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Financial Institution Licensing in Lithuania
In Lithuania, the activities of the financial institutions which are engaged in the provision of licensed financial services shall be supervised by the Bank of Lithuania.
Registered financial institutions or companies must obtain a licence (authorization) in order to provide financial services, which are licensed under the laws of the Republic of Lithuania.
Licences (authorizations) to provide financial services shall be issued to a financial institution in accordance with the procedure set forth by the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions.
Licences are obligatory for credit institutions, electronic money institutions and payment institutions.
The specifics of services offered, territory, directions of the intended activity, size of the planned investment shall determine a type of the required licence. For example, a licence of payment institution is not enough, provided it will be necessary to withhold customers’ funds longer than required for a payment transaction execution. In such a case, the Bank licence will already be required.
The electronic money institution licence and payment institution licence can be of two types: for restricted and unrestricted activities. At first, an institution can apply for issuance of the payment institution licence for restricted activities. Once the business is entrenched, this licence may be changed to the payment institution licence for unrestricted activities.
A licensing price depends on the type of licence. A fee for issuance of the electronic money institution licence for unrestricted activities is EUR 1,463, whilst a fee of the licence for restricted activities is EUR 1,235. The payment institution licence for unrestricted activities costs EUR 898, licence for restricted activities – EUR 682, whereas the licence of payment institution providing only account information services costs EUR 693.
Licensing Process
In all cases, the licensing process remains the same. First of all, when the supervisory authority of the Bank of Lithuania is provided with an application for issuance of a particular licence, it must assess within 5 (five) business days whether all documents have been submitted, and only then the supervisory authority can accept the application.
The supervisory authority must consider applications for issuance of licence no later than within 3 (three) months of submission of all documents. Upon submission of documents with deficiencies, a deadline shall be renewed from a date of receipt of additional documents.
In the event of licence for restricted activities, a deadline is 2 (two) months, which is extended upon submission of additional documents or information.
After the supervisory authority has completed to assess all the documents submitted, summarized information is provided to the Board of the Bank of Lithuania for consideration. Finally, the Board of the Bank of Lithuania makes a decision on the granting of a licence or refusal thereof.
Requirements for Payment Institutions
The minimum initial capital of a payment institution must be no less than EUR 20,000, if a payment institution intends to provide only money transfer services. If a payment institution intends to execute only payment initiation services, the initial capital must be no less than EUR 50,000. When a payment institution intends to provide more services set out in the Law on Payment Institutions of the Republic of Lithuania, the capital thereof should be at least EUR 125,000.
The requirement for the minimum initial capital is not applied to the licence for restricted activities. Nevertheless, this licence allows a payment institution to operate in Lithuania only and provide restricted financial services.
Requirements for Electronic Money Institutions
In order to obtain an electronic money institution licence, the minimum initial capital of an institution shall be not less than EUR 350,000. However, this licence entitles the electronic money institution to provide services in other EU Member States.
The electronic money institution having a licence for restricted activities, as well as the payment institution, is not required for a minimum initial capital, but this licence enables such an institution to operate only in Lithuania.
The following requirements are also applied to the managers of the companies: the managers must be of good repute and possess the qualification and experience necessary to properly perform their duties.
The shareholders must be able to ensure a sound and prudent management of the electronic money institution, be of good repute, and financially credible.
Financial Institutions of Foreign States in Lithuania
A financial institution of foreign states may provide financial services in the Republic of Lithuania only upon the receipt of an authorization and/ or licence to provide financial services issued by an institution in Lithuania. Prior to the granting of an authorization or licence to a financial institution of a foreign state, in the cases specified, the foreign institution exercising supervision thereof must be consulted with in advance.
If a financial institution was established in the EU state, such an institution shall be entitled to establish a branch in Lithuania and provide financial services in its territory. In such a case, the foreign supervisory authority must forward to the supervisory authority of financial institutions of the Republic of Lithuania an operating plan of the institution and specify the types of activities, the structure and other information thereof.
In specified cases, a financial institution licensed in a Member State of the European Union may commence the provision of financial services in the Republic of Lithuania without establishing a branch one month from the submission of an operating plan of the financial institution by the foreign supervisory institution to the supervisory institution of financial institutions of the Republic of Lithuania.
Institutions and companies that started providing financial services must obtain an authorization from the supervisory authority each time in order to register amendments to founding documents, set up branches, representative offices or other structural divisions of a legal person in a place other than the registered office of the financial institution, no longer pursue the provision of all or a part of financial services, and in other cases provided for by law.
It should be noted that the supervisory authority has a right to withdraw a licence issued to a financial institution, if the financial institution has not made use of the licence within 12 months of the issuance of the licence to provide financial services or does not pursue licensed activities for a period of time exceeding 6 months, and in other cases established by law of the Republic of Lithuania.