How to Prepare Documentation for a Successful Obtaining SEMI License?

SEMI-certification is authorization allowing businesses to issue e-money and spread payments-related services, nevertheless, in a somewhat limited scope than a fully-authorized EMI-license implies. This authorization allows businesses to function as financial institutions and offer e-payment options to customers. Below we’ll look at main documentation being mandatory to get this type of permit and nuances of implementing such a procedure.

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Introduction to SEMI-License: Understanding Compliance with SEMI Standards

In the modern world, e-money is confidently gaining trust, and increasing number of market-participants are beginning to take benefits of privileges provided:

  • no need for exchange;
  • abilities of remote usage and speed of transactions;
  • protection against counterfeiting and theft.

So let’s look at some of individual benefits of SEMI license.

  1. Cost-effective payment-related solutions: SEMI-holders may provide cost-effective payment-related solutions to customers, allowing them to transfer monetary means domestically or internationally at low cost.
  2. Customer confidence: officially-approved SEMI-authorization ensures customers safety and security of their funds. It leads to increased customer trust and loyalty.
  3. Flexibility. SEMI-authorization holders may provide customers with a diversity of payment-related options, including online operations, mobile ones and e-wallets.
  4. Regulative measures compliance: SEMI-owners need to meet regulative parameters to ensure that business-activities are conducted ethically and in accordance with regulations.

SEMI License Process: Documentation Preparation 

Beginning several years ago, banking establishments globally were needed to provide data about customer accounts to tax authorities of their countries. It’s mandatory to combat illegal circulation of cash flows. But this rule applies to creditor-banks. SEMI permission allows you to store confidential information about your clients using a range of tools in a completely legal manner. Regulators in many market-spaces haven’t yet regulated procedures for controlling cash flows for such financial establishments; it allows them to move large cash flows.

Getting this type of authorization will allow you to strengthen trust of counterparties in matters of transparency of processes and the reliability of your company, but at the same time, you’ll be more loyal to the supervision and attitude of regulatory authorities than to traditional banking institutions or financial organizations.

According to SEMI license compliance rules, basic criteria for beneficiaries are next-mentioned.

  1. No tax arrears.
  2. No outstanding criminal record.
  3. Availability of a personal bank account.

If some documentation is missing, alternative evidence may be requested.

To control activities carried out under a permit, there is always a rule to establish a financial firm and possess its head-office in the licensor jurisdiction, and to include in the management of the licensee several directors from among the citizens/subjects of this jurisdiction. The number of directors varies from two to five people. Additionally, if not all, then the majority of directors must be citizens/subjects of the licensor jurisdiction.

Each licensing procedure is different, so not only may different norms apply, but different conditions. Many EU-regulators grant SEMI approval only if next-mentioned SEMI license requirements are met:

  • firms must have at least 3 directors who, together with the shareholders, must have experience in the financial sector;
  • availability of a comprehensive human resource management policy, and procedures that are necessary to ensure the business model;
  • payment of initial capital, the size of which depends on the company’s turnover, region of activity (in the country of registration or throughout the EU/world) and the nature of the proposed services.

As for SEMI license limits, such firms mustn’t issue more than 5 mln EUR of e-money monthly. 

SEMI license documentation is next-mentioned.

  1. Completed form, including a description of what financial services the applicant plans to provide.
  2. Documents confirming the legal status of the company.
  3. Document confirming the right to sign for company representatives.
  4. Document confirming payment of the fee for issuing a license.
  5. Operational plan.
  6. Business-plan for 3 years.
  7. Documentary confirmation of the availability of funds for equity capital.
  8. Documentary confirmation of the existence of an account for storing client funds or confirmation by the bank of the intention to open it.
  9. Description of management mechanisms and internal control mechanisms, including SEMI audit documentation, administrative systems, risk management and accounting systems (only for authorized companies). SEMI audit process is implemented by thirdly-engaged parties as by independent experts.
  10. Description of the structure of the organization.
  11. Questionnaires of company owners and key officials.
  12. Professional indemnity insurance agreement.
  13. Important attention is paid to compliance policy issues. A home-based surveillance manager should be appointed and internal methods to combat fraud and protect client welfare should be developed.
  14. Along with the package of documents, it is necessary to provide a business plan and strategy of the company for the next 3 years with a description of the services provided and an action plan in case of force majeure.

Strategically, SEMI can continue its development in next-mentioned parameters.

  1. Further business-project development.
  2. Extension of permit to fully-authorized EMI.
  3. Launching a card issuance program to choose from: UnionPay, VISA, MC.
  4. Payment facilitator program with acquiring banks.
  5. Concluding agreements with crypto businesses.

SEMI-authorization is therefore a legally-approved authorization allowing a business-structure to operate as an e-money issuer. It provides businesses with cost-effective payment-related solutions, increases customer confidence, flexibility and compliance. The regulative authorities responsible for issuing SEMI depends on the jurisdiction where business-activities are established. All this will allow the business to develop rapidly and launch new products to the market in a shorter time.

Our team is ready to offer you comprehensive specialized services for getting a SEMI-license in any of the selected global jurisdictions and grant you fully-covering SEMI license tips. Our highly-qualified lawyers will accompany you at all stages, particularly during the full preparation of documentation. Contact our managers and get a guarantee of an effective and quick commercial start.

Article’s author is Denys Chernyshov – founder and CEO of the globally-famous organization Eternity Law International.