic Money Institution (EMI) license, which authorizes the issuance and management of electronic money, and a Payment Institution (PI) license, which allows for the execution of payment transactions and payment initiation services. There are two types of PI status: a fully licensed PI (which requires meeting capital and security requirements) and a registered PI (a simplified form for smaller companies offering limited services).
Is a physical presence in Latvia required to obtain an EMI license?
Yes, having a registered office in Latvia is mandatory for obtaining an EMI license. In addition, the company must have the necessary infrastructure and resources to conduct business within the country.
What obligations come with holding an EMI license in Latvia?
Licensed institutions must comply with strict regulatory requirements, including safeguarding client funds, maintaining robust reporting systems, implementing anti-money laundering (AML) measures, and submitting regular reports to the Latvian financial supervisory authorities.
Can an EMI license issued in Latvia be used to operate in other EU countries?
Yes. An EMI license granted in Latvia is valid throughout the European Economic Area (EEA), allowing the license holder to provide services in other EU member states under the passporting regime. This means that separate licenses are not required in each country, although companies must notify local regulators and comply with local operational requirements.
What options are available if an EMI license application is rejected in Latvia?
If an application is denied, the applicant may either appeal the decision or revise and resubmit the application in line with the regulator's feedback. To minimize the risk of rejection, we recommend working with Law&Trust International — our legal experts will ensure your application is complete, compliant, and professionally prepared.