A Small Electronic Money Institution (SEMI) licence empowers the holder to provide a range of valuable financial services, including:

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1. Issuing Electronic Money: This encompasses the issuance of electronic money, such as prepaid cards and electronic wallets, enabling seamless digital transactions.

2. Cash Placement and Account Operations: Services that facilitate cash deposits into a payment account and encompass all essential operations related to managing a payment account.

3. Cash Withdrawals and Account Operations: Offering the capability for cash withdrawals from a payment account, along with handling all essential operational tasks associated with account management.

4. Execution of Payment Transactions: This involves executing payment transactions, which includes transferring funds between payment accounts within the user's payment service provider or with another payment service provider. This includes executing direct debits, both recurring and one-off, and conducting payment transactions using payment cards or similar devices. Additionally, credit transfers, including standing orders, are part of this service.

5. Payment Transactions with Credit Line Coverage: Providing the execution of payment transactions where the funds are covered by a credit line for a payment service user. This includes executing direct debits, including one-off transactions, and conducting payment transactions using payment cards or similar devices. It also encompasses executing credit transfers, including standing orders.

6. Payment Instruments and Acquiring Transactions: Offering payment instruments and facilitating payment transactions, including acquiring payments, which ensures smooth processing of financial transactions.

7. Money Remittance: Enabling safe and efficient cross-border money remittance, providing individuals and businesses with a reliable means of transferring funds.

8. Payment Initiation Services: Offering payment initiation services that allow users to initiate payments directly from their accounts, ensuring a seamless and secure payment process.

9. Account Information Services: Providing valuable account information services, offering users insights into their financial transactions, balances, and other relevant account details.

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In summary, a SEMI licence empowers businesses to provide a comprehensive suite of financial services, spanning electronic money issuance, payment execution, money remittance, payment initiation, account information services, and more. This licence unlocks a world of possibilities, enabling service providers to cater to diverse financial needs while adhering to regulatory standards.

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Vital Requirements for Small Electronic Money Institutions:

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For aspiring Small Electronic Money Institutions, there are two key requirements that stand as pillars of the regulatory framework:

1. Safeguarding Client Funds: The cornerstone of responsible operations is the obligation to safeguard client funds. This can be accomplished either through a segregated client bank account or by having an insurance policy in place. This vital step ensures that the funds entrusted to your institution by clients are secure, fostering trust and accountability.

2. Repute and Expertise of Management Body: The management body steering the ship of your Small Electronic Money Institution (SEMI) licence plays a pivotal role. Upholding an impeccable repute and possessing the pertinent qualifications and experience are prerequisites for those at the helm. This requirement guarantees that your institution is guided by professionals equipped with the knowledge and skillset necessary to execute their roles effectively.

By adhering to these requirements, Small Electronic Money Institutions can create a foundation of stability, integrity, and competence, essential for establishing credibility within the financial landscape.

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Capital Requirements: 

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The process of registering as a Small Electronic Money Institution does not entail any initial or upfront capital requirement.

For the continued operation of your Small Electronic Money Institution registration, an ongoing capital allocation equivalent to 2% of the average outstanding e-money exceeding €500,000 is necessary.

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Fees: 

When submitting your Small Electronic Money Institution registration application, a nominal application fee of £1,000 is required. This fee is payable at the time of submitting your application, ensuring the smooth processing of your registration request.

Application Requirements & Documentation:

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To initiate your journey toward obtaining FCA authorisation for the Small Electronic Money Institution (SEMI) licence, you'll partner with K2 Regulatory Consultants, working closely to prepare the essential components for a successful application. Here's what you'll need to complete in preparation for submission:

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1. Comprehensive Business Plan and Financial Projections: Craft a robust business plan, complete with financial forecasts spanning a three-year horizon. This plan will articulate your SEMI's vision, strategy, and financial trajectory.

2. Detailed Business Organization Description: Provide a comprehensive overview of your business structure, detailing key roles, responsibilities, and the organizational hierarchy.

3. User Fund Safeguarding Strategy: Outline a robust strategy for safeguarding user funds, ensuring their security and integrity within your SEMI.

4. Compliance, Governance, and Internal Controls: Detail your arrangements for compliance, governance, and internal controls, underscoring your commitment to regulatory adherence.

5. Security Incident Handling Procedure: Present a well-defined procedure for the monitoring, handling, and follow-up on security incidents and customer complaints related to security matters.

6. Data Security Protocols: Outline the processes governing the filing, monitoring, tracking, and access restrictions to sensitive payment data.

7. Continuity Measures for Business Operations: Showcase your business continuity measures, ensuring your SEMI's resilience in various operational scenarios.

8. Data Collection Methodology: Provide insights into how you gather and manage performance, transaction, and fraud-related data.

9. Security and Financial Crime Policies: Include your security policy and financial crime policy, detailing your internal control mechanisms for compliance with anti-money laundering and countering-terrorist financing (AML/CTF) obligations.

10. Details of Qualifying Holders: Disclose information about qualifying holders, specifically shareholders controlling 10% or more in the applicant firm.

11. Outsourcing Arrangements: Provide details about any outsourcing arrangements integral to your SEMI operations.

12. Key Management Team Information: Highlight individuals who shoulder management responsibilities within your SEMI

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​At K2 Regulatory Consultants, we're dedicated to simplifying and enhancing your SEMI application journey. By leveraging our expertise and guidance, you can confidently navigate the complexities of the application process, ensuring your path toward SEMI status is marked by precision and compliance.

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