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Companies wanting to offer commercial banking services, financial services or payment services in Germany need a permission from the Federal Financial Supervisory Authority (BaFin) prior to the offering of their services. Activities like the granting of loans, the managing of funds or the professional trading of financial instruments as a service to clients are therefore not permitted without a BaFin license unless the individual activity stays below specific de-minimis-thresholds as defined by BaFin. In order to obtain a required permission from BaFin for commercially offering financial services a variety of legal requirements have to be matched. For example, the applicant needs a sound and sustainable business plan,
specific minimal capital requirements have to be matched, competent and reliable directors have to be in charge of the company and all the business procedures and sample contracts need to be flawlessly drafted from a regulatory point of view. Those legal requirements vary from case to case depending on the actual services that the company wants to provide. As a general rule, permissions for banking services like deposit banking or the granting of loans have to meet higher requirements than permissions for financial services like e.g. investment brokerage.
Avoiding the Statutory Bafin Permission in specific Cases
FIN LAW supports its clients with the preparation of a license application and represents them vis-à-vis BaFin throughout the licensing proceedings. Prior to the license application, FIN LAW will – if possible and desired – show its clients alternative solutions that avoid the need for a BaFin permission while staying in compliance with the laws. Especially Fintech startups in the early stages of business development can profit from this approach. Depending on the services that the business wants to provide an adjustment of the business model might eliminate the need for a permission from BaFin and thereby save time and money for the client. Beside the possibility of adjusting the business model there may also be the possibility of a cooperation with a licensed whitelabel partner or the outsourcing of the licensed activities to a bank partner.
Brokering Financial Assets to Clients in Accordance with Section 34f of the Federal Commercial and Industrial Code
In certain cases the commercial brokerage of financial assets as defined in section 34f of the Federal Commercial and Industrial Code (GewO) is permitted without a BaFin license, if the assets brokered are solely shares of closed-end funds or mutual funds or asset investments as defined in the Federal Asset Investment Act. According to section 34f of the Federal Commercial and Industrial Code (GewO) in these cases the permission of the competent authority (depending on the federal province that is either the chamber of industry and commerce or the trade office) is sufficient. Even though the admission as a financial asset broker as defined in section 34f of the Federal Commercial and Industrial Code (GewO) is also tied to certain legal requirements these requirements are not as extensive as the ones that have to be met when applying for a BaFin license in accordance to sec. 32 of the Federal Banking Act (KWG). FIN LAW advices its clients comprehensively in the application process for a permission according to section 34f of the Federal Commercial and Industrial Code (GewO) and represents them vis-a-vis the competent authority.