Cross-Border Payments – Remittance and Money Transfer Business Setup
FinTech startups for cross-border payments and remittances are always in demand. LegalBison will help you create one that will stand out among the others.
- Assistance with obtaining a license
- AML-CFT paperwork done by pro-lawyers
- IT infrastructure & cybersecurity setup
- Ongoing legal support & ad-hoc advice
Common services for Money Transfer Businesses and their regulation
International transfers are a universal method of remitting or sending money abroad. Transactions can be executed via multiple methods: bank transfers, bank cards, e-wallets, or mobile payments. At the same time, an online cross-border payment institution is a blend of their best qualities: security and speed along with the leading methods of customer protection.
The fast-paced development of international trade and the growing number of immigrants around the world have increased the demand for international transfer institutions allowing for remittance transactions. These companies allow for person-to-person, person-to-business, and business-to-business transactions without grave losses for either party in fees. The demand is predicted to only grow in the future, hence now is the best time to commit to establishing your business.
Setting up a cross-border payment company comes with a number of legal implications. As experienced lawyers, LegalBison will outline the most common aspects to take into account while starting your business.
- Securing a license
- AML-CFT
- Cybersecurity
- Banking
Choosing a license
In most cases, opening your own cross-border payment company for money transfers abroad and remittances starts with securing a license. Is the money transfer license always mandatory? The answer is yes, but the type of it depends on the nature of the provided services and your business model. Most often, you will be required to obtain a FinTech license, either onshore or offshore depending on your project structure and aspirations. Apart from FinTech, it is possible to secure a small payment institution license or an EMI (Electronic Money Institution) license.
A legal permit opens the doors to international money transfers for your business, which is the main purpose of its existence. The license comes with requirements to be met depending on your chosen jurisdiction but at the same time, it improves your visibility among clients and partners, contributing to the trustability of your business. It is solid proof, first of all, to clients that their funds are in safe hands.
Complying with AML-CFT
Your company must be AML-compliant, whether licensed or not. It is the duty of many national and supranational authorities to ensure that cross-border payments are not used for money laundering or sponsoring financial terrorism. When your company does not involve crypto payments, it is more transparent, which means easier to control.
Having an AML-CFT compliance program drafted is mandatory in both cases. Before opening, your company needs to prove its compliance to the authorities. As a rule, the process consists of the following steps:
- Preparing an AML-CFT compliance program;
- Assigning a responsible compliance officer (AML officer);
- Instructing key shareholders and figures on the compliance procedures;
- Submitting regular compliance reports.
IT infrastructure and audit
An international money transfer system most likely means an online-based company. Later, of course, your business can expand to the land-based form, allocating special agent offices or booths around the globe like Western Union, an exemplary leader in the industry, does. But primarily, an online platform is formed, allowing the company to start its operations faster.
In that case, a proper arrangement of the IT infrastructure and cybersecurity is required. Some jurisdictions will also require a proper technical audit done by a professional before allowing your company to go to the market.
Acquiring multiple banking solutions
A cross-border payment system works as an intermediary between two parties meaning to send and receive funds. Your platform will want to provide clients with multiple ways of completing transactions, the most popular being bank accounts, debit or credit cards, e-wallets, and cash pick-ups (if applicable).
These channels of sending and receiving money require not only a meticulous technical setup but also a proper legal approach. Connecting a new transaction channel to your platform is relatively easy once you obtain a license: from there, the main objective is to find and get access to a proper banking gateway.
In addition, you won’t be able to do without a corporate bank account, which must be obtained separately. This is the bank account for your company’s internal payments, from the employee’s salaries to the overhead expenses.
Starting a Cross-Border Payment System — Request a Free Consultation Today
Start preparing your Money Transfer company today. Inquire about the cost, timeline, and requirements. LegalBison will choose the most suitable jurisdiction for your business.
Guiding questions to properly set up a Money Transfer Company
The 6 questions below will navigate you through the process of forming and registering your own cross-border payment system. Can’t answer some of them? Here’s where LegalBison’s professional team of lawyers comes to the rescue.
Legal implications of a Money Transfer Company
Choosing a suitable license
One of the best ways to build a secure, trustworthy, and generally compliant international transfer company is to secure a license. The right type of license usually depends on the business model of the company and its activities described in detail.
A FinTech license either in an onshore or offshore jurisdiction remains the most popular choice. In some cases, it might be advisable to apply for an EMI license, such as the EMI license in Lithuania, or a small payment institution license. LegalBison has years of experience in defining business models and the best license types for particular projects, offering the best legal solutions that would cover the whole scope of their activities.
AML-CFT & Compliance
AML-CFT compliance comes first in any novel project. It is not possible to form a company or secure a license in any jurisdiction unless the startup is fully AML-compliant. Depending on the target country of registration, the requirements might differ slightly but the general package remains set in stone:
- A properly drafted AML-compliance policy of the company;
- An assigned responsible compliance (AML) officer;
- Education of the key shareholders and employees on the AML-CFT policies.
The authorities must be convinced that your company is compliant before allowing it to step into the market. LegalBison knows how to make it possible.
Cybersecurity & IT audit
There is a reason why cross-border institutions are preferable over banks when it comes to international payments. Transactions between two banks require both institutions to update the status of the payment, ideally working in synergy to make it go through as fast as possible.
It is not always achievable in reality. Banks of different countries process each money transfer to a different degree of thoroughness: some require more information than others, some require specific information that others don’t, and some apply more stringent security protocols, thus delaying the transaction until all the safety requirements are met.
Henceforth, a cross-border payment system is the most straightforward way to remit and receive money without delays since no other party apart from the institution itself participates in the transaction. This process still requires a fair share of work on internal and external security, as well as regular IT audits and reporting to the regulator in case of licensing. At LegalBison, we can assign a responsible technician who will oversee the cybersecurity of your online payment system to the highest extent.
Developing banking applications
Another way to take your company to another level of usability and convenience is to develop its dedicated mobile app. Most reputed payment systems in the world have long introduced their applications for even quicker transactions that can be completed on the go.
An application is a good complementary feature to your payment system but if you plan to develop one, you must know that it will require proper technical setup. Just like LegalBison assists clients with cybersecurity, we can control the process of developing an official application for your company.
Securing a bank account
Bank connections are essential for cross-border payment systems. Obtaining a bank account must be one of the project’s primary concerns in the process of company formation. Bank accounts can serve different purposes but they are mostly used for internal corporate expenses of the firm.
Another reason why your business needs to establish connections with a bank is that your clients will likely need a banking gateway for secure and transparent transactions. Banks around the world tend to trust those companies that are built on steady legal grounds, holding official licenses from reputable jurisdictions. LegalBison’s professionalism and experience allow us to assist clients in securing banking gateways without complications.
- License & registration
- AML-CFT
- IT & Security
- Money Transfer Apps
- Banking
Choosing a suitable license
One of the best ways to build a secure, trustworthy, and generally compliant international transfer company is to secure a license. The right type of license usually depends on the business model of the company and its activities described in detail.
A FinTech license either in an onshore or offshore jurisdiction remains the most popular choice. In some cases, it might be advisable to apply for an EMI license, such as the EMI license in Lithuania, or a small payment institution license. LegalBison has years of experience in defining business models and the best license types for particular projects, offering the best legal solutions that would cover the whole scope of their activities.
AML-CFT & Compliance
AML-CFT compliance comes first in any novel project. It is not possible to form a company or secure a license in any jurisdiction unless the startup is fully AML-compliant. Depending on the target country of registration, the requirements might differ slightly but the general package remains set in stone:
- A properly drafted AML-compliance policy of the company;
- An assigned responsible compliance (AML) officer;
- Education of the key shareholders and employees on the AML-CFT policies.
The authorities must be convinced that your company is compliant before allowing it to step into the market. LegalBison knows how to make it possible.
Cybersecurity & IT audit
There is a reason why cross-border institutions are preferable over banks when it comes to international payments. Transactions between two banks require both institutions to update the status of the payment, ideally working in synergy to make it go through as fast as possible.
It is not always achievable in reality. Banks of different countries process each money transfer to a different degree of thoroughness: some require more information than others, some require specific information that others don’t, and some apply more stringent security protocols, thus delaying the transaction until all the safety requirements are met.
Henceforth, a cross-border payment system is the most straightforward way to remit and receive money without delays since no other party apart from the institution itself participates in the transaction. This process still requires a fair share of work on internal and external security, as well as regular IT audits and reporting to the regulator in case of licensing. At LegalBison, we can assign a responsible technician who will oversee the cybersecurity of your online payment system to the highest extent.
Developing banking applications
Another way to take your company to another level of usability and convenience is to develop its dedicated mobile app. Most reputed payment systems in the world have long introduced their applications for even quicker transactions that can be completed on the go.
An application is a good complementary feature to your payment system but if you plan to develop one, you must know that it will require proper technical setup. Just like LegalBison assists clients with cybersecurity, we can control the process of developing an official application for your company.
Securing a bank account
Bank connections are essential for cross-border payment systems. Obtaining a bank account must be one of the project’s primary concerns in the process of company formation. Bank accounts can serve different purposes but they are mostly used for internal corporate expenses of the firm.
Another reason why your business needs to establish connections with a bank is that your clients will likely need a banking gateway for secure and transparent transactions. Banks around the world tend to trust those companies that are built on steady legal grounds, holding official licenses from reputable jurisdictions. LegalBison’s professionalism and experience allow us to assist clients in securing banking gateways without complications.
Best jurisdictions for cross-border payment platforms
EMI License in Lithuania
on request-
Most reputed license in Europe
-
Straightforward set-up
-
Used by Revolut, etc
Crypto License in Singapore
on request-
Elite finance country
-
Prestigious
-
Provide electronic money
Forex License in Mauritius
on request-
Give financial advice
-
Manage portfolios
-
Issue securities
Company Formation in Great Britain
from 975 €-
Simple for banking
-
Quick and easy to set-up
-
Low dividend taxes
Company Formation in Poland
from 1.500 €-
0% Tax if undistributed
-
A fast growing EU state
-
Tech savvy workforce
Company Formation in Austria
from 1.800 €-
Prestigious standing
-
Competitive tax rate in EU
-
Completely remote
Examples of LegalBison's assistance with Money Transfer companies
A cross-border payment system, in general, uses a standard legal setup. In this section, we will briefly explain how LegalBison can turn such a project into reality.
Assessing the need for a license
Once LegalBison receives a project request and agrees on the terms with the client, our pro-lawyers start by assessing the need for a money transfer license. Most often, obtaining a license is the client’s request for enhanced trustability from clients and banks. Then, the question is which license suits the client’s company best.
To answer this question, LegalBison conducts a proper legal assessment of the project and its business model, laying out the results in the form of a legal opinion. A legal opinion is the fastest and most reliable way to find out which international transfer license will cover all the activities of your company in full.
Forming and registering a company
The company formation of your future money transfer platform can be undertaken in full by LegalBison. We are not only well-acquainted with the legal intricacies of the incorporation process but we also have local agents in different jurisdictions, coordinating the process for the clients locally. It is also possible to entrust the lawyers with remote incorporation if the possibility of traveling is currently excluded from your plans.
Most often, the requirements for company formation will include:
- Outlining the company’s purpose and activities to be proposed in the form of a business plan;
- Coming up with a company name and a shareholder structure;
- Providing non-criminal records and basic personal information of key shareholders and other figures at your company;
- Drafting AML-CFT compliance policies;
- Opening a bank account with a starting share capital.
LegalBison takes care of the incorporation process in full, drafting and submitting all the necessary documentation on the client’s behalf.
Ensuring AML-CFT compliance
One of the milestones of a successful company formation is AML-CFT compliance. It must be built carefully block by block with all the current regulations and amendments taken into account. Jurisdictions will require a properly drafted AML compliance policy, a responsible AML officer, and regular reporting.
These requirements are mandatory whether your company already holds a money transfer license or not. Keeping track of the current regulations, LegalBison undertakes the drafting of an AML policy, educates the key shareholders and employees of your company on the vital AML compliance practices, and can even find a suitable individual to fill the role of an AML officer.
Opening a corporate bank account
Any business, especially in the FinTech sector, requires a bank account. Opening one can be a stringent and tedious procedure since there are too many details and legal subtleties to consider. In order to save you time and trouble, LegalBison establishes a proper connection with the bank of your choice as soon as you give the green light.
Providing ongoing legal support
Even after your company is already active and operating on the market, ongoing legal support is indispensable. LegalBison assists clients with regular reporting to the regulator and keeping records of the company’s activity and expenses. Any possible legal issue your company might come across while being operational can be solved by us. The legal support is uninterrupted at every stage of the company’s existence and includes ad-hoc advice and assistance when needed.
Complete legal package for cross-border payment companies
Build the startup of your dreams, stone by stone, with the help of experienced lawyers at LegalBison. Consult us now for a free primary analysis of your project.
FAQ about our legal assistance for the setup of Money Transfer systems
Yes, of course, but you will have to incorporate a company, possibly obtain a money transfer license, streamline your AML-CFT compliance, and ensure a proper technical setup and security.
Most likely, yes, but the license type will depend on the business model and services provided by your company.
The price of setting up a cross-border payment system depends on the complexity of the project, as well as the licensing and incorporation requirements. For a detailed assessment of your particular company, get in touch with our lawyers.
From a couple of weeks to several months depending on how complex your project is. In the case of the licensing requirement, the timeframe depends on the workload of the regulator and several other factors. Contact us to get more precise time limits for your project. From a couple of weeks to several months depending on how complex your project is. In the case of the licensing requirement, the timeframe depends on the workload of the regulator and several other factors. Contact us to get more precise time limits for your project.
In theory, yes, but only a strong legal team who knows all the intricacies and technical pain points of the process can assist you with establishing them.
Get in touch with our experts
Fill out the form below to book a free consultation with our lawyers. Together, we will look into the best legal and compliance options for your future money transfer company. We assist you at every stage of the process.
Our team of experienced professionals to assist you with any question and project pertaining to FinTech projects.
International economics expert with UK and US education in corporate finance, alumna of NYU Abu Dhabi.
