The UK - Lithuanian Puzzle: A New Regulatory Hurdle for EMIs?
- EMIs licensed both in Lithuania and the UK will need to implement 6 AMLD and the new UK regulatory framework
Electronic Money Institutions (hereinafter- EMIs) which are licensed and regulated under the Central Bank of Lithuania and the Financial Conduct Authority (hereinafter- FCA) will be facing a unique regulatory uncertainty, not just post-Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term, but also due to the Sixth Anti Money Laundering Directive (hereinafter- 6 AMLD) which is under an obligation to be fully transposed by the EU Member States by December 20th, 2020.
Brexit, which has been set aside the past few months due to the Covid-19 pandemic, has now been brought back to the drawing board, and new regulatory implications which have not been feasible or tangible up until now, have surfaced, leaving many EMIs in regulatory uncertainty.
6 AMLD, which is under an obligation to be transposed by the EU Member States in December, will not take the usual course of transposition action in the UK. As the FCA will not be accountable to the European Securities and Market Authority (hereinafter- ESMA) post Brexit, there is not a mandatory obligation for the UK to transpose 6 AMLD.
On the contrary, Lithuania is a Member State of the EU, and 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 enterprises.
Thus, EMIs which are licensed both in Lithuania and the UK will need to implement AML procedures and practices not only in accordance with 6 AMLD but also with the new UK regulatory framework, which for the first time since joining the European Community (hereinafter- EC) will have to adapt and issue-specific guidelines and best practices for double-licensed entities in the European continent.
Furthermore, until the final agreement is reached between the EU and the UK, it is advisable that financial institutions which are licensed in both jurisdictions, and especially EMIs, will adhere to the lowest level of their risk appetite, while enabling a strong and stable risk management policy, specifically in regards to Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term.
EMIs that have opened accounts for cryptocurrency exchanges which are currently under final review for the Financial Intelligence Unit (hereinafter- FIU) in Estonia, will need to verify 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.
It is advisable that EMIs will reconsider their financial risk appetite and management in the EU, especially in these uncertain times, till a more stable regulatory framework will be provided by the EU Institutions and the FCA.
Ella Rosenberg, Founder, Israeli- European Regulatory Consultancy Firm
Electronic Money Institutions (hereinafter- EMIs) which are licensed and regulated under the Central Bank of Lithuania and the Financial Conduct Authority (hereinafter- FCA) will be facing a unique regulatory uncertainty, not just post-Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term, but also due to the Sixth Anti Money Laundering Directive (hereinafter- 6 AMLD) which is under an obligation to be fully transposed by the EU Member States by December 20th, 2020.
Brexit, which has been set aside the past few months due to the Covid-19 pandemic, has now been brought back to the drawing board, and new regulatory implications which have not been feasible or tangible up until now, have surfaced, leaving many EMIs in regulatory uncertainty.
6 AMLD, which is under an obligation to be transposed by the EU Member States in December, will not take the usual course of transposition action in the UK. As the FCA will not be accountable to the European Securities and Market Authority (hereinafter- ESMA) post Brexit, there is not a mandatory obligation for the UK to transpose 6 AMLD.
On the contrary, Lithuania is a Member State of the EU, and 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 enterprises.
Thus, EMIs which are licensed both in Lithuania and the UK will need to implement AML procedures and practices not only in accordance with 6 AMLD but also with the new UK regulatory framework, which for the first time since joining the European Community (hereinafter- EC) will have to adapt and issue-specific guidelines and best practices for double-licensed entities in the European continent.
Furthermore, until the final agreement is reached between the EU and the UK, it is advisable that financial institutions which are licensed in both jurisdictions, and especially EMIs, will adhere to the lowest level of their risk appetite, while enabling a strong and stable risk management policy, specifically in regards to Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term.
EMIs that have opened accounts for cryptocurrency exchanges which are currently under final review for the Financial Intelligence Unit (hereinafter- FIU) in Estonia, will need to verify 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.
It is advisable that EMIs will reconsider their financial risk appetite and management in the EU, especially in these uncertain times, till a more stable regulatory framework will be provided by the EU Institutions and the FCA.
Ella Rosenberg, Founder, Israeli- European Regulatory Consultancy Firm