Ask a payments founder where to apply for an EU electronic money institution licence and Lithuania comes up in the first sentence. That is not an accident. After the 2016 referendum in the United Kingdom, the Bank of Lithuania set out to attract firms that needed continued EU access, opened a dedicated newcomer function, published its expectations in English, and offered a route that was faster than most of the alternatives. It worked. Then the consequences arrived.
What the Bank of Lithuania supervises
The Bank of Lithuania is the central bank and, since the supervisory reform that folded the securities and insurance authorities into it, the single financial supervisor. It authorises and supervises banks, specialised banks, electronic money institutions, payment institutions, financial brokerage firms, management companies, insurers and, under the EU crypto framework, crypto asset service providers. Everything a fintech group needs sits with one authority.
The specialised bank licence deserves a mention because it is genuinely distinctive. It permits deposit taking and lending without the full investment services permission set, at a capital level below a universal bank. For a firm whose ambition is accounts and payments rather than trading, it is a real option that most member states do not offer in the same form.
The EMI licence and what it is for
The electronic money institution licence is the one Lithuania is known for. It permits issuing electronic money and providing payment services, with client funds safeguarded rather than held as deposits, and it passports across the EEA. For a trading group it is attractive for an obvious reason: it can hold client money in named accounts, run the deposit and withdrawal flow in house, and stop depending on a third party payment provider whose risk appetite can change without notice. The mechanics of the instrument are covered in the EMI licence explained, and the payment services rules that sit underneath it in PSD2.
Two cautions. An EMI licence is a payments permission, not an investment permission. It does not let a firm act as counterparty to leveraged contracts for difference. A group that wants both needs both, applied for separately, with capital and governance for each. And safeguarding is a hard operational obligation, not a policy document: client funds must be identifiable, held with an authorised credit institution or otherwise covered, and reconciled. Supervisory action across the EU has repeatedly turned on safeguarding failures rather than on exotic misconduct.
The tightening, and why it happened
A licensing regime that grows quickly attracts firms that should not have applied. The Bank of Lithuania responded the way supervisors do: more scrutiny at authorisation, more onsite inspection afterwards, sharper expectations on anti money laundering systems, and a willingness to restrict or withdraw permissions where a firm could not demonstrate control of its own flows. Substance became the recurring theme. A licensed entity is expected to have its senior management, its money laundering reporting officer and its core control functions physically in Lithuania, with decisions taken there.
The practical result is that the licence is no longer a cheap document. It is a permanent operating cost: local hires, local audit, transaction monitoring that produces real alerts and real investigations, and reporting that lands on time. Firms that budgeted for the application and not for the following three years are the ones that hand permissions back.
This is descriptive, not advice. Authorisation requirements change and turn on specific facts, so any group considering a Lithuanian application should take Lithuanian regulatory counsel before committing to a structure.
Who accepts a Lithuanian licence
A Lithuanian EMI is an EEA authorised payment firm, which is the right answer for most counterparties. It is recognised by the EU payment rails, it can hold an IBAN in its own name, and it passports. That said, holding an EMI licence and holding a correspondent banking relationship are separate problems, and the second one is harder.
Banks assessing a licensed EMI look through to the underlying flow. What is the client base, which countries do the funds come from, what proportion of activity is high risk merchant category, what does the sanctions screening produce. A large volume of small inbound payments from higher risk jurisdictions is the pattern that triggers de-risking, and the licence does not neutralise it. Correspondent relationships are withdrawn on aggregate risk appetite, sometimes with little notice and no appeal.
There is also the acceptance problem in the other direction. EEA IBANs issued by payment institutions are legally required to be accepted for euro transactions across the single market on equal terms with bank IBANs, and yet rejections still happen in practice when a counterparty's payment form validates on country prefix. That behaviour is unlawful under the SEPA regulation and it is also completely real. We cover the mechanism and the remedy in IBAN discrimination.
Card acquirers, meanwhile, are indifferent to the elegance of the licence. They classify the merchant, price the risk, set a reserve and monitor chargebacks. A licensed EU entity gets a review; the category stays. Ad platforms and app stores run their own financial services verification and generally want a licence covering the country being targeted, which an EEA passport notification supplies.
Investment firms, not only payments
The financial brokerage firm licence is the Lithuanian MiFID II investment firm authorisation, and it works like any other EEA one. Permissions scale, capital scales with them, and the passport reaches the EEA subject to host conduct rules and product intervention. A CFD business needs dealing on own account and inherits the full ESMA framework on leverage, negative balance protection and marketing, described in ESMA leverage caps. For a firm whose clients are all in Asia or Latin America, that is a heavy set of obligations to accept in exchange for a passport it will barely use.
The team behind SINGUARD builds software for licensed firms rather than holding licences, and the pattern we see across client onboardings is consistent. Lithuania is a strong base for a group whose revenue is European and whose payments are the core of the product. It is a poor base for a group that wants a European flag on a business run entirely somewhere else, because the substance expectations and the ongoing supervision will find that out. For readers weighing locations rather than licences, our Vilnius page covers the operating side.
Leveraged trading carries a high risk of loss for clients wherever the firm is authorised. A licence assigns responsibility for that risk; it does not reduce it.
"People pick Lithuania for the speed of the licence and then discover the hard part was never the licence. It was keeping a real compliance team in Vilnius two years later."
— Alex Onta, Executive Director, SINGUARD
Key Takeaways
- The Bank of Lithuania is the single supervisor for banks, EMIs, payment institutions, investment firms and crypto asset service providers.
- An EMI licence is a payments permission and does not authorise acting as counterparty to leveraged contracts for difference, which needs a separate investment firm authorisation.
- Substance expectations tightened after the growth years: local senior management, a local money laundering reporting officer and real transaction monitoring are ongoing costs, not one-off filings.
- An EEA licence gets a bank or acquirer to open the file, but client geography and merchant category decide whether the relationship survives.
Frequently Asked Questions
Why did so many fintech firms license in Lithuania?
The Bank of Lithuania created a dedicated newcomer programme, published its expectations in English and offered a faster route to an EU payments authorisation at a time when firms needed continued single market access. That pipeline attracted large numbers of applications, and supervision was tightened afterwards.
Can a Lithuanian EMI licence be used to run a CFD brokerage?
No. An EMI licence covers issuing electronic money and providing payment services. Acting as counterparty to contracts for difference requires an investment firm authorisation with the dealing on own account permission, which is a separate application with its own capital and governance requirements.
Does a Lithuanian licence guarantee a bank account?
It does not. Correspondent banking decisions are made on the underlying flow: which countries clients pay from, how much of the volume sits in high risk merchant categories, what sanctions screening produces and how the firm evidences its own controls. Licensed firms lose banking relationships on those grounds regularly.
About the Author
Alex Onta is an Executive Director at SINGUARD. He built eTrader, the terminal, the mobile apps, eTrader Broker, Copytrading, Business and Community, along with the worldwide clustered-server infrastructure it all runs on, with his brother Roman Onta helping on the design, and he leads that division today. Together with Roman he builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals, and the two of them carry worldwide compliance, payment processing and international business structuring side by side. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.