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Small scale financial institution in the European Union

The licensing of a financial institution in one of the EU member states explores business opportunities for the provision of services in all other EU member states and access to a common market of 500 million + high net worth consumers and over 20 million + companies. In addition to large-scale financial institutions (such as Insurance companies, Investment funds, Credit Institutions, Payment Service Providers, etc.), there are a number of small-scale or side activities that fall under simplified regulation. The significant experience of Gofaizen & Sherle with projects focused on financial activities allows us to offer our Clients assistance at all stages of the company formation. Our advisors will be able to analyze the operating activity planned by the company for the license acquisition needs and prepare all the necessary documents.

Small-scale financial activities

In most EU member states, small-scale financial activities are regulated by the national state central bank, financial supervisory authorities or by separate departments of police and tax authorities. Among others, small-scale financial institutions include below list of activities needed to be registered within competent authorities or require operating license.

Our Practice areas include

Investment Consulting License
  • Development and justification of optimal investment strategie
  • Analysis of the alternative investment direction efficiency
  • Advice on financing methods and origin of attracting financial resources
License for Mediation in Financial Deals
  • Factoring
  • Leasing
  • Pledges and guarantees
License for Issuance B2B loans
  • Authorization allows only to carry out activities related to the issuance of loans exclusively to legal entities (B2B). Loans to individuals are regulated by a large-scale Credit Institution license
License for Wholesale of precious metals
  • Wholesale of precious metals or precious stones. Retail sales of precious metals in most European jurisdictions do not require an authorization.
Foreign currency exchange license
  • Services of exchange of foreign currencies in physical presence. The online exchange is equivalent to activities related to money remittance and is subject to a large-scale license of a payment service provider
Legal opinion preparation
  • Escrow services
  • Staking services
  • Loans in a virtual currency backed with fiat
  • NFT digital arts auction

Business climate

Investment consulting - one of the most demanded activities of a small-scale financial institution. Investment decisions are often based on investment advice and investment strategy. This area requires high standards to maintain investor confidence. These standards relate to the objectivity, discretion and individuality of those who prepare and disseminate investment advice. In different EU member states, there are a number of minimum requirements for companies interested in providing investment consulting services. For example, in Germany companies providing such a range of services fall under the regulation of the securities law (Wertpapierhandelsgesetz - WpHG) and are required to register their activities with the financial supervisory authority BaFin. The same law regulates the activities of large-scale brokerage companies. However, the requirements for investment consulting companies are much softer and it takes less time for the license acquisition. Meanwhile, in Estonia a license for activity is issued by the Financial Intelligence Unit (Police and Border Guard department) and is regulated by the Law on Combating Money Laundering and the Terrorism Financing, which distinguishes Estonia from other countries where regulation is carried out exclusively by the higher financial supervision authorities.

Minimum requirements

Requirements for small financial institutions may differ depending on the jurisdiction. However, the main ones include an application for the license, drafts of internal documents and rules on compliance with legislation in the field of combating money laundering and terrorism financing. It is also necessary to provide data on the actual places of service provision, contact persons, and company management. Company shareholders and directors should have an impeccable business reputation and have no prior criminal offences.

We are working directly with the following regulators

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FSA
Financial Supervisory Authority of Estonia
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FIU
Estonian Financial Intelligence Unit
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CBN
Czech National Bank
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Bank of Lithuania
Lithuanian Central Bank
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CBI
Central Bank of Ireland
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BaFin
Federal Financial Supervisory Authority (FFSA) of Germany
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FCIS
Financial Crime Investigation Service
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GFSC
Gibraltar Financial Services Commission
Gofaizen & Sherle will provide professional assistance in jurisdiction choice and financial institution license acquisition, including preparation of required documents for application, company formation, support with Bank account opening, consulting on IT issues and full compliance with applicable regulations. Upon licensing process completion Gofaizen & Sherle will provide corresponding maintenance (accounting and reporting and legal support of current activities).

Explore other financial licenses in Europe

  • Virtual currency for exchange and storage
  • Virtual currency
  • ICO/IEO support
Virtual Assets Service Provider License
  • Electronic money emission
  • Payment system management
  • Money remittance
  • Provision of loans (using equity capital only)
E-Money or Payment Institution
  • Allows operate with 500 MEUR capital
  • Ability to attract deposits from retail investors
  • 2-3 month to set up the infrastructure and acquire a license with low costs
Alternative Investment Funds (AIF’s)

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Contact
Lõõtsa tn 2a, 11415 Tallinn, Estonia
Žalgirio g. 88-101, Vilnius, Lithuania
License for operating activity: FIU000407
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