Segragated Bank Account for new EMI Institution

[Jonny Cage]

Do you know any bank that provide segregated accounts for holding client's money for PSP?

PSP is licensed from National Bank of Georgia.

 

[Spinat]

You mean PSP like Payment Service Provider for credit card processing services?

 

[Jonny Cage]

Yes, Payment Service Privider. Credit/Debit cards, e-wallet, international transfers.

 

[DGTLOTC]

You will probably have to go for a client segregated account underneath another broker to be quite frank.

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[JohnSeed]

By segregated accounts you want to setup a 3rd party payment processor? 1 Master Account (MSP) and endless merchants connected to this account. You will approve and decline who is using this service.

Is that what you want?

 

[Jonny Cage]

Thanks for reply but I think you did not get my question (or I did not get your answer).

Let me ask different way: If I open Transferwise account for my company and deposit money there, these funds will be kept on some German bank account. Am I right?
So Transferwise uses German bank to accomodate its clients funds. Moreover, it does not use one accoun only, as Transferwise needs to segregated its clients accounts from each other.

I am looking for a bank, that might onboard a new EMI, that has license from Georgian National Bank and needs segregated accounts for its clients.

 

[DGTLOTC]

I think you’ll need to go for a bank in that local jurisdiction or nearby as with that licence I think it will be tough to get banking in the eu

I would suggest looking for a broker that will give you a sub account to segregate client funds

 

[Jonny Cage]

By broker you mean other PSP, that already have bank account?

 

[Sols]

There are a lot of factors that go into whether a bank will accept you. Having a Georgian license isn't a good first impression if you want a European bank. A Georgian license isn't worth much. Most will insist that you come back with an EU license, preferably after it has been passported into the jurisdiction where the bank is based.

And even if you do show up with an EU/EEA EMI or PI license, most banks turn down most applicants. It takes a lot of extra work to set up a segregated account (client funds account). There's more to it than just setting up a regular corporate account.

That's not to say it's impossible, but you have many weeks and months of research, negotiations, and discussions ahead of you. Even more if you don't have an existing network of contacts.

Look at what partner banks other institutions are using and contact those banks. You will find it's mostly banks in Eastern and Central Europe mostly Poland, Hungary, Czechia, and Romania. Some may work with German, Austrian, British, and other banks but that's heavily dependent on your ability to present a convincing case to the bank, and finding someone willing to listen to you.

 

[andres33]

From my experience, I was asking to differents lawyers firms about PSP one year ago. It was very easy to setup one and cheap. But the first problem was that the regulator said that a PSP must to have more than 75% of its customer resident in Georgia. So forget it if you want to have european people as customers. And you need to work only from account in georgian bank. This license is not accepted by european banks. Curiously lawyers said the same. I was looking firstly to setup in one FIZ. Many intermediaries said me that no problems. But only one said me that in FIZ a new law in July 2018 amended the license from the FIZ for financial institutions. So only was possible in the main country. But when I submit to work with european pepople principaly, they said that it was not possible. The main % of clients must be resident in Georgia

 

[Spinat]

If it comes to provide financial services nothing is easy and cheap any longer, to go to prison may be easy and cheap but to conduct a financial business legally is not that easy and not at all with a license from Georgia which still may be recognized as the soviet and corrupt. The fact that you can register a company in Georgia for VAT in a few minutes but isn't recognized by the EU may say it all.

 

[Martin Everson]

I am looking for a bank, that might onboard a new EMI, that has license from Georgian National Bank and needs segregated accounts for its clients.

Your looking for a Safeguarding account to hold third-party funds. It is nothing more than a custody arrangement like most EMI's should have but don't really have . A custody arrangement just ensures that the account is not on the banks books like a deposit account. It becomes an account held in trust and hence cannot be part of any bankruptcy proceedings of a bank like stock trading custody accounts are across the entire EU - they are ring fenced.

As has been said, outside of Georgia this license is scrap paper. Have you tried with a local Georgian bank for this arrangement or neighboring country banks familiar with where Georgia even is on a map?

 

[JohnSeed]

Now it make sense what it is OP is looking for. Most Lawyers have the same arrangement with the bank. They are client accounts.

 

[Jonny Cage]

There are a lot of factors that go into whether a bank will accept you. Having a Georgian license isn't a good first impression if you want a European bank. A Georgian license isn't worth much. Most will insist that you come back with an EU license, preferably after it has been passported into the jurisdiction where the bank is based.

And even if you do show up with an EU/EEA EMI or PI license, most banks turn down most applicants. It takes a lot of extra work to set up a segregated account (client funds account). There's more to it than just setting up a regular corporate account.

That's not to say it's impossible, but you have many weeks and months of research, negotiations, and discussions ahead of you. Even more if you don't have an existing network of contacts.

Look at what partner banks other institutions are using and contact those banks. You will find it's mostly banks in Eastern and Central Europe mostly Poland, Hungary, Czechia, and Romania. Some may work with German, Austrian, British, and other banks but that's heavily dependent on your ability to present a convincing case to the bank, and finding someone willing to listen to you.

Thanks a lot for a valuable advice.

From my experience, I was asking to differents lawyers firms about PSP one year ago. It was very easy to setup one and cheap. But the first problem was that the regulator said that a PSP must to have more than 75% of its customer resident in Georgia. So forget it if you want to have european people as customers. And you need to work only from account in georgian bank. This license is not accepted by european banks. Curiously lawyers said the same. I was looking firstly to setup in one FIZ. Many intermediaries said me that no problems. But only one said me that in FIZ a new law in July 2018 amended the license from the FIZ for financial institutions. So only was possible in the main country. But when I submit to work with european pepople principaly, they said that it was not possible. The main % of clients must be resident in Georgia

This explains a lot. Great addition to a research we are doing now.
But information on FIZ license is wrong. It is still issued, but its validity is under question. It has never been a license from a financial regulator. We can talk aboutbit in another threat.

If it comes to provide financial services nothing is easy and cheap any longer, to go to prison may be easy and cheap but to conduct a financial business legally is not that easy and not at all with a license from Georgia which still may be recognized as the soviet and corrupt. The fact that you can register a company in Georgia for VAT in a few minutes but isn't recognized by the EU may say it all.

Thanks. I disagree with corruption perceptions about Georgia. Its institutions are noy developed enough, vut corruption is not a ptoblem.
Also could not get your point about VAT, what do you mean EU does not recognize Georfia VAT?

 

[Spinat]

Also could not get your point about VAT, what do you mean EU does not recognize Georfia VAT?

We got a company registered for a customer and the agent did the job quickly but when we look up the VAT number provided by the Georgia registry it is not valid in the EU it seems.

hmmm, strange the website seems to have errors https://ec.europa.eu/taxation_customs/vies/ it was available here the last day.

 

[blockchain4ever]

We got a company registered for a customer and the agent did the job quickly but when we look up the VAT number provided by the Georgia registry it is not valid in the EU it seems.

hmmm, strange the website seems to have errors https://ec.europa.eu/taxation_customs/vies/ it was available here the last day.

Last time I checked, Georgia was not part of the EU, so how could a Georgian VAT number be valid in the EU?