Lithuania cuts fintech red tape with risk based regulations
Investment climate
Investment climate, Tech

Lithuania cuts fintech red tape with risk-based regulations

July 10, 2025

Lithuania is slashing red tape for fintech companies with new   regulations that cut compliance burdens for low-risk businesses while keeping essential safeguards intact. The regulatory shift aims to strengthen Lithuania’s position as Europe’s largest fintech hub and create a more flexible environment for financial institutions.

 

Europe’s fintech leader gets more competitive

With more than 120 active licensed fintech companies operating at the end of 2024, Lithuania stands as the largest fintech hub in the European Union by number of licensed companies, serving over 30 million EU customers. To further strengthen Lithuania’s competitiveness, recent regulatory updates have introduced a more risk-based approach, granting institutions greater discretion to assess client risk levels and determine when simplified due diligence may be applied – ultimately making it easier for lower-risk business models to operate in the country.

The new framework, developed to be more in line with the newest EU’s Anti-Money Laundering and Countering the Financing of Terrorism Authority regulation, introduces a differentiated regulatory model. Companies with lower-risk business models – such as e-commerce or property rental platforms – will be able to apply a risk-based approach for simplified due diligence processes.

Balancing innovation with security

By shifting to a risk-based regulatory model and broadening the applicability of simplified due diligence (SDD), the new framework strikes a balance between maintaining strong AML/CTF safeguards and fostering a more business-friendly environment. The   regulatory update is designed not only to comply with EU legal provisions but also to ensure Lithuanian companies can operate transparently and safely without excessive regulatory burden.

This regulatory evolution is particularly significant for   digital-first, low risk companies operating large-scale e-commerce platforms that rely on seamless, low-friction onboarding and payment processes. The reduced compliance burdens and greater flexibility in customer verification support operational agility and scalability – critical factors for companies looking to expand across European markets.

This represents another progressive move and positive development by the Lithuanian government. With this change, Lithuania strengthens its competitive edge by endorsing low-risk fintech business models. Companies can now adopt a risk-based strategy, allowing them to focus on technology and product development to deliver a seamless user experience.
Modestas Tursa, CEO of Vinted Pay

Attracting global investment

The regulatory adjustments, based on differentiated risk assessment, align with best practices from leading EU countries and position Lithuania to remain competitive with the most progressive jurisdictions. For international businesses, these changes create opportunities to establish operations in a jurisdiction that offers both regulatory sophistication and operational flexibility.

Payhawk, a leading global spend management solution that opened a local office in Vilnius in 2023 after obtaining an Electronic Money Institution (EMI) license from the Bank of Lithuania, exemplifies the type of international investment Lithuania continues to attract.

We were impressed by the speed and reaction of the Bank of Lithuania and the Ministry of the Interior along with its Financial Intelligence Unit that took the initiative to improve the existing regulation swiftly. These regulatory changes are a step in the right direction that will help us provide smoother onboarding experience for low-risk businesses ultimately making Lithuania stronger competitor to other popular jurisdictions for regulated businesses such as Netherlands and Luxembourg. Until now, the regulation required many country-specific requirements such as apostilles that might not have been very familiar to businesses opening an account for the first time in Lithuania-based EMI. We are happy to have been able to collaborate with both the regulator, the Ministry of the Interior along with the wider community such as Lithuanian Startups Associations – the Unicorns.
Hristo Borisov, Co-founder & CEO at Payhawk
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