Navigating AML Regulations and Licensing Obligations in Lithuania, a Thriving EU Fintech Center
Lithuania, a top 10 global fintech hub, offers an attractive environment for fintech startups seeking access to the EU single market. The country has made significant strides in combatting money laundering and terrorist financing, making compliance a key priority for businesses looking to enter the country.
To obtain a fintech license in Lithuania, the first step is company registration, followed by the implementation of robust Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures. Lithuania adopts a risk-based approach, allowing simplified due diligence for low-risk profiles, supporting fintech agility and scalability across the EU market.
The key steps include developing AML/KYC policies and a risk assessment framework, appointing a compliance officer, submitting a detailed application to the Bank of Lithuania, and maintaining ongoing regulatory compliance. The license issuing process takes, on average, three months, and includes meetings with the Bank of Lithuania, application submission, and a decision on the issuance or refusal of a license.
In terms of AML regulations, businesses must identify natural persons using a personal number, unique identifier, or date of birth, and legal entities by identifying their beneficial owners. Beneficial owners are those who directly or indirectly own more than 25% of a company's capital/voting rights or exercise ultimate control over it.
When identifying beneficial owners, businesses can use the Information System of Legal Entities Participants (JADIS) or other state registers to assure the validity of the obtained data. For remote KYC requirements, businesses can use verification data obtained from other financial institutions or obliged entities, remote verification solutions, qualified electronic signatures, video calls, and ensure that the customer's first payment comes from an account linked to an EU credit institution or credit institution of a third country applying the same AML standards.
When detecting a suspicious transaction, businesses must suspend or freeze the transaction and report this transaction to the Financial Crime Investigation Service no later than within three working hours from the suspension of the transaction.
Fintech companies involved in crypto-asset services, such as virtual currency exchanges and wallet providers, must align with AML/CTF rules and upcoming MiCA regulation requirements, with an extended compliance deadline until December 31, 2025.
Lithuania's AML law targets various financial institutions and obliged entities, including credit institutions, payment institutions, e-money institutions, currency exchanges, crowdfunding platforms, peer-to-peer lending platforms, insurance companies, investment companies, virtual currency exchanges, custodian virtual currency wallets, auditors, judicial officers, accounting or tax advisory services, notaries services, gaming companies and lottery companies, and art dealing services.
Over 250 fintechs, including EMI sector leaders like Revolut, Shift4 Payments, Contis, TransferGo, are licensed in Lithuania. The Bank of Lithuania enables companies to obtain a license in just three months, test innovations in a live environment through a regulatory sandbox, obtain full SEPA reachability via CENTROlink, and get a financial institution code for their own IBAN accounts.
In summary, obtaining a fintech license in Lithuania involves company registration, comprehensive AML policy implementation under a risk-based framework, appointing compliance leadership, submitting a detailed application to the Bank of Lithuania, and maintaining ongoing regulatory compliance, including adapting to EU-wide AML/crypto regulations. To truly benefit from this promising fintech hub, businesses should ensure they're meeting all the current and future regulations that Lithuania rolls out.
- Fintech startups looking to access the EU single market may find Lithuania an attractive environment, as it is a top 10 global fintech hub and is regarded for its efforts in combatting money laundering and terrorist financing.
- The process of obtaining a fintech license in Lithuania involves company registration, the implementation of anti-money laundering (AML) and know-your-customer (KYC) policies, the appointment of a compliance officer, and the submission of a detailed application to the Bank of Lithuania.
- In addition to these steps, fintech companies in Lithuania must adhere to AML regulations by identifying beneficial owners, implementing remote KYC requirements, and reporting any suspicious transactions to the Financial Crime Investigation Service within three working hours.
- Businesses operating in sectors such as casino and gambling, sports, education and self-development, general news, and arts dealing may also be subject to AML regulations in Lithuania, making compliance a crucial aspect for businesses seeking to enter the market.
