Applying for a license in 5 steps

2018-12-06T14:29:20+00:0003-12-2018|Risk & Compliance|

License applications from DNB: we know what needs to be done!

Lees hier over onze aanpak in het Nederlands.

When an enterprise processes payment transactions or wants to operate as an account information service provider (AISP) or payment initiation service provider (PISP), a license from De Nederlandsche Bank (DNB) is oftentimes obligatory.

The consultants of Enigma are very experienced in the field of preparing license applications.

Our customers often have very different reasons for applying for a license. Among others, our customer base consists of:

  1. Innovative companies wishing to take advantage of the opportunities offered by new payment regulations in areas of account information services and payment initiation services, such as fintech companies and accounting software suppliers;
  2. UK-based companies that decide to apply for a license in the Netherlands and to service Europe from here, because of brexit considerations;
  3. Asian and American companies that want to use the Netherlands as a basis for their global Payment Gateway;
  4. Companies that can no longer make use of PSD2 exceptions that were still available under PSD1.
Geert Blom
Geert Blom
Senior Consultant

We work with a multidisciplinary team, which has the advantage that we can offer all the areas of expertise that are required for the preparation and end-to-end management of the license application. The result is an application that meets the quality requirements of the regulator on all aspects, which leads to a quicker assessment and license granting by the DNB.

You do no longer have to be a bank to offer payment services. With the aim of increasing competition and protecting consumers, the Financial Supervision Act is active in the Netherlands; this law makes it possible to offer payment services as a payment institution.

The law distinguishes 8 different variants of payment service providers. For example, there are the classic payment service provider and the electronic money

institution (EGI), but since the introduction of the European payment directive PSD2, new variants like the account information service providers (AISPs) and the payment initiation service providers (PISPs) exist as well.

Payment services types that are offered are, for example, the operation of payment accounts, the transfer, remitting or withdrawing of money and the issuing or accepting of payment instruments.

When is a license requirement applicable? And what requirements must be met?

For every variant of the payment institution, a successful license application is a matter of proper preparation and adequate quality assurance.

We have outlined the required steps for an efficient, successful application for you:

1

Check whether a license is required for the service

A payment service may be exempt from the license requirement. Exempt are, for example, services where payment is made with a payment instrument with limited usage possibilities. Also, no license is required the transaction only involves cash money and no payment account.

2

If a license is required, see if a special exemption applies

If the first step shows that a license is required, check whether a special exemption applies. In order to be able to rely on these exemptions, several conditions must be met. Three of them are listed below:

  1. Payment services must be exclusively intended for persons living in the Netherlands;
  2. The total volume per month is less than 3 million euros;
  3. The separation of assets is regulated by means of a third-party foundation, bank guarantee or comparable guarantee.

If the conditions for a special exemption seem to be present, the exemption must also be formally requested for at the DNB. Substantial delivery requirements are attached to this application too. After application and supervisory assessment, the exempted payment service provider will be registered in the public register.

3

Build the application set of documents and modify the organizational setup where necessary

If after carrying out the first two steps it became clear that a license is necessary, the enterprise must apply for a regular payment institution license. The organization must meet various requirements in order to be able to receive a license from the supervisor.

Consider, for example, the topics below.

  1. Demonstrating the reliability and suitability of policy makers;
  2. Formulating the structure of the company’s integrity;
  3. Demonstrating the controlled execution of business;
  4. Securing customer funds;
  5. Assessment of day-to-day policymakers;
  6. Minimum equity and solvency;
  7. Certificate of no objection.

The above topics concern the management of business processes and business risks and the securing the funds of clients of the payment institution. Also, policies and procedures must be drawn up, such as policies on customer due diligence, transaction monitoring and incident management. A compliance charter and a procedure for reporting unusual transactions must be drawn up too. Drafting a risk management policy and also appointing a risk & compliance officer is necessary in most cases.

4

Submit the application to the supervisory body, De Nederlandsche Bank (DNB)

Subsequently, all documents required for the application must be sent to DNB. The basis is formed by the online application form that must be completed and signed. DNB will decide whether the license will be granted within three months of receiving a license application for a payment institution. Mind that the three months consideration period will only take effect if all the documents that are requested are received. The DNB charges a fee for processing a license application.

5

Incorporate the new policies and associated procedures in the organization

By building the set of documents for the license application, a major step has already been taken in implement the various policies and procedures in the organization. Make sure that the policies are actually implemented within the organization when the license is granted.

Experience

With our extensive experience with license processes and short communication lines with DNB, we can advise and support you at every stage of the license process, whether it concerns the application of an exemption or a license for payment service provider, electronic money institution (EGI), account information service provider or payment initiation service provider.

The temporary deployment of a risk & compliance officer is also possible, to share best practices and train your internal organization. At Enigma we have extensive experience with all phases of the license process. We can support you in building up the set of application deliverables and in the structuring of your organization. Feel free to contact us if you want to share your plans with us.

Cases

Enigma and Bitonic

Risk & Compliance is a familiar playing field for Enigma. By contributing to the development of regulation in the market of cryptocurrencies, we can share and transfer our knowledge.

Pay.nl about Enigma

The license process was fairly heavy, but thanks to the experience, input, planning and expertise of Enigma, we were able to obtain the license for payment institution within the agreed upon time period!

Our Risk & Compliance Experts

Daniëlle Veldhorst

Consultant
Geert Blom

Senior Consultant
Lex van Beurden

Junior Consultant
Maarten van Denzen

Juridisch Consultant