We were honoured to accept an invitation to be interviewed by Fintree.cz magazine on the topic “Law and FinTech.” You can read the full interview here.
From the interview, we highlight the following:
Ondřej Machač, Fintree.cz: I first met you when you assisted us at Roger in obtaining the PSD2 licence. Was that a challenge for you? Is the CNB as friendly to FinTech companies in our country as the local regulators in the Baltics?
Jan Šovar, FINREG: In this case, we joined the process after the licensing procedure had already been underway for some time; our objective was to secure the licence for the client within the shortest possible timeframe. We believe it’s absolutely essential to translate the business model into the company’s internal regulatory framework and processes, as required by the CNB and the relevant legislation. This is where we supported Roger.
As for your second question, I wouldn’t describe the CNB as unfriendly. It’s an authority with its own procedures, vision, and objectives, and its primary goal is to prevent entities from entering the market that do not meet the necessary legal requirements. My understanding is that the CNB, in particular, wants to ensure that these entities are not risky in terms of AML, market stability, and public trust.
In short, there are two approaches to licensing in Europe, differing in the level of detail with which ex-ante compliance with licensing conditions is examined. Regulators who do not require a high level of detail typically scrutinise the functionality and thoroughness of procedures during inspections conducted shortly after the licence is granted. In our country, a high degree of caution is already applied during the licensing process.
Your firm has worked with many prominent names in the domestic FinTech scene, such as Fondee, Roger, Twisto, Advanto, and Spendee. Which case was the most challenging for you in terms of meeting the licensing requirements?
It’s not surprising to say that every case is interesting in its own way. However, in terms of satisfaction, it’s particularly rewarding to work on cases that are new to the Czech environment. This highlights how crucial it is to discuss the client’s business plan and strategy, as sometimes it may turn out that the plan can be realised outside the regulated environment, or through a combination of the “regulated” and “unregulated” worlds. Such an approach requires experience and a keen awareness of recent developments in both local and European regulations.
How long does it take to obtain such a licence from the CNB?
The duration of the process depends on several factors, particularly the type of licence and how standard your business model is compared to domestic models. It also depends on whether the licence permits activities such as receiving funds, and who the people behind the project are. Clients should bear in mind that obtaining a licence typically takes longer than the relevant law suggests. Preparation is key—having a well-prepared and fine-tuned business plan significantly impacts the length of the licensing process.
What types of licences can the CNB issue?
In the fintech sector, the need to obtain a licence most often arises in the area of payment services. Here, it’s possible to obtain a licence to operate as either a “large” or “small” payment institution, with the “small” licence subject to a limit of an average monthly transaction volume of EUR 3,000,000 and without a European passport. There’s also a specific licence available for account information services only.
This year, the fintech world will also be impacted by the new regulation on crowdfunding. In the Czech Republic, there are a number of entities operating internet platforms that allow the public to invest in real estate or other projects through crowdfunding. These entities should consider whether they will need to obtain a licence under this newly regulated environment, or whether they wish to do so. This is a new area requiring thorough preparation, and we are currently assisting several clients with this.
You can read the full interview on the Fintree.cz website.
