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Licensing of Financial Institutions in Lithuania

Licensing of Financial Institutions in Lithuania

In Lithuania, activities of financial institutions engaged in the provision of licensed financial services are supervised by the Bank of Lithuania.

Registered financial institutions or companies willing to provide financial services, which are licensed under the laws of the Republic of Lithuania, must obtain a licence (permit).

Licences (permits) to provide financial services are issued in accordance with the procedure established by laws of the Republic of Lithuania, regulating the provision of financial services and activities of financial institutions.

Licences are obligatory for credit institutions, electronic money institutions and payment institutions.

What type of licence is required is determined by the specifics of services offered, territory, directions of the intended activity, size of the planned investment. For example, a licence of payment institution is not sufficient, if it will be necessary to keep customers’ funds for longer than it is required to perform a payment transaction. In such a case, a Bank’s licence would already be required.

There are two types of licences for electronic money and payment institutions, namely, limited and unlimited licences. At first, an institution can apply for a limited payment institution licence. Once the business is entrenched, this licence may be changed to the unlimited one.

A price is also subject to the type of licence. A fee for issuance of the unlimited activity licence of electronic money institution is EUR 1,463, whilst a fee for limited activity licence – EUR 1,235. The unlimited activity licence of electronic money institution – EUR 898, limited activity licence – EUR 682, whereas payment institutions providing only the account information service – EUR 693.

 

Licensing Process

In all cases, the licensing process remains the same. First of all, after a submission of application to the Supervisory Authority of the Bank of Lithuania for issuance of certain licence, it shall be assessed within 5 (five) working days whether all documents have been submitted, and only then the application is accepted.

Licence applications must be processed within 3 (three) months from the submission of all documents. Upon submission of documents with deficiencies, a deadline shall be renewed from a date of receipt of additional documents.

In case of limited activity licence, a deadline is 2 (two) months, which is extended from the moment of submission of additional documents, or information.

After assessment of all documents submitted, summarized information shall be provided for examination to the Board of the Bank of Lithuania, which finally makes a decision regarding the issuance of the licence of refusal to issue it.

 

Requirements for Payment Institutions

A payment institution must hold initial capital no less than EUR 20,000, if a payment institution intends to provide only money remittance services. If a payment institution intends to provide only the payment initiation service – no less than EUR 50,000. If a payment institution intends to cover more services provided for in the Law on Payment Institutions, the capital should be at least EUR 125,000.

For a limited activity licence, a requirement of minimum initial capital is not applied. Nevertheless, this licence allows to operate only in Lithuania and provide a limited list of financial services.

 

Requirements for Electronic Money Institutions

In order to obtain an electronic money institution licence, a minimum capital shall be at least EUR 350,000. However, this licence entitles to provide services in other EU Member States.

The limited activity electronic money institution, as well as the payment institution, is not subject to a minimum initial capital requirement, but this licence enables to operate only in Lithuania.

Certain requirements are also applied to the heads of the companies. The heads must be of good repute and possess the qualification and experience necessary to properly perform their duties.

Shareholders must be able to ensure a reliable management of the electronic money institution, be of good repute, and financially credible.

 

Foreign Financial Institutions in Lithuania

A financial institution established in a foreign state can provide services in Lithuania only after obtaining a permit or licence in Lithuania. Prior to the issuance of the permit or licence, in certain cases, the foreign authority supervising the foreign financial institution must be consulted in advance.

If a financial institution is established in an 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 transfer to the Supervisory Authority of Lithuanian financial institutions a business plan of that institution, indicate its types of activity, structure and other information.

In certain cases, a financial institution licensed in an EU state may start providing financial services in Lithuania without establishing a branch, 1 (one) month after the day when the foreign supervisory authority has transferred a business plan of such company to the Supervisory Authority of Lithuanian financial institutions.

Institutions and companies that started to be engaged in the provision of financial services must obtain a permit from the Supervisory Authority each time when wanting to register changes to the foundation documents, establish branches, representative offices or other structural units of the legal entity in other location than the head office of the financial institution, cease to provide all or part of financial services, and in other cases provided for by law.

It should be noted that the issued licence may be revoked by the Supervisory Authority, if the financial institution failed to use the licence within 12 (twelve) months from the date of issuance of the license to provide financial services, or has been no longer engaged in licensed activities for more than 6 (six) months, and in other cases established by laws of the Republic of Lithuania.

 

 

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