Obtaining a financial license
The international financial services market, which may include brokerage services for forex trading, trade with options and financial instruments, provision of loans, issue of debit and credit cards, deposit taking, insurance operations, money-processing operations, as well as investment and many other services, is quite competitive, as a result it is very difficult to win the clientâ€™s trust. Choosing the provider of financial services, customers primarily pay attention to the companyâ€™s financial performance, its reputation, feedbacks of the participants and, of course, to the legal aspects of the companyâ€™s work. A financial services provider that is not properly registered in accordance with the requirements of financial regulators, and not having licensing documents (such as licenses and certificates), from the legal point of view, does not have the right to work in principle, from the marketing one - it will not be able to attract a large pool of customers and have good financial performance. In order to work actively and legally in the financial services market, financial companies (banks, processing companies, insurance, funds, credit organizations, etc.) are demanded to have licenses.
Licenses and major countries licensing international financial enterprises
|Broker license||Australia, Great Britain, Georgia, Cyprus, Latvia, Lithuania, Malta, New Zealand, Seychelles, Czech Republic||You will need a broker license if you have decided to conduct trading activities for financial instruments and securities (including shares and bonds), as well as currency transactions.|
|License for provision of investment consultation services||Australia, Belize, Great Britain, Hungary, Germany, Cyprus, Latvia, Lithuania, Malta, New Zealand, Panama, Czech Republic, Estonia||A license covers activities related to providing consultation on the most suitable customer deposits/sales and investments, such as investments in real estate, securities, portfolio investments, etc.|
|License for conducting banking activities||Australia, Belize, Great Britain, Hungary, Germany, Cyprus, Latvia, Lithuania, Malta, New Zealand, Panama, Czech Republic||A banking license is necessary to carry out the activities of bank financial institutions, regardless of whether banking services are provided with physical presence in the office (traditional bank) or online (online/mobile banking). Types of banking licenses may differ depending on the planned services (processing, deposits, micro/macro crediting for physical or legal entities, card products, currency transactions, securities, etc.)|
|Forex license||Australia, Belize, Bulgaria, Great Britain, Vanuatu, Hungary, Germany, Hong Kong, Cyprus, Cayman Islands, Latvia, Lithuania, Malta, New Zealand, Panama, Czech Republic, Mauritius, BVI||Two types of licenses are a forex dealer license (for making margin trading contracts on your own behalf, on your site and at your own expense with individuals, the obligations on which are dependent on changes in exchange rates) and a forex broker license (for intermediary transactions on behalf of a client on the forex market).|
|License for payment and processing systems||Australia, Belize, Great Britain, Hungary, Germany, Cyprus, Latvia, Lithuania, Malta, New Zealand, Panama, Czech Republic||A license for payment (financial, non-banking) companies - depending on the jurisdiction and the expected services of the company, each of the following services requires a separate license: settlement and merchant accounts, transfer of funds, issue of cards, acquisition of payment instruments, performance of payment operations with POS terminals. The procedure for obtaining a license is rather complicated and long. The licensing requirements depend on the chosen country and the type of services licensed.|
The procedure for obtaining a license is rather complicated and long. The licensing requirements depend on the chosen country and the type of services licensed.
- Company registration and physical location of the office in the territory of the country-licensor (including the presence of permanent directors and employees in this office).
- Proper capitalization level - the companyâ€™s capital must meet the capital requirements for credit, currency and other risks, depending on the type of companyâ€™s activities.
- The consideration period of the application is 3-6 months, sometimes - up to 12-24 months.
- In some countries (Malta, Great Britain) - liability insurance (to compensate for losses from unprofessionalism or professional negligence).
- The availability of a detailed business plan for the next 3-5 years with an exhaustive description of the planned services.
- Detailed regulations of the processes of companyâ€™s activity: description of all procedures, risks, the system for preventing money laundering and funding of terrorism, protection of the customers data, etc.).
- Personal meeting-interview with the licensing commission.
- The use of modern and reliable information systems for the protection of databases.
Requirements for beneficiaries, owners, directors, founders:
- absence of previous convictions and good reputation;
- confirmation of the source of income, capital;
- relevant work experience, relevant education.
The financial controller has the right to withdraw the issued license at any time or suspend it in the following cases:
- due to the provision of knowingly false information in the application for obtaining a license;
- due to the changes in the structure of the company related to its management, registration, activities and services provided, which the company did not notify the license commission in advance in the specified period;
- if the company no longer complies with licensing requirements.
Doing business in other countries
It should be noted that such licenses as banking, insurance and others operate exclusively in the territory of the country-licensor and do not apply to branches and subsidiaries located in other states. It is necessary to obtain a license from local financial regulators to conduct business in other countries. However, if it is not restricted by a license, the licensed company has the right to provide its services to non-resident customers, but in the country of registration/licensing.
The main costs (depend on the licensing country):
- authorized capital, guarantee/insurance funds;
- state fees for consideration of application and issue of a license;
- annual license fees;
- legal consulting services for obtaining a license.
- Registering a company and opening a bank account (if necessary).
- Assisting in the preparation and collection of documents in accordance with licensing requirements.
- Submitting documents, organizing a personal meeting with the commission (if necessary).
- Further legal support of the company activity.