1 November 2019 is supposed to be the date when the United Kingdom (UK) leaves the European Union (EU) “family”. The UK will then become a “third country”. In the event of “no deal” situation, as of the withdrawal date, the EU rules in the field of banking and payment services will cease to apply for the UK. For this reason, institutions like Fintech law firms in Lithuania are very likely to feel the increase in workloads.
UK continuous to seek assistance
Irrespective of the fact that more than 18 months have passed since the UK’s notification submission on withdrawing from the EU pursuant Articles 50 of the Treaty on European Union, the Fintech law firms in Lithuania are still overloaded with requests.
The requests include calls for legal assistance in the relocation of the financial services business from the UK to the EU after the Brexit. Authorization in the EU is extremely important for the UK entities providing banking and payment services as well as issuing e-money under the so-called “EU passport”.
The assistance of Fintech law firms in Lithuania, however, is not enough. Companies authorized by the UK competent authorities which have established branches in the other EU Member States will have to comply, as of the withdrawal date, regulations of the host Member State applicable to branches of entities.
For companies to have their head office in a third country include the requirement to be authorized by the respective competent authority of the host Member State in accordance with previously indicated regulations.
Establishing entities in the EU
Within passed year, Motieka & Audzevičius, which is one of the recognized and experienced Fintech law firms in Lithuania, has identified a trend of the UK Fintech companies to find a proper jurisdiction (including Lithuania) for their licensed activities by establishing an entity in the EU and then aiming to passport its activities in other EU Member State.
Nevertheless, it is worth highlighting that a license is only the first step for authorized activities. Transfer of asset as well as of skilled staff and risk functions associated with the newly authorized business from the UK to the continent is equally important.
Currently, Motieka & Audzevičius, while advising its clients on licensing matters as one of Fintech law firms in Lithuania, identifies a sharp increase in demand of competent and highly skilled employees for the Fintech companies.
More information on key requirements for the e-money and payment institutions can be found in the attached document.