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New requirements for Lithuania and UK EMIs

Oct 06, 2020

Electronic Money Institutions (EMIs) will be facing uncertainty over regulations due to post-Brexit and Sixth Anti Money Laundering Directive (6 AMLD) which provides obligations that need to be transposed by European Union Member States by the December 20th, 2020.

Due to the worldwide covid-19 pandemic Brexit was postponed for few months, however currently Brexit has been brought back and is being re-examined. As a result, new legislation changes and implications which up to now have not been feasible, have appeared and caused many EMIs in regulatory uncertainty.

6 AMLD, which should come into practice in December, will not be implemented in the UK. As the Financial Conduct Authority (FCA) will not be considered as a part of the European Securities and Market Authority (ESMA) post Brexit, there is not a mandatory obligation for the UK to introduce 6 AMLD principles.

On the other side, Lithuania EMIs which are licensed and regulated under the Central Bank of Lithuanian and is a part of the EESMA and is one of the leading jurisdictions in transposition and implementation is expected to fully transpose the Directive, which entails enhanced criminal enforcement on directors and shareholders, blacklisting of financial institutions and closure of non-compliant entities.

Therefore, companies with EMI licenses in both jurisdictions – Lithuania and UK, will be required to implement AML procedures according to 6 AMLD and new UK legal framework.

It is recommended that financial entities which are licensed in both jurisdictions, particularly EMIs, will retain the lowest level of their risk standard, while enabling a strong and stable risk management policy, specifically if company’s business activities are related to crypto currencies. Such precaution is required until the final agreement is reached between the EU and the UK.

EMIs that have established accounts for cryptocurrency exchanges which are currently under final review for the Estonian Financial Intelligence Unit (FIU), will be obligated to clarify that the exchanges are licensed and until the receipt of the final authorization, are not able to accept funds that are generated from un-regulated activities.

EMIs will reconsider their financial risk standards and management in the EU until more consistent legal framework will be provided by the EU Institutions and the FCA.

Whether you are planning to establish Electronic Money Institution and conduct your business in UK or EU, Offshorelicense team would gladly assist with obtaining Electronic Money Institution license form Financial Conduct Authority or Central Bank of Lithuanian.

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