Swedish Trust Company Structure

[MoneyMoney]

Hi Everyone,

I am doing some research on acquisition. Specifically I was looking at local licensing and also at DealStream. There, I came across DX TRUST KB. This company is authorised in Sweden as a trust provider. I searched some more, and while there are not trusts in Sweden, these companies seem to be able to hold money on behalf of clients in trusts opened offshore. Trust is not really more than an agreement so I guess these can be made on demand.

The company promotes that a Swedish LP can get this and then pay tax only when remitted to the company owners. They also talk about setting up a Canadian MSB so that it can provide payment solutions. It's a little Sus for me that they want to use this EBANQ software but can just be partnership.

It seems a bit good to be true because there is not any capital requirements. I know about Canada MSB and they did not lie about this so it gives a little bit of trust haha. Does anybody have experience with it? From what I see this Swedish registration is existent and does kinda provide that authorisation in the meaning that the company is allowed to organise trusts for its customers. But does company deliver and is it fully true that it can just be a trustee for all Custoemrs?

Like price is pretty cool and EU company is good for business relationships so if such was legit it will be useful - and I don't really see how they would scam if they did.

To sum, I would like to ask about 1) Does Swedish trust company have such authorisation? 2) Does this company provide it for real? 3) If authorisation is ok but this company is scam, are there other service providers that can arrange it?

 

[Compliance Circle]

Years ago, claims made by such providers were that Swedish "trust company" is a para-banking entity capable of literally everything banks can do. Now, probably after some bashing from government entities, it seems they have removed most of their bells and whistles and got down to actual nature of the entity status.

While I have no personal, first-hand experience with Swedish "trust companies" in the sense of real-world operational viability, I've seen several examples when people who were boasting about their "large financial groups" consisting of the likes of St. Vincent and the Grenadines FX brokerage companies, Comoros banks, Panama avisos de operacion, used such structures as yet another source of artificial trust.

In the common sense, those registrations closely resemble situation with Estonian "activity licenses" before the legislative reform a few years ago. You could have registered yourself as "corporate and trust services provider/operating as financial institution" with little scrutiny, but with no legislative clarity over what financial services may you provide based on that registration as AML obliged entity, no international standing and no real public trust.

Now, if we look from the perspective of the prospective client/banking partner who would be doing some basic research and googling "swedish trust company", what are they going to find is a "source provider" website of KB Trust boasting about no capital, qualification, substance or residency requirements and very vague descriptions of what the entity actually is; some low quality projects doing that and link to one of offshore services providers stating "NOTE: WE NO LONGER OFFER THE SERVICE DESCRIBED HERE. OUR IN-HOUSE ATTORNEYS ARE NOT COMFORTABLE WITH THE LEGAL RISKS OF THIS PRODUCT. SO, WE CANNOT SUPPLY MORE INFORMATION ON THIS SERVICE. THE ARTICLE REMAINS FOR INFORMATIONAL PURPOSES ONLY. THANK YOU FOR YOUR UNDERSTANDING."

Thus I would rather say nah if your goal is not to con someone, unless you consult with local Swedish attorney on the real-world uses cases suitable for your circumstances, tax implications etc..

Ah, and as rightly pointed, almost every regulatory licensing product EBANQ is being upsold with is usually pure crap.

 

[MoneyMoney]

Compliance Circle said:
Years ago, claims made by such providers were that Swedish "trust company" is a para-banking entity capable of literally everything banks can do. Now, probably after some bashing from government entities, it seems they have removed most of their bells and whistles and got down to actual nature of the entity status.

While I have no personal, first-hand experience with Swedish "trust companies" in the sense of real-world operational viability, I've seen several examples when people who were boasting about their "large financial groups" consisting of the likes of St. Vincent and the Grenadines FX brokerage companies, Comoros banks, Panama avisos de operacion, used such structures as yet another source of artificial trust.
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Yeah, I mean I understand that, but if it were to have the ability of holding money for clients in various ways and formats, as well as then investing those funds, it doesn't seem like a bad addition to more reliable licenses.

Compliance Circle said:
Now, if we look from the perspective of the prospective client/banking partner who would be doing some basic research and googling "swedish trust company", what are they going to find is a "source provider" website of KB Trust boasting about no capital, qualification, substance or residency requirements and very vague descriptions of what the entity actually is; some low quality projects doing that and link to one of offshore services providers stating "NOTE: WE NO LONGER OFFER THE SERVICE DESCRIBED HERE. OUR IN-HOUSE ATTORNEYS ARE NOT COMFORTABLE WITH THE LEGAL RISKS OF THIS PRODUCT. SO, WE CANNOT SUPPLY MORE INFORMATION ON THIS SERVICE. THE ARTICLE REMAINS FOR INFORMATIONAL PURPOSES ONLY. THANK YOU FOR YOUR UNDERSTANDING."
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This is true but I guess that this 1 provider cannot be representative of the whole trust company system.

Compliance Circle said:
Thus I would rather say nah if your goal is not to con someone, unless you consult with local Swedish attorney on the real-world uses cases suitable for your circumstances, tax implications etc..
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I will discuss with a Swedish law firm about this. To me it seems reasonable to use a real company than this KB.

Otherwise, what licensing is generally recommended without as stringent capital requirements? I am considering on the classic EMI but obviously there is a need for 350K EUR share capital - I have decided to go for a 1M starting investment from my side to my project - so it is a little bit of a hole then. I guess that MSB licenses could be reasonable - although this company is offering them which is not so good for the trust of that licensing

Compliance Circle said:
Ah, and as rightly pointed, almost every regulatory licensing product EBANQ is being upsold with is usually pure crap.
Click to expand...

Yes, platform seems a bit of a joke lol

 

[Sols]

There is no such thing as a Swedish trust company that can do what's often being touted in the context of offshore financial services.

It's pretty simple. Sweden is an EU member. EU members must follow EU directives. As such, anything that sounds like a PI or EMI licensed activity requires a PI or EMI license.

The legal disclaimer at the foot of the DX Trust KB (DX Bank) website is a mess. What they have isn't a license.

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This is the probably the answer to your question.

 

[clemens]

Sols said:
The legal disclaimer at the foot of the DX Trust KB (DX Bank) website is a mess. What they have isn't a license.
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DX BANK LTD is a Statutory Trust registered in Connecticut with Authoritative Legal Entity Identifier (ALEI) 2662831. DX TRUST KB is the Corporate Trustee of DX BANK LTD and an AML/CFT regulated Trust Company registered in Sweden with registration number 969798-4046. DX MONEY LLC is a Money Service Business (MSB) regulated under the US Bank Secrecy Act and registered with the Financial Crimes Enforcement Network (FINCEN) with registration number 31000228678640. Services are not available in certain jurisdictions or sanctioned countries. Card and payment services are offered in partnership with issuing entities duly licensed and regulated in their respective jurisdictions. All trademarks are the property of their respective owners. No affiliation or endorsement is intended or implied.
Click to expand...

source: DX | BANK. - Your Own Online Bank

What is wrong with it, mind to explain a little more?

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One of my favorit articles in Mentor Group ~ Sending money anonymously archieve Financial Anonymity

 

[JustAnotherNomad]

A KB is like a LLP, it's a tax transparent entity. It's probably just some dodgy offshore company camouflaging as a Swedish entity for better reputation.
Like setting up a UK LLP that has a BVI company and a Panama foundation as its partners.
I wouldn't do business with an entity like that.

 

[MoneyMoney]

Sols said:
There is no such thing as a Swedish trust company that can do what's often being touted in the context of offshore financial services.
Click to expand...

And what is the actual product that is being sold? Like what is received when getting a "Swedish trust company" - and what authorisations does it have based on its registration.

Sols said:
It's pretty simple. Sweden is an EU member. EU members must follow EU directives. As such, anything that sounds like a PI or EMI licensed activity requires a PI or EMI license.
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Of course but what is suggested is kinda different to an EMI or PI - it is an entity that can register trusts on behalf of clients, in which it then holds a specific type of asset for the client. EMI would have to safeguard the funds, collect only funds rather than assets - and a PI is not supposed to hold client funds (only make the requested movements with them) unless it receives an exception from the regulator to do that.

Sols said:
The legal disclaimer at the foot of the DX Trust KB (DX Bank) website is a mess. What they have isn't a license.
Click to expand...

Can you clarify why it's a mess?

From what I see -
Connecticut statuatory trust - they themselves say that it is practically useless, but it is by law allowed to use Trust and Bank in the name. That's the main purpose it serves - letting the service name itself Bank.
Swedish trust company Corporate trustee - this is what I wanna find out about. In this case it seems to be also managing the trust in Connecticut.
US MSB - Lastly it's just an MSB registration at FinCEN so that they can provide the payment transfer + crypto services.

Like to me that just seems a bit cheeky approach to regulation but if the Swedish corporate trustee would actually have the powers they promote ("opening trusts" which is actually just a deed for the customer where they act as the trustee - and then managing those assets) then this approach would make quite a lot of sense.

JustAnotherNomad said:
A KB is like a LLP, it's a tax transparent entity. It's probably just some dodgy offshore company camouflaging as a Swedish entity for better reputation.
Like setting up a UK LLP that has a BVI company and a Panama foundation as its partners.
I wouldn't do business with an entity like that.
Click to expand...

Yes, Of course. I am aware of KB but it is a minor part of this process. I would not use a KB and not use the suspicious incorporation agent. But the main principle is about if the trust company registration is really that simple and if it can actually do what it says.

 

[JustAnotherNomad]

It can't. Trusts are likely not even recognized in Sweden.
I've thought about offering a service not too unlike that and paid tax lawyers in another EU country a lot of money for investigating it.
It only works if it's not your money anymore, if you hold no legal claim to the money at all. Why would anyone want to do business with a company like that?

 

[Sols]

MoneyMoney said:
And what is the actual product that is being sold? Like what is received when getting a "Swedish trust company" - and what authorisations does it have based on its registration.
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Depends on who's scamming selling to you. A while back, people were selling Swedish trust company and when you entered the sales pipeline, they'd push you to another jurisdiction. Some claimed Swedish savings unions were some sort of super secret offshore bank license alternative.

In reality, Finansinspektionen will break every bone in your body if you do anything beyond collective savings for a sports team, small community, or something like that. Swedes have a reputation for being calm and quiet people. That facade goes away if they bust you for financial crimes.

MoneyMoney said:
Of course but what is suggested is kinda different to an EMI or PI - it is an entity that can register trusts on behalf of clients, in which it then holds a specific type of asset for the client. EMI would have to safeguard the funds, collect only funds rather than assets - and a PI is not supposed to hold client funds (only make the requested movements with them) unless it receives an exception from the regulator to do that.
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Once you take deposits from the public, you're either a bank, an EMI, or in some cases a PI. The regulations are crystal clear in Sweden and EU/EEA in general.

Holding money on behalf of someone else in a non-deposit taking manner, such as an escrow, is limited to lawyers and other people/companies with due authorisation.

MoneyMoney said:
Can you clarify why it's a mess?
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The main thing is the MSB. Out of all 50 states that make up the USA, they picked Montana. Why Montanta? The financial centers of the US are New York, Miami, San Francisco, and Seattle. There's nothing happening in Montana besides some of the most beautiful nature our planet has to offer.

But there is one thing... Money Transmitter License in the State of Montana: The abridged version

So out of all 50 states, they went with the least regulated, least prestigious, and least sensible option.

MoneyMoney said:
Connecticut statuatory trust - they themselves say that it is practically useless, but it is by law allowed to use Trust and Bank in the name. That's the main purpose it serves - letting the service name itself Bank.
Click to expand...

Yeah, good luck with that. It's not just about whether a name is technically allowed. It's also about how you use it.

MoneyMoney said:
Swedish trust company Corporate trustee - this is what I wanna find out about. In this case it seems to be also managing the trust in Connecticut.
Click to expand...

KB is not a trust company. There is no such thing as a trust company under Swedish law. KB is just a company type similar to LP in UK.

If you want to start a financial services business, this ain't it, chief. There are options out there. Keep looking.

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This is the probably the answer to your question.

 

[clemens]

Sols said:
KB is not a trust company. There is no such thing as a trust company under Swedish law. KB is just a company type similar to LP in UK.

If you want to start a financial services business, this ain't it, chief. There are options out there. Keep looking.
Click to expand...

That said, it means they are more or less not what they say they are, maybe not scam but providing false information!

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One of my favorit articles in Mentor Group ~ Sending money anonymously archieve Financial Anonymity

 

[MoneyMoney]

Sols said:
Depends on who's scamming selling to you. A while back, people were selling Swedish trust company and when you entered the sales pipeline, they'd push you to another jurisdiction. Some claimed Swedish savings unions were some sort of super secret offshore bank license alternative.

In reality, Finansinspektionen will break every bone in your body if you do anything beyond collective savings for a sports team, small community, or something like that. Swedes have a reputation for being calm and quiet people. That facade goes away if they bust you for financial crimes.
Click to expand...

Okay, got it and will avoid.

Sols said:
The main thing is the MSB. Out of all 50 states that make up the USA, they picked Montana. Why Montanta? The financial centers of the US are New York, Miami, San Francisco, and Seattle. There's nothing happening in Montana besides some of the most beautiful nature our planet has to offer.

But there is one thing... Money Transmitter License in the State of Montana: The abridged version

So out of all 50 states, they went with the least regulated, least prestigious, and least sensible option.
Click to expand...

Well, I guess because it's so easy and cheap, yeah. It doesn't really create much trust or prestige, though.

Sols said:
Yeah, good luck with that. It's not just about whether a name is technically allowed. It's also about how you use it.
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Of course, there is no value to it - but I guess that they can easily mislead people when they own an institution that has Bank in the name. Even if it is a statutory trust without any value.

Sols said:
KB is not a trust company. There is no such thing as a trust company under Swedish law. KB is just a company type similar to LP in UK.
Click to expand...

Yes, I am aware of KB. They do not really sell KB, they sell that apparent authorisation.

They just promote a KB because it will be paying taxes upon redistribution and then of course avoids Swedish tax when operated from elsewhere. But with the circumstance that there is no real trust company authorisation it is useless.

Sols said:
If you want to start a financial services business, this ain't it, chief. There are options out there. Keep looking.
Click to expand...

Okay, I am thankful for your advice!

Do you recommend generally looking at EMIs? I would prefer licensing that has more ability for the business to work with (invest consensually) the funds that are deposited.

Would you be able to recommend any law firms that could provide consultation and then potentially assistance with the process? I have obviously spoken locally but I want to have a clearer understanding of the process around the globe and explore suitable options. Thank you

 

[Sols]

clemens said:
That said, it means they are more or less not what they say they are, maybe not scam but providing false information!
Click to expand...

Exactly that. I wouldn't call them a scam. I know practically nothing about them. But there is enough on the website that makes it seem like they are hoping to mislead the audience (most of whom are less informed). Nothing factually inaccurate is stated. Just very carefully worded.

MoneyMoney said:
Well, I guess because it's so easy and cheap, yeah. It doesn't really create much trust or prestige, though.
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You might not care but business partners and (other) regulators might. Showing up to a bank with a Montana quasi or unlicensed MSB isn't going go over quite as well as showing up with even a New York, Florida, or California MSB licensed in that state.

Even if that exact example doesn't apply in your case, don't go scraping bottom of barrels. Sure, you might end up with a license. But that license is worthless if you can't connect it to the financial systems, with banks and VASPs turning you down.

MoneyMoney said:
Yes, I am aware of KB. They do not really sell KB, they sell that apparent authorisation.
Click to expand...

At most they might have voluntarily submitted to the Swedish FSA that they commit to conducting AML/KYC checks on counter partners. Or they might be authorised for some very narrow service, like a savings union or escrow. But the FSA will slap you silly if you do anything akin to PI/EMI/banking activities.

MoneyMoney said:
Do you recommend generally looking at EMIs? I would prefer licensing that has more ability for the business to work with (invest consensually) the funds that are deposited.
Click to expand...

What do you want to build? What's the plan here? What's the budget? Who are your customers? How many years of industry experience do you/your team have?

If you want to gamble with invest people's money, what you're looking for isn't an EMI or similar. You're rather looking at wealth management, investment fund, or something like that. Or a bank license. Practically everything else requires you to keep client funds separated and segregated.

MoneyMoney said:
Would you be able to recommend any law firms that could provide consultation and then potentially assistance with the process? I have obviously spoken locally but I want to have a clearer understanding of the process around the globe and explore suitable options.
Click to expand...

I haven't come across any law firms that have genuine international breadth. There are firms that are good in multiple jurisdictions but they're all pretty terrible at keeping each other abreast of developments and opportunities in different markets. So you end up having to do a lot of research yourself. You might want to hire a consultant, who might not be able to take you from A to Z, but can tell you about different options, and make intros. Those people are hard to find. I linked one earlier in this thread, although his/their focus is on money remittance first and foremost.

Toggle signature
This is the probably the answer to your question.

 

[MoneyMoney]

Sols said:
You might not care but business partners and (other) regulators might. Showing up to a bank with a Montana quasi or unlicensed MSB isn't going go over quite as well as showing up with even a New York, Florida, or California MSB licensed in that state.
Click to expand...

Got it. But it seems that even authorisation in the larger and more reliable states is still so much easier than anywhere in the EEA.

Sols said:
Even if that exact example doesn't apply in your case, don't go scraping bottom of barrels. Sure, you might end up with a license. But that license is worthless if you can't connect it to the financial systems, with banks and VASPs turning you down.
Click to expand...

Yes, I also don't want to be using the cheapest and lowest trust licenses. In that case I could already have bought a Comoros bank in Moheli or Anjouan but I don't want to be sitting here with XX thousand of my money in the account of a random CSP that has given me a piece of paper - which banks would just laugh at me for (not gonna lie).

So I will explore more available options.

Sols said:
At most they might have voluntarily submitted to the Swedish FSA that they commit to conducting AML/KYC checks on counter partners. Or they might be authorised for some very narrow service, like a savings union or escrow. But the FSA will slap you silly if you do anything akin to PI/EMI/banking activities.
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Yes, from looking a bit more, it seems that they are just registered as an entity that does AML and KYC with the Swedish "entity/regulator" for company registration.

Sols said:
What do you want to build? What's the plan here? What's the budget? Who are your customers? How many years of industry experience do you/your team have?

If you want to gamble with invest people's money, what you're looking for isn't an EMI or similar. You're rather looking at wealth management, investment fund, or something like that. Or a bank license. Practically everything else requires you to keep client funds separated and segregated.
Click to expand...

Well I don't exactly look to release the full business plan on a public forum but it is currently a local (as in one-nation) platform for the investment in 1 specific asset + the corresponding license for such. I have experience, I have a good team for this.

In current times I am looking to invest something in the 1M range in order to reach more jurisdictions and expand the abilities of the business a bit. Reaching more jurisdictions is already what the 2 in-house lawyers do - but they have a more focus on 'investments' like is done as the main corporate activity. The 'expansion' side of things I want to be able to support a bit more assets and primarily to be able to offer some payment services.

Wealth management is one registration we are exploring because it is locally accepted. Investment fund license we have already been granted. So at the moment the primary focus is just something that can provide payment services. I guess the most sense would just be a local PI (with the license allowing holding of funds) or an EMI somewhere like Lithuania - and then either one connected to CENTROLINK and 1 correspondent for further currencies which we have already agreed on partnership terms with. I was just looking at other options that could take less time to set up and maybe be more cost-effective. Even with a decently large budget, it's never bad to save money if the goal is met 🙂 but need to make sure that all meets requirements legally.

Sols said:
I haven't come across any law firms that have genuine international breadth. There are firms that are good in multiple jurisdictions but they're all pretty terrible at keeping each other abreast of developments and opportunities in different markets. So you end up having to do a lot of research yourself. You might want to hire a consultant, who might not be able to take you from A to Z, but can tell you about different options, and make intros. Those people are hard to find. I linked one earlier in this thread, although his/their focus is on money remittance first and foremost.
Click to expand...

Yes, I will have a look at that.

 

[Compliance Circle]

Sols said:
There is no such thing as a Swedish trust company that can do what's often being touted in the context of offshore financial services.
Click to expand...

Already pointed out to that by putting "trust company" in quotation.

However, from the information on County Administrative Board Website Money laundering, it seems that certain entities registered/notified with it and Companies Office as AML obliged entities (my comparison to Estonia was actually correct) may carry on some activities reminiscent of PI/EMI in limited ways and forms, and County Administrative Board supervises those entities re their adherence to AML/Risk Management rules and laws:

...

• Professional operations intended for accounting or auditing services, which are not carried out by a chartered accountant or a registered audit firm. For example, accounting consultants and layman auditors.
• Professional operations engaged in offering advice with the intention to influence the amount of taxes or fees that someone has to pay. For example, tax advisers.
• Independent legal staff, who are not lawyers or paralegals working in law firms. The business is included if the independent lawyer is acting in the name of a client, and on his behalf carries out financial transactions and transactions related to real estate business. The business is also included if the independent lawyer assists a client in planning, or carrying out, transactions related to:
  
  - Purchases or sales of real estate or companies.
  - Management of money, trusts, securities or other assets.
  - Opening or managing of bank, savings or security accounts.
  - Acquiring necessary capital to start, run or manage a company.
  - Starting, running or managing a company, an association, a foundation, a trust or similar legal designs.

• Professional operations engaged in forming legal persons, selling newly formed limited companies and legal person brokering. For example business brokers and business start-ups.
• Professional operations that fulfill the function of a board member, or a person with corporate liabilities, in partnership companies or limited partnership companies, or that fulfill the function of someone that has a similar position in relation to other legal persons.
• Professional operations providing registered offices, or mail addresses, and related services. For example open office spaces, workspaces or PO Box businesses.
• Professional operations engaged in management of a trust, or similar legal designs.
• Professional operations that fulfill the function of a nominal shareholder on behalf of someone else, or that engage in other efforts aiming at providing someone else with such function, with the exception of operations that fulfill obligations to a legal person that are registered in a regulated market.

Click to expand...

So, while by no way we're able to determine legality and legal basis of certain claims made by those sellers of Swedish "trust companies", it seems that there's indeed limited form of supervision compared to registration of VASP in lower-tier EU jurisdiction or Estonian system of activities notifications and supervision by FIU for ML prevention purposes.

Sols said:
It's pretty simple. Sweden is an EU member. EU members must follow EU directives. As such, anything that sounds like a PI or EMI licensed activity requires a PI or EMI license.
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Mostly agree. However, the point of their offering "concept" is that you somehow integrate that "trust company" in creating complex, non transparent and absolutely shell multi-jurisdictional vehicle with (what I suppose) is meant to be "para-banking" Frankenstein consisting of three main parts:

1) A vehicle registered somewhere as MSB (Canada/Montana) as the entity responsible for moving money in and out;
2) This Swedish company registered as AML obliged entity as manager/trustee of statutory trust in the US
3) US statutory trust named "bank" which is for bells and whistles? injecting someone's assets?.

 

[Sols]

Compliance Circle said:
Already pointed out to that by putting "trust company" in quotation.
Click to expand...

Sorry, I think I totally missed your whole post before. You covered a lot already.

Compliance Circle said:
However, from the information on County Administrative Board Website Money laundering, it seems that certain entities registered/notified with it and Companies Office as AML obliged entities (my comparison to Estonia was actually correct) may carry on some activities reminiscent of PI/EMI in limited ways and forms, and County Administrative Board supervises those entities re their adherence to AML/Risk Management rules and laws:
Click to expand...

My experience with these kind of regulations in places like Sweden is that they are not meant for anything even remotely like what's being proposed here. These are regulations meant for narrow scope engagements like community savings unions, membership organizations, pawnshops, crowd funding initiatives, escrows, tax payment services, legal services, and things like that. The language you find in there about other countries is just boiler plate copy-pasted from the actual AML laws which in turn come from FATF and OECD. The FSA will gun you down if you try to offer financial services akin to payments processing, e-money, or money remittance under an authorization like this.

MoneyMoney said:
Got it. But it seems that even authorisation in the larger and more reliable states is still so much easier than anywhere in the EEA.
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It definitely seems that way. I'm aware of a handful of MSBs having their state licenses refused or revoked because they weren't serving local customers at all or primarily, though. The financial regulators in these states aren't set up to oversee MSBs that heavily target foreign clients. That can make them feel nervous.

MoneyMoney said:
Well I don't exactly look to release the full business plan on a public forum but it is currently a local (as in one-nation) platform for the investment in 1 specific asset + the corresponding license for such. I have experience, I have a good team for this.
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If you already have a license, why are you seeking additional licensing?

MoneyMoney said:
Wealth management is one registration we are exploring because it is locally accepted. Investment fund license we have already been granted. So at the moment the primary focus is just something that can provide payment services. I guess the most sense would just be a local PI (with the license allowing holding of funds) or an EMI somewhere like Lithuania - and then either one connected to CENTROLINK and 1 correspondent for further currencies which we have already agreed on partnership terms with. I was just looking at other options that could take less time to set up and maybe be more cost-effective. Even with a decently large budget, it's never bad to save money if the goal is met 🙂 but need to make sure that all meets requirements legally.
Click to expand...

If all you want is to be able to issue payment accounts, do you really need your own licenses, or can you just partner with someone who already has a license? OpenPayd, Modulr, Verified Payments, and other BaaS providers. BaaS comes with its own pros and cons, but it's a lot faster and easier than getting your own license.

Nothing stops you from going whitelabel first, build up a customer base, and then migrate them to your own platform/license.

Toggle signature
This is the probably the answer to your question.

 

[Compliance Circle]

MoneyMoney said:
In current times I am looking to invest something in the 1M range in order to reach more jurisdictions and expand the abilities of the business a bit. Reaching more jurisdictions is already what the 2 in-house lawyers do - but they have a more focus on 'investments' like is done as the main corporate activity. The 'expansion' side of things I want to be able to support a bit more assets and primarily to be able to offer some payment services.

Wealth management is one registration we are exploring because it is locally accepted. Investment fund license we have already been granted. So at the moment the primary focus is just something that can provide payment services. I guess the most sense would just be a local PI (with the license allowing holding of funds) or an EMI somewhere like Lithuania - and then either one connected to CENTROLINK and 1 correspondent for further currencies which we have already agreed on partnership terms with. I was just looking at other options that could take less time to set up and maybe be more cost-effective. Even with a decently large budget, it's never bad to save money if the goal is met 🙂 but need to make sure that all meets requirements legally.
Click to expand...

You should have started with that.

If you're looking into something likewise in the regulatory approach (AML/CTF and risk-based supervision by lower level regulatory authority than Central Bank) which can potentially allow both wealth management in some form and payment services I would advise looking in the direction of Swiss company with SRO membership.

Of course, there's no one size fits all solution and there are certain limitations on how you can market those services, however you probably have an example of what can be built in combinations "EMI partnership + Swiss permit" right here, on OCT - swissmoney (not an ad or endorsement).

Based on my experience setting up SRO affiliated entities for clients, you can usually get that, and possibly even be registered with FINMA as asset manager beyond SRO affiliation limit of 5 million CHF of AUM, with a total first year budget well under 350 k EUR, which would include setting up, affiliating with SRO, employing part-time local director and compliance officer, injecting 100 K capital for AG, accounting and establishing local relationships.

That may, potentially, close some, or most, of your expansion goals, with having in place structure that is not unknown to local banking system at least and has substance beyond mailing address in Sweden.

Can PM you if you would be interested to discuss this option in more detail.

 

[MoneyMoney]

Sols said:
My experience with these kind of regulations in places like Sweden is that they are not meant for anything even remotely like what's being proposed here. These are regulations meant for narrow scope engagements like community savings unions, membership organizations, pawnshops, crowd funding initiatives, escrows, tax payment services, legal services, and things like that. The language you find in there about other countries is just boiler plate copy-pasted from the actual AML laws which in turn come from FATF and OECD. The FSA will gun you down if you try to offer financial services akin to payments processing, e-money, or money remittance under an authorization like this.
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Yes, it seems like the authorisation sort-of exists but is not completely clear and is not made for this purpose.

Sols said:
It definitely seems that way. I'm aware of a handful of MSBs having their state licenses refused or revoked because they weren't serving local customers at all or primarily, though. The financial regulators in these states aren't set up to oversee MSBs that heavily target foreign clients. That can make them feel nervous.
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Interesting, yes, appears so.

Sols said:
If you already have a license, why are you seeking additional licensing?
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I have a license for the investment product and working on a license for asset management. This doesn't empower for payment services - that's why.

Sols said:
If all you want is to be able to issue payment accounts, do you really need your own licenses, or can you just partner with someone who already has a license? OpenPayd, Modulr, Verified Payments, and other BaaS providers. BaaS comes with its own pros and cons, but it's a lot faster and easier than getting your own license.

Nothing stops you from going whitelabel first, build up a customer base, and then migrate them to your own platform/license.
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This suggestion makes a lot of sense.

I kind-of crossed it off after speaking with Clear Junction, them seemingly agreeing to get started and then, well, pretty much ghosting me.

But there is a lot of available EU + UK BaaS available from me searching, and some seem to also have larger risk appetites. So I will surely take this into account and reach out to other options that seem suitable. Thank you

Compliance Circle said:
You should have started with that.

If you're looking into something likewise in the regulatory approach (AML/CTF and risk-based supervision by lower level regulatory authority than Central Bank) which can potentially allow both wealth management in some form and payment services I would advise looking in the direction of Swiss company with SRO membership.
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This sounds interesting

Compliance Circle said:
Of course, there's no one size fits all solution and there are certain limitations on how you can market those services, however you probably have an example of what can be built in combinations "EMI partnership + Swiss permit" right here, on OCT - swissmoney (not an ad or endorsement).
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Yes, I have looked at them before - it has the Lithuanian EMI license, and then 1 SRO member for the actual platform and 1 for the crypto exchanging.

Compliance Circle said:
Based on my experience setting up SRO affiliated entities for clients, you can usually get that, and possibly even be registered with FINMA as asset manager beyond SRO affiliation limit of 5 million CHF of AUM, with a total first year budget well under 350 k EUR, which would include setting up, affiliating with SRO, employing part-time local director and compliance officer, injecting 100 K capital for AG, accounting and establishing local relationships.
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Yea, that sounds reasonable.

Have you also worked with the Sandbox and Fintech licenses in Switzerland? They seem also quite good, the cost would be higher but it is directly with FINMA and has more abilities like direct account issuing - because they are deposit-taking institutions in that case

Compliance Circle said:
That may, potentially, close some, or most, of your expansion goals, with having in place structure that is not unknown to local banking system at least and has substance beyond mailing address in Sweden.

Can PM you if you would be interested to discuss this option in more detail.
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Yes, that would be nice. I would like to discover more about it.

 

[clemens]

MoneyMoney said:
Have you also worked with the Sandbox and Fintech licenses in Switzerland? They seem also quite good, the cost would be higher but it is directly with FINMA and has more abilities like direct account issuing - because they are deposit-taking institutions in that case
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where can I read more about it? how is it possible that you can issue accounts directly?

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One of my favorit articles in Mentor Group ~ Sending money anonymously archieve Financial Anonymity

 

[MoneyMoney]

clemens said:
where can I read more about it? how is it possible that you can issue accounts directly?
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Hi,

That's because the Fintech (1M to 100M funds) and Sandbox (<1M funds held) are almost banks. They are deposit-taking institutions with very close functionality. Sandboxes can also pay interest nowadays. Fintechs cannot do this but they are able to hold a larger amount of money. For the Fintech license, the minimum capital is 300K francs and it is more effective than an EMI in my eyes.

These are licensed by FINMA, can easily get SWIFT code and are known to Swiss correspondents. If I remember right they also connect to Swiss National Bank so they issue CH IBANs and support SIC.

Some Swiss law firms have decent articles about this.

 

[EliasIT]

So it all went out to be something not existents and rather from outer space than this world?

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If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability!
My personal favorite thread posted in the Mentor Group. Group of investment companies to avoid licensing.