Passporting
Passporting is the mechanism by which a firm authorized in one EEA state may provide its services in the other EEA states without seeking separate authorization in each one. The home state regulator continues to supervise the firm throughout.
Also called: EEA passport · freedom of services
Passporting works because the underlying authorizations are granted under shared European rules. If one state has already tested a firm against those rules, the others accept that decision rather than repeating it. The firm remains authorized and prudentially supervised by its home state regulator wherever its customers are.
How it works
The firm notifies its home regulator of the states it intends to serve and the activities it will carry on there. The home regulator passes the notification to each host regulator, and after a short waiting period the firm may begin. There are two forms. Freedom of services covers cross-border activity with no local presence. Freedom of establishment covers operating through a branch or through agents or distributors in the host state, and brings more host-state involvement, particularly on conduct and anti-money-laundering supervision.
Where it stops
A passport carries only the activities the home authorization actually permits. A payment institution cannot passport e-money issuance it was never authorized for, and an electronic money institution cannot passport services outside its permission set. Nor does the mechanism reach beyond the EEA: Switzerland, the United States and every other third country sit outside it, and a firm established outside the EEA cannot passport inward. It needs an authorized EEA entity of its own, staffed and directed in the state that authorizes it — a nameplate office with the decisions taken elsewhere will not survive the application.
Passporting also does not flatten everything a firm meets in a host state. Local conduct rules, consumer protection requirements, language obligations and anti-money-laundering supervision can still apply, and a host regulator retains powers over a firm operating on its territory. The passport removes the second authorization, not the second set of local expectations.
In practice
Passporting operates within the EEA only. A UK authorization has carried no EEA passporting rights since Brexit, and an EEA authorization gives no right to serve UK customers — so UK and EU licenses are now two separate decisions, each with its own application, capital and supervision.
Example
An e-money institution authorized in Lithuania notifies its regulator and begins serving customers in Germany and France under freedom of services, with no new application in either country. The same firm wanting UK customers has no passport to use: it must apply to the FCA for a UK authorization and run it as a separate regulated business.
Commonly confused with
| Term | How it differs |
|---|---|
| Equivalence | Equivalence is a political recognition of another jurisdiction’s rules for limited purposes and can be withdrawn; passporting is a firm-level right to serve customers across the EEA. |
| SEPA | SEPA is the geography of a euro payment scheme; passporting is a licensing right. A firm can reach SEPA countries through a partner without holding any passport itself. |
See also
- Electronic Money InstitutionA firm authorized in the United Kingdom or in an EU member state to issue electronic money and to provide payment services. The e-money it issues is a claim its holders have against the institution, redeemable at par and expressly not a deposit, which is why the funds behind it must be safeguarded.
- Payment InstitutionA payment institution is a firm authorized in the United Kingdom or a European Union member state to provide payment services — transfers, acquiring, remittance, payment initiation — but not to issue electronic money. It may hold customer funds in payment accounts used only for payment transactions; those funds are neither deposits nor e-money.
- PSD2PSD2, the Second Payment Services Directive, is the EU law governing payment services. It sets the authorization categories for payment firms, opened bank account access to licensed third parties, and required strong customer authentication for electronic payments.
- Financial Conduct AuthorityThe Financial Conduct Authority is the United Kingdom’s conduct regulator for financial services. It decides whether a payments or e-money firm may operate in the UK, authorizes or registers it, and supervises how it behaves afterwards.
- MiCAMiCA, the Markets in Crypto-Assets Regulation, is the EU law governing the offer of crypto-assets, their admission to trading, and the provision of crypto-asset services, with one set of rules applying directly across every member state. Service providers are authorized once and can then passport through the bloc.