Choosing a Member State, without ranking regulators

This guide is for a firm that has settled which authorisation it needs and now has to choose where to apply.

It is not for a firm still deciding which authorisation it needs, because the framework decides most of what looks like a country question. Whether a business needs a payment institution or an electronic money institution authorisation turns on whether it performs a payment service listed in Annex I to PSD2, issues electronic money, or both.1620

It is not a comparison of authorities by how they behave. This site does not publish one, and it holds no evidence that would support one.

Whether the firm already holds an authorisation somewhere in the Union, since that changes the question from where to apply into where the existing permission already reaches.3101523

Whether any part of the group sits outside the Union. The United Kingdom is a third country for Union purposes, a United Kingdom authorisation carries no EEA rights, and serving EEA clients on a regulated basis requires a separate EEA authorisation.1415

Whether the plan depends on an exemption. A Member State may exempt small payment institutions and small electronic money issuers from full authorisation, and an exempted undertaking does not obtain the right to operate in other Member States.1718

Whether the relevant national measure is in force where you intend to apply. The third-country branch requirement, for instance, takes effect through national transposing measures, so the date it binds in a given Member State follows that measure rather than the directive alone.6

Whether a transitional arrangement you were relying on ended earlier in the Member State you had in mind, because Member States could shorten the crypto-asset transitional period or decline to apply it at all.5

The legal route. The framework governing the activity sets the conditions, and the capital framework shown against each jurisdiction is the Union framework that applies there, not a national figure set by that Member State.48131924

The activity scope. Which services are performed decides which framework applies: the payment services in Annex I to PSD2, the investment services and activities in Annex I to MiFID II, or the crypto-asset services that require authorisation from an entity established in a Member State.12162021

The target market. Cross-border reach differs by framework: PSD2 and MiFID II passporting operate across the EEA, while the MiCA and ECSPR cross-border procedures are Union arrangements.3101523

Governance and substance. Union authorisation frameworks require the authorised entity to be established in a Member State and to have its head office or effective management there, which is the legal floor beneath what supervisors describe as management substance.2722

The supervisory model, and how much of it is national. The anti-money-laundering obligations that bind a firm today come from the Union anti-money-laundering directive as transposed into the national law of each Member State, so the detail differs between Member States.11

Operational dependencies, including where the application is actually made. A crowdfunding service provider, for example, applies for authorisation to the competent authority of the Member State in which it is established.9

Evidence readiness. The file has content requirements of its own: a payment institution application must include a security policy document containing a risk assessment and a description of the security control and mitigation measures.12

What it does not change is the framework. The conditions of authorisation come from the same texts wherever the file is submitted, and a firm that cannot meet them in one place will not meet them in another.

What it does change is everything around the framework: the language the file is written and discussed in, the parts of the regime that are set nationally, the depth of local presence the firm can credibly staff, and the banking, payment and audit relationships it can actually open there.

Those are facts about your own firm rather than judgements about an authority, and they are the honest content of a country decision.

Choosing on reputation. A reputation is a summary of other firms with other business models, and it is not evidence about yours.

Choosing on a schedule. A schedule is a plan the firm makes for itself, not a commitment anyone else has given, and building a launch date on it turns an assumption into a promise to the board.

Choosing before the perimeter is settled, which produces a country plan for a permission the firm may not be applying for.

Choosing somewhere the firm cannot credibly be. The establishment and management conditions set out above are conditions, not preferences, and a place the firm cannot staff is a place it cannot satisfy them.

Choosing once. A decision taken before the model, the funding and the target market settled is a decision to be re-taken when they do.

Put the seven criteria down the left of one page and your own firm down the right. Fill in what you can evidence today, mark what you cannot, and take the country decision only where the gaps are ones you know how to close. A shortlist built that way survives a board meeting; one built on reputation does not.