The UK remittance (money transfer) market is regulated by the Financial Conduct Authority (FCA) under the Payment Services Directive 2009, and by HMRC under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR2017) and associated subsequent guidance.
The Financial Conduct Authority has a two-tier regulatory structure for payment institutions under the PSD:
- Small Payment Institution (SPI)
- Authorised Payment Institution (API)
All companies operating a remittance (money transfer) service must also possess a money transmitter licence from HMRC.
Under each of the FCA licences there are a number of shared provisions applicable to all companies operating in the market, as well as requirements and permissions specific to each type of licence. For instance, API licensed firms are required to maintain minimum own funds levels, whereas this condition does not apply to those holding an SPI licence.
SPI Licence Application Requirements
To apply for the SPI licence, the following criteria must be met (from the FCA website):
- the applicant must satisfy the FCA that its directors and/or any persons responsible for the management of the SPI, and where relevant the persons responsible for the management of its payment services, are of good repute and possess appropriate knowledge and experience to provide payment services;
- its projected average monthly payment transactions must not exceed €3million;
- none of the individuals responsible for managing the business has been convicted of offences relating to money laundering or terrorist financing or other financial crimes;
- its head office and, where applicable, its registered office (or place of residence for natural persons) must be in the UK;
- it must comply with the registration requirements of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, where those requirements apply to it;
- where the applicant is a partnership, an unincorporated association, or a body corporate, the applicant must satisfy us that any persons having a qualifying holding in it are fit and proper persons having regard to the need to ensure the sound and prudent conduct of the affairs of a small PI; &
- where the SPI licence applicant is a body corporate that has close links with another person (‘CL’) the applicant must satisfy us that those links are not likely to prevent our effective supervision of the applicant. If it appears to us that the CL is subject to the laws, regulations or administrative provisions of a territory outside of the EEA, the applicant must satisfy us that those foreign laws/provisions would not prevent our effective supervision of the applicant.
You must have UK-resident management for the business and a physical office. The FCA will reject any application where this condition is not met. You cannot have all non-resident directors/management. This is a priority issue now for the FCA when processing applications.
If you do not have suitable management with sufficient knowledge and experience for the business then your application will be rejected by the FCA.
If you need assistance regarding recruitment of competent UK management then please see our recruitment page.
SPI Licence Application Process
API Compliance can handle the application process from start to finish. We offer a flat-fee structure for the application which includes unlimited follow-up with the FCA until the licence is granted.
For more information on deciding which option to choose please contact us.
We recognise that each company is unique and that the time required in preparing the application will vary depending on their specifics, but we aim to have all applications completed within 2 weeks.
The FCA will process a complete application within 3 months of receipt of a complete application. Our fastest in-principle approval to date with the FCA (pending HMRC approval) is 2 working days.
You should allow at least 3-4 months to get the company up and running.
In a Rush?
Need your application ready ASAP? No problem – talk to us about our express licence preparation service. We aim to have your SPI licence application ready for filing within 48 hours (terms and conditions apply, subject to availability).
What is our Success Rate?
We have a 100% approval rate for our Small Payment Institution applications. We have a very strict client acceptance policy for regulatory applications. We screen firms, their directors and their shareholders to ensure they meet the FCA criteria before we accept the case.