eSignature Licitness for Finance in United Kingdom: Simplifying Document Workflow

How to eSign a document: eSignature licitness for Finance in United Kingdom

hello my name is fasal Khan and today we are going to do a walkthrough about licensing and this particular thing we are going to talk about Licensing in the United Kingdom and even in that oops sorry my assuming is not working well we're going to be talking about the licensing as issued by FCA which is the financial conduct Authority and talk about payment services licenses so in payment services you have essentially two licenses one is called the payment institution license and one is called the Emi license and in this diagram uh just to show you we'll discuss the licenses under the PI license and the licenses under the Emi I won't go into the documentation and other nuances but I'll just sort of give you an understanding of what the licensing is all about so as I said um the United States in in the United Kingdom the license is issued by FCA and there are two uh you know specifically people are more interested in the payment services license I mean of course you can get things like banking license and a credit union license Etc but these are the licenses that most people go for either a payment institution license or an e-money license so let's talk about a payment institution license in payment institution you essentially have three types of licenses you have an SPI license which is what many many people sort of go for a small payment institutional license you have a Money Services business license it's pretty much the same as a SPI but I'll tell you the slight difference and you have an API an authorized payment institution license in this case the capital requirement for an SPI is essentially zero pounds the capital requirement for um a MSP license is about twenty thousand pounds and the capital requirement for an API is a hundred and twenty five thousand pounds this does not mean that you just show zero pounds and you're good to go the FCA will ask you okay uh Mr licensed applicant you are applying for a license how do you propose to pay for um electricity how do you propose to pay for your office whereas your staff what about salary for yourself how will you Market do you have 40 50 60 70 000 pounds tucked away somewhere if so can we see it because this is just a requirement for the license itself the but the operational requirements for capital for you know your day-to-day running of your business Etc they'll say do you have the money for that and you will have to show it many people sort of mistakenly assume that just because they went for a license over here um you know the zero thing they'll get a license and they'll just pay for it and everything will be hunky-dory no FCA very stringently looks at what is the money you have saved up for running your business and needless to say that will apply for MSP for an API Etc there are limits that are assigned to you so you know limits are less than three million uh that's all you can process monthly again same thing for the MSP it's less than three million and for the API there is no limit it costs about um between 35 to 45 000 in addition to the capital cost of getting this license you have to get a compliance manual your systems risk assessment and many other things that cost like I said is pretty much similar for the MSB but for an authorized payment which has no limits the requirements are much higher and obviously you need to show your compliance program and your segregated bank accounts and your you know your your banking is going to be a huge issue in this Arena but anyways it is also important to note that no passporting is allowed into the European Union it used to be that you could take an API license and passport it into the UK um uh into the EU from the UK and you could use your license you know to onboard customers throughout the European economic area the eea but that is no longer um in the SPI and MSP one of the reasons people say well you know if the difference is this thing what stops it you can't do payment initiation services in SPI and MSP so that's another thing you need to you can do it for authorized payment institution but you can't do payment initiation services so that is what the uh you know the PI license looks like this the SPI the MSP and the API for our practical purposes this is also referred to as the SPI and people sort of take it this way and you know the license is worth getting are either the you know the MSP license or the API API is good but and remember it doesn't have any limit the other ones have you know a limit of three million Euros or three million pounds per per month so which brings us to the flip side what is the Emi license again the Emi is also issued by the FCA and it's a more um it's an e-money institution license right so e-money meaning electronic money so what does it have so in the Emi realm you have essentially two licenses you have an semi a small e-money institution and you have an electronic money institution which is basically in many ways called also the authorized e-money institution uh the capital requirement for these two is you need 75 000 pounds for the semi and for the Emi uh 350 000 pounds realistically today the fcsa is okay if you're going to apply for an semi uh you need to show me somewhere around 150 to 250 000 pounds that you can have the ability to Market and get this license and do other things with it and if you have an Emi license there now it used to be I mean the FCA doesn't publish a figure but you can get it from all the people who have applied and what the FCA did in the interviews with them they're now looking at close to a million pounds it used to be 750 000 pounds but now close to a million pounds so a million pounds is what you need to show other than the 350 000 uh pound Capital again as with anything else the there's a there is a limit on the semi you know you are issuing or processing less than five million a month I think the right word is issuing in the or overnight which you have in your bank and limits as far as the Emi concern is done and again both require you know you had banking is going to be an issue the cost for an semi license is between 50 to 75 000 pounds these are additional ancillary costs costs associated with the the compliance program with your business plan with your kyc with your CIP with your AML CDF manual Etc and the same is about uh 75 000 to 90 000 pounds with the Emi and as with anything else from the UK no passporting allowed into the European Union so just wanted to you know give you a a heuristic sense of you know the licensing regime and how it looks like so in the UK FCA Financial conduct Authority payment services license bi which is the payment institution license Emi which is electronic money institution license the one thing you have to note about payment institution license you can only hold on to the money for so long in some cases it's 48 hours and 72 hours Etc but it's an STP process straight through processing either the money goes back or the money gets processed to the end beneficiary in the e-money institution you can actually offer pseudo banking services on be at the FCA really really frowns upon using the word bank and Emi at the same time so you can hold on to uh funds loaded by the you customer so this this is it if you have any questions or comments remember the whole goal is to show that this is not the actual cost that you're looking at there are other ancillary costs that you need to be aware of and that is what you will have to show to the FCA as always if you have a question or a comment please leave it in the comments below a high resolution version of this diagram and the link Etc will be included in the description of this video till next time this is Faisal Khan signing out