Obtaining a financial license in the Czech Republic | Law&Trust International

Obtaining a financial license in the Czech Republic

In order to start operating as a payment institution, it is necessary to obtain a license from the Czech National Bank, since the Czech National Bank in the Czech Republic is the official authority and issues licenses for all types of financial activities.

Licenses are issued for an indefinite period. They contain a list of activities that are allowed to be carried out and, in some cases, conditions that an institution must meet before commencing a specific authorized activity.

In order to obtain a financial license, you must submit application for permission to work with financial services.

The following information

should be attached to the application:

Basic information about the applicant:

    • certificate;
    • document on the source of the initial capital and any other financial resources, as well as on how the authorized capital was paid;
    • financial reporting.

Description of activities of the payment institution:

    • business plan;
    • description of the management system;
    • description of the method of protection of funds for conducting payment transactions;
    • description of the way of performing individual payment services;
    • Information about employees, description of organizational and technical measures for certain types of activities, description of the information system, accounting and financial reporting, as well as description of control;
    • description of the object, scope and manner of performing other business operations.

Information regarding senior managers:

  • •    completed questionnaire number 2 for each manager;
    •    detailed information on professional experience and information on the education of each manager;
    •    certificate of proficiency and competency.

    Additionally, other documents can be requested.

    Payment institution should set up a management system so that it covers all activities. The payment institution’s management system should always include a system of internal rules and procedures for the prevention of money laundering and terrorist financing.

The management body should approve and regularly assess business strategies, organizational arrangements and events, risk management strategies, capital management strategy and capital adequacy, system development strategies, internal control principles and safety principles, including security principles for the information system. The management body should affirm new products, activities and systems that are key to the payment institution and the payment limits system, which the institution will use to manage risks.

The authorized capital

must be sufficient to cover risks.

The initial authorized capital consists of paid-up authorized capital of the issuer:

    1. Minus acquired own shares, including elements arising from transactions with own shares, in particular, forward contracts and options.
    2. Plus reserve funds and retained earnings, which should be the sum of items a-d minus item e:

    •    mandatory reserve funds and funds for risk accounting;
    •    other funds created from the distribution of profits, which can only be used to cover losses recorded in the financial statements of the payment institution;
    •    undistributed profit in comparison with previous periods recorded in the financial statements of the payment institution, which is verified by the auditor and approved by its supreme body;
    •    profit after paying taxes for the reporting period;
    •    accumulated losses, including losses for the previous reporting period.
    Formulas are used for the calculation of capital. There is no fixed amount.

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