EMI License in Malaysia

EMI License in Malaysia

• The EMI license in Malaysia is the most crucial for electronic money institutions, allowing them to offer a wide range of digital payment services within the financial ecosystem in Malaysia. With the license, EMIs can issue and manage electronic money involving multi-forms of digital cash used in swift cashless transactions. It varies from financial instruments like e-money to pre-paid cards and e-wallets. 

• Electronic money is, in essence, an online version of money, which, for transactional purposes, is efficient and secure without having to deal in cash. The ability to do so means that EMIs can develop convenient and reliable means of making payments beyond the limitations experienced with traditional forms of payment. Digital wallets, through mobile applications and online sites, do this even more conveniently as the integration into daily life becomes apparent. Therefore, EMI License in Malaysia supports such digital tool development and generally plays a crucial role in facilitating modern-day cashless economies’ financial transactions. 

• Our team at Tetra Consultants is highly qualified for international business setup in over 50 jurisdictions, with additional expertise in various business services including corporate bank account opening and the full range of accounting and tax services. We handle various licenses, including the Singapore payment institution license, Estonia cryptocurrency license, Lithuania EMI license, and Canada MSB license, to ensure wide coverage for your business needs. 

Advantages of EMI License in Malaysia 

Enhanced credibility and customer trust 

• Getting a Malaysia EMI license boosts the credibility of an institution significantly to show that it is properly adhering to the strict regulatory standards put in place by the Bank Negara Malaysia. In this regard, the institution, through its appropriate compliance, will be viewed by customers and business associates alike as having high levels of integrity and reliability. For any competitive market, trust is critical in the building and maintenance of the best relations with clients and associates for further reputation and attraction of interest. 

Expanded financial service offerings 

• A license for EMI license in Malaysia  opens wide the doors to a great variety of financial services, extending the horizon of what businesses can offer. This includes, inter alia, the possibility to issue electronic money and payment cards, among them those branded by Visa and MasterCard. The licensed institution can execute both local and international transactions, thereby facilitating cross-border financial management by its clients. Besides, it includes the issuance of IBAN accounts, which ultimately make cross-border payments easier, hence making things easy for the user that is involved in financial activities on an international basis. 

Adherence to regulatory standards 

• The licensing procedure for EMI license in Malaysia hence assured AML and fraud prevention measures through robust customer due diligence by companies and fraud detection systems. Such strict practices will not only save the institution from potential risks but also add value to a more secure and trustworthy financial ecosystem, where the possibility of illicit activities is reduced and ensures better security on financial grounds for the entire financial ecosystem. 

Capitalizing on market opportunities 

• Holding an EMI license in Malaysia will go a long way in placing businesses at an advantageous position to explore the fast-growing e-money sector in Malaysia. With the increased demand for digital financial solutions, licensed EMIs are aptly positioned to capture a share of this emerging market. As consumer preferences increasingly shift toward cashless transactions, a license will enable them to meet such changes in demand and realize new opportunities for business growth with expanded market presence. 

Flexibility in operations 

• An EMI license in Malaysia allows businesses to exercise flexibility in their operations by making independent decisions concerning the payment solutions they offer and the management of their services. The flexibility extends to institutions in innovating their services to try and meet constantly changing customer demands without regulatory shackles weighing them down. Such flexibility gives rise to service development and better customer experience, hence making licensed EMIs stand out from their competition. 

Gaining a competitive advantage 

• Getting an EMI license in Malaysia is a competitive advantage because it makes the institution operate in the legal framework of Malaysian financial regulations. Legal standing against institutions that may be unlicensed automatically will give them a greater market position and more credibility. This also allows licensed and potential EMIs to present themselves as more reliable and credible in the market because they would be operating within the necessary regulatory requirements. 

Regulatory authorities responsible to manage EMI License in Malaysia 

• Bank Negara Malaysia (BNM) is the chief regulatory body that governs the licensing of Electronic Money Institutions in Malaysia. Since the regulation of EMIs is very important for a central bank, BNM requires an EMI to maintain a full range of financial regulations, such as AML standards and consumer protection protocols. 

Key responsibilities of Bank Negara Malaysia includes: 

Licensing and approval 

• BNM is in charge of processing the application and approving the application of any EMI license. It analyzes applications via a fit-and-proper test on financial stability and the capability to deliver operations of applicants. BNM closely scrutinizes any potential EMI to ensure that only properly qualified entities operate within the electronic money industry. 

Establishing the regulatory framework 

• BNM defines and implements a regulatory regime that will guide operations by EMIs, covering minimum capital, frequent audits, and other measures that ensure financial soundness and operational integrity. The underlying objective is to ensure that EMIs conduct their operations in a manner that promotes stability and reliability within the financial system. 

Ongoing monitoring and compliance 

• Once an EMI is licensed, BNM monitoring of its operations ensues continuously to determine if the required regulations are respected. It is such ongoing oversight that helps to reduce risks associated with electronic money transactions, fraud, and instability in the financial sector. The role of BNM in such monitoring serves as a necessary pre-condition towards solidifying the trust needed to guarantee the safety of electronic money services available in Malaysia. 

Ensuring consumer protection 

• BNM is committed to protecting consumers using electronic money services. It also ensures that the regulatory authority enforces policies protecting consumer rights, ensures that EMIs observe high standards in service and security, and ultimately provide secure and reliable financial services. 

Time required to obtain EMI license in Malaysia  

• The application for a Malaysian EMI license has different stages, each taking a different timeline. First is that Tetra Consultants will be able to complete your company’s registration in 1 week from the time all due diligence documents are received. Once the company is incorporated, we will prepare all the required documents for the application of the EMI license, which include a comprehensive business plan and AML/CFT policy. While this is in the process, we will arrange the recruitment of a staff member and a local office for your business. Please note that the payments of monthly salaries and office rentals would be born directly by your company. 

• Upon completion of this preparatory work, our lawyers will submit your EMI license application to Bank Negara Malaysia. The processing time for the application to be approved usually takes about 5 to 6 months. Once the license is obtained, Tetra Consultants will further help you set up your corporate bank account, which usually takes an additional 4 weeks. In short, from when the company registration process began up until your corporate bank account is ready, approximately about 6 to 7 months would have passed. 

Classification of EMI license in Malaysia 

• In Malaysia, the different classes of EMIs prescribed in the regulatory regime included under FSA 2013 and IFSA 2013 consist of three broad classes. Each class has been designed to cover specific levels of market presence and operational scope. 

Standard EMI 

• Standard EMIs represent the ‘residual’ class of those licensed under either the FSA or IFSA-anything that does not fall into one of the other categories. Standard EMIs are thus subject to general regulatory requirements, ensuring basic compliance with financial regulations but not benefiting from the exemptions or special provisions extended to other EMI varieties. 

Limited purpose EMI 

• This category includes EMIs that issue e-money with specific usage restrictions, which may confine either the location or purpose for which the e-money can be used. There are certain regulatory exemptions accorded to a Limited Purpose EMI through an Exemption Order under BNM. This regime is thus ideal for businesses operating within a narrow ambit which does not necessitate assuming the gamut of regulatory requirements imposed upon wider-scope EMIs. 

Eligible EMI 

• The qualified EMI status is reserved for those selecting a few EMIs that have attained a significant market share and therefore attract higher regulatory requirements. For qualification, an EMI shall be considered qualified if it has at least 500,000 active users for a continuous period of six months and attains the minimum market share of 5% in e-money transaction volume, transaction value, or outstanding e-money liabilities in Malaysia for that year.  

• Eligible EMIs are thus subject to more intensive compliance and operational requirements, in view of the substantial impact those have on the market, taken together with their extensive role in the e-money ecosystem. 

Activities permitted under EMI license in Malaysia

The activities permitted under an Electronic Money Institution (EMI) license in Malaysia are: 

Issuing electronic money 

• A licensed EMI may be permitted to issue different forms of e-money, such as prepaid cards, e-wallets, and other digital means of payment. With such facilities, the customer can securely store money and make an electronic payment, which is convenient and an alternative to traditional cash transactions. 

Processing transactions 

• EMI License in Malaysia enable a number of customer purchase transactions wherein there is no need for the physical payment of goods and services. Be it through an electronic money house, a pre-paid card, or an e-wallet, EMI sees to it that such a transaction is seamless and that the processing thereof is efficient, adding to the seamless experience of cashless payment. 

Facilitating fund transfers 

• The facility provided by licensed EMIs to their customers in sending and receiving money in an electronic way makes it easier to transfer funds between accounts. Such a facility also extends to transferring cash to and from e-money accounts, which makes the process of sending cash between different people or organizations less cumbersome. 

Offering cross-border remittance services 

• The EMI license offers a cross-border remittance service, a way through which customers can send money across the border. EMI licensing widens the international reach of digital financial solutions provided to customers since international money transfers are not as burdensome. 

Issuing payment cards 

• EMI can issue a payment card, such as Visa and Mastercard, which is connected to e-money accounts. Payment cards allow the customer to make purchases, including the facility to withdraw cash, thereby offering versatility and access to their electronic funds in an easily accessible manner. 

Providing e-wallet services 

• The EMI-licensed businesses provide one with an e-wallet to store money in a digitized format. Indeed, e-wallets do constitute a very handy way to manage electronic money; it provides total ease regarding handling payments and transfers directly out of a mobile app or an online platform. 

Facilitating cash withdrawals 

• They also provide EMI services for cash withdrawals from an e-money account. In fact, this service ensures that customers can have access to hard cash if needed, adding flexibility to their digital financial management. 

Process of obtaining EMI license in Malaysia 

Step 1: Company incorporation 

• Initially our company will register company in Malaysia within 1 week of engagement for securingEMI license in Malaysia. Our team is efficient enough to normally complete the company registration process. 

• Additionally, we will also provide international trademark registration services to our clients for securing our clients brand name. 

Step 2: Fulfill company pre-requisites 

• Further, we will address the specific requisites for company incorporation which is based on the legal structure of your company. This involves: 

• 1 local director  

• 2 shareholders of any nationality  

• Local registered address 

• To comply with these requirements, we provide various services such as resident director in Malaysia. 

Step 3: Preliminary preparation 

• Following this incorporation, we proceed with a detailed assessment of Bank Negara Malaysia requirements. Therein, all regulatory requirements will be carefully examined in minute detail, especially those relating to EMI clearance, capital adequacy, anti-money laundering/combating financing terrorism directives, and governance structures along with the technological setup.  

• We will thereafter prepare a specific business model and business plan according to the requirements set by BNM, elaborating on your operating model, products, target market, risk management measures, and financial projections. 

Step 4: Collection and preparation of documentation 

• Further, we will also draft and provide all the required legal documentation for any document submission. These shall include articles of incorporation, agreements between the company and service providers, and documents reflecting property ownership or office premise leases. Similarly, we shall prepare financial statements in support of the assertion of financial stability and delineate a financial activity plan for the first years of operation.  

• Also, internal policies and procedures like AML/CFT, risk management, data processing, and security policies will be elaborated. A Disaster Recovery Plan will be compiled too, outlining the procedures in relation to restoring operations in the event of unforeseen circumstances. 

Step 5: Submit your application to BNM 

• Once all documents are collected and prepared, a formal application will be forwarded to BNM with all collected documents, policies, and the business plan. We will manage the payment of government fees and charges required for processing your application. 

Step 6: Waiting for BNM decision 

• During this review period, BNM will review the submitted documents in detail and may call for further information or clarification. Arrangements relating to a meeting or inspection to assess your operational preparedness, including the security at your office premises may be made. 

Step 7: Obtaining a license 

• Once BNM has approved your application, you receive formal notification that the license for EMI has been issued. Upon receipt of such notification, once all final fee payments have been made, you can start to commence trading in digital currencies in Malaysia. 

Step 8: Corporate bank account opening 

• Upon successful acquisition of the EMI license, we then offer our services for corporate bank account opening. We can thus confidently say that our professional services will aid our clients in successfully opening a corporate bank account within 4 weeks from incorporation. 

Documents required to obtain EMI license in Malaysia

• Company structure, ownership, and contact information 

• Description of company activities 

• Disaster recovery plan 

• Certified company documents such as memorandum and articles of association 

• Audited financial statements 

• Statutory declaration affirming that there are no outstanding regulatory or criminal issues related to the company or its key personnel. 

• Undertaking to notify BNM 

• Board resolution 

• Regulatory approvals or licenses 

• Evidence of shareholder funds 

• Capital requirements details 

• Notarized copy of identification document for directors and shareholders 

Requirements of EMI license in Malaysia

• A physical office in Malaysia, equipped and where business operations are executed. The usage of registered or virtual offices is prohibited. 

• Appoint one compliance officer of any nationality. 

• Appoint one local director. 

• Appointment of 2 shareholders without residency requirements. 

• Have one local employee on the payroll of your company. 

• Capital requirements are set at RM 1,000,000 or 8% of its outstanding electronic money liabilities, whichever is higher for standard EMI and eligible EMI. 

Eligibility criteria for EMI license in Malaysia

The eligibility criteria for the company to obtain EMI license in Malaysia is as follows: 

• Maintain a minimum of 500,000 active users for a consecutive period of six months. 

• Achieve at least 5% of the total e-money transaction volume in Malaysia for a given year. 

• Maintain a paid-up capital of at least RM5,000,000 or its equivalent in any foreign currency throughout the company’s operations. 

Cost of obtaining EMI license in Malaysia 

• For EMI License in Malaysia, the cost at Tetra Consultants is tailor-made to meet your needs and requirements pertaining to the scope of services required. Our all-inclusive engagement fee will cover everything needed from the initial company registration right through to the submission of your EMI license application. Any additional costs that may arise during the engagement process are inclusive. 

• The detailed consultation that we will go through shall give you a clear breakdown of what the total engagement fee will be before we can start the registration process. That way, all costs are clearly outlined and understood, which we do document in our letter of appointment. 

• Our approach to licensing is carefully designed to be transparent and clear, which helps make licensing easier for you. We also want to make your licensing journey with us seamless and well-informed for your business by offering a clear breakdown of the costs in as much detail as possible. 

Looking to obtain EMI license in Malaysia 

• With expertise, Tetra Consultants will assist you through the EMI license in Malaysia. We offer comprehensive support from company registration to obtaining the EMI license with clarity in terms of breakdown costs to make things as smooth as possible. Reassurance to the client will be provided by an easy entry into the Malaysian e-money market, yet on every point in time, compliance is met, and the companies are operationally ready to commence their operations. 

• Contact us to know more about EMI license in Malaysia and our team will revert back in 24 hours. 

FAQs

What is an Electronic Money Institution (EMI)?

What are the eligibility criteria for an EMI license in Malaysia?

What are the categories of EMI licenses in Malaysia?

What documentation is required for an EMI license application?

How long does the EMI license application process take?

Are there ongoing compliance requirements for EMIs?

Can an EMI switch category after initial approval?

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