Denmark: Licensing Requirements for Fintech Companies
A new regulatory framework has been introduced in Denmark, outlining licensing requirements for fintech companies operating in the country. The regulations aim to provide a clear and consistent approach to licensing and supervision, ensuring that fintech businesses comply with relevant laws and regulations.
Core Services Require Licensing
Fintech companies providing core services, such as:
- Investment advice
- Financial advice
- Residential credit intermediation
- Insurance activities
must hold a licence from the Financial Supervisory Authority (FSA). The minimum own funds requirement for these services is €125,000, with a share capital of Dkr500,000. Additionally, firms must comply with Capital Requirements Regulation own funds requirements.
Investment Services
Large investment firms permitted to provide all types of investment services are subject to:
- Minimum own funds requirement: €730,000
- Share capital: Dkr500,000
- Capital Requirements Regulation own funds requirements
Licensing Exemptions
The licensing exemptions set out in Article 2 of the EU Markets in Financial Instruments II Directive have generally been implemented without material changes.
Anti-Money Laundering (AML) Registration
Fintech businesses not otherwise required to hold a licence under any of the above regulations must register with the FSA if they perform any of the activities set out in Annex I to the Act on Measures to Prevent Money Laundering and the Financing of Terrorism, including:
- Deposit taking
- Lending
- Financial leasing
- Assistance in offering securities
- Storage, administration, and management of securities
Consumer Lending
The new Act on Consumer Loan Undertakings entered into force on July 1, 2019, creating an exception to the absence of a requirement for a licence to lend in Denmark. Consumer loan and credit in-scope providers must obtain a licence from the FSA and will be subject to ongoing conduct of business rules.
Secondary Market Loan Trading
There are no restrictions on trading loans in the secondary market.
Crowdfunding
Crowdfunding and other types of alternative financing are not subject to bespoke regulation in Denmark. However, if the crowdfunding scheme constitutes “donation-based crowdfunding,” the rules set out in the Danish Fundraising Act may apply.
Payment Services
The performance of payment services requires a licence under the Payments Act, which implements Annex I to the PSD2.
Open Banking
There are no laws or regulations introduced to promote competition that require financial institutions to make customer or product data available to third parties, except for the rules implementing Articles 65 to 68 of the PSD2.
Insurance Products
Fintech companies selling or marketing insurance products in Denmark must comply with relevant licensing requirements and regulations.
Credit References
Credit information services and credit information bureaus are generally required to adhere to the rules set out in the EU General Data Protection Regulation and the Danish Data Protection Act. Credit information bureaus must seek a licence from the Danish Data Protection Agency prior to commencing any data processing.
The new regulatory framework aims to provide a clear and consistent approach to licensing and supervision, ensuring that fintech businesses comply with relevant laws and regulations in Denmark.