How to Obtain an EMI License in the Philippines

The Philippines is experiencing a digital revolution in the financial sector, with electronic money services at the forefront of this transformative journey. For those eager to participate in the electronic money industry, securing an Electronic Money Issuer (EMI) license from the Bangko Sentral ng Pilipinas (BSP) is not just a requirement but a gateway to offering innovative digital payment solutions. This comprehensive guide will unravel the intricacies of the EMI licensing process, shedding light on the fundamental concepts, classifications, and key steps involved.

Understanding the Basics

What is e-money?

Electronic money, or e-money, serves as a digital substitute for traditional cash. It enables cashless transactions through various mediums, including cards, mobile devices, and online platforms. According to BSP, e-money is an electronically stored monetary value that is: 

1. maintained in a non-interest bearing non-deposit transaction account; 
2. denominated in or pegged to Philippine Peso or other foreign currencies; 
3. pre-funded by customers to enable payment transactions
4. accepted as a means of payment by issuers and by other persons or entities including merchants/sellers
5. issued against receipt of funds of an amount equal to the monetary value issued
6. represented by a claim on its issuer
7. withdrawable in cash or cash equivalent or transferable to other accounts/instruments that are withdrawable in cash.

What are electronic instruments?

Electronic instruments encompass cash cards, prepaid cards, stored value cards, digital wallets accessible via mobile phones, and similar products within the realm of electronic payments and financial services.

What is an EMI License?

An EMI license is issued by the BSP to entities aiming to operate as electronic money issuers. This license is indispensable for those intending to provide digital payment services, facilitating electronic fund transfers in the Philippines.

How are EMIs Classified?

EMIs are classified into three categories: 

• EMI-Bank (for banks)
• EMI-NBFI (for non-bank financial institutions supervised by the BSP), 
• EMI-Others (for non-bank institutions registered as monetary transfer agents under Sec. 4511N of the MORNBFI). 

Requirements and Eligibility

• Legal Entity:
  • Eligibility requires entities to be registered legal entities in the Philippines, such as corporations or partnerships.
• Liquidity Requirement:
  • Entities must maintain sufficient liquid assets to meet E-money redemptions at all times, protecting the interests of E-money holders.
• Capital Requirements:
  • EMI-Banks must meet the higher of the required minimum capitalization for banks or a specific minimum capitalization based on the EMI category (e.g., Large-scale EMI-Bank: PHP 200,000,000).
• Reporting Requirements:
  • Maintain records and submit required reports to the supervising department of the BSP, ensuring compliance with transaction and due diligence record-keeping for at least five years.
• Registration with AMLC:
  • Secure a Certificate of Registration with the Anti-Money Laundering Council (AMLC) following the 2021 AMLC Registration and Reporting Guidelines. (How To Register With The AMLC)

Application Process

• File an Application:
  • Entities must file a comprehensive application with the BSP, including business plans and information on IT infrastructure and security measures.
• BSP Evaluation:
  • The BSP evaluates the application, potentially conducting on-site inspections to assess operational readiness and compliance.
• Approval or Rejection:
  • Await a decision from the BSP. If approved, the entity receives the EMI license, with rejections accompanied by feedback.

Risks and Compliance

• AML Compliance and Fraud Prevention:
  • Strict adherence to Anti-Money Laundering (AML) regulations and robust fraud prevention measures are imperative to secure and maintain the EMI license.

Conclusion

Obtaining an EMI license in the Philippines demands meticulous planning, adherence to regulatory requirements, and a commitment to ensuring the security and integrity of electronic money transactions. By navigating this process thoughtfully, entities can contribute to the evolution of the digital financial landscape in the Philippines.

This article is intended for informational purposes only. Please refer to the BSP Regulation of EMI License for details.