Expanding into France: what PIs and EMIs need to know before establishing a branch

France remains one of Europe’s most attractive markets for Payment Institutions (PIs) and Electronic Money Institutions (EMIs). However, entering the French market involves much more than activating passporting rights. To better understand the opportunities, regulatory expectations, and practical challenges, we met with Franck Manoukian, Chief of Staff at Regsharp, who specializes in regulatory compliance and payment services. In this first part of our interview, the expert shares key insights on why firms establish a branch in France, how the ACPR approaches supervision, and what institutions can do to successfully navigate the authorization process.

France is the EU’s second-largest economy and home to a thriving Fintech ecosystem. Based on your experience, what typically motivates a PI or EMI to establish a branch in France? What tends to surprise them most once the process begins?

There are several reasons why firms choose to establish a presence in France. The country represents a market of nearly 70 million consumers for B2C activities, with one of the highest banking penetration rates in Europe. It is also a highly active B2B market, driven by the growth of new payment providers, payment infrastructure players, and the increasing adoption of innovative financial solutions.

For PIs and EMIs licensed in jurisdictions where authorization processes have historically been more flexible, France often represents a major step in their European expansion strategy, beyond simply relying on EU passporting rights.

However, this ambition to enter the French market frequently encounters two realities.

The first is the level of scrutiny exercised by the ACPR (Autorité de Contrôle Prudentiel et de Résolution). In areas such as Anti-Money Laundering and Combating the Financing of Terrosism (AML/CFT), internal controls, and regulatory reporting, the ACPR is generally regarded as more demanding than many other European NCAs (National Competent Authorities). Foreign institutions are expected to demonstrate robust governance arrangements and a compliance framework genuinely tailored to the French market.

The second surprise often relates to the administrative burden associated with establishing a branch. Many firms still view it as a simple notification process. In practice, this perception can be misleading, leading institutions to underestimate the preparatory work required and subsequently face costly adjustments in compliance, governance, and operational structures.

From a commercial perspective, France is also particularly attractive. Many Fintechs, marketplaces, financial institutions, and large corporates prefer working with partners that maintain a genuine local presence. This often drives firms to establish a branch when pursuing long-term growth opportunities.

Finally, human resources and local substance requirements are playing an increasingly important role. Institutions seeking to demonstrate a meaningful presence in France must be able to evidence a credible local organization. This typically involves closer engagement with French authorities, particularly the ACPR and, depending on the activities involved, the Autorité des Marchés Financiers (AMF).

There is often confusion between EU passporting and establishing a branch. Could you clarify the practical and regulatory differences between these two models? Why would an institution choose one over the other?

This is a question we encounter regularly.

Freedom of Services (FoS), commonly referred to as passporting, allows a PI or EMI licensed in one EU Member State to offer services in another Member State without maintaining a permanent physical presence there. The process is based on a notification submitted to the home-state authority, which then informs the host-state authority. Prudential supervision remains the responsibility of the home regulator.

A branch follows a different logic. It involves establishing a stable physical presence in France, including office premises, dedicated staff, and effective local management. This signals a more structured and long-term commitment to the French market.

A branch also provides an important operational advantage: it may facilitate access to a local BIC and, consequently, a French IBAN. This is often valued by customers, business partners, and banking institutions, as it represents a strong indicator of local presence.

From a regulatory perspective, supervision is shared. The home authority retains prudential oversight, while the ACPR exercises enhanced supervision over specific areas, particularly conduct of business and AML/CFT obligations.

In practice, the choice largely depends on the institution’s commercial ambitions. Where the objective is to serve a limited number of customers or develop a small number of B2B partnerships, FoS may be sufficient. However, when an institution intends to participate in tenders, enter strategic partnerships, or build a significant presence in the French market, establishing a branch often becomes essential. It considerably strengthens the institution’s credibility with clients, partners, and local stakeholders.

A common approach is to begin under the FoS regime to test market demand and then progressively transition to a branch structure once business activity reaches a critical scale.

For a PI or EMI already licensed within the EU, what are the main requirements imposed by the ACPR when establishing a branch in France? What are the most common challenges?

The ACPR first expects a complete notification package transmitted by the home-state authority. This filing typically includes the business plan, organizational structure, governance arrangements, and details regarding the branch’s effective managers and their qualifications.

The AML/CFT framework must be specifically tailored to the French market, with a clearly designated Money Laundering Reporting Officer (MLRO). Internal control procedures must be adequately documented, and institutions must demonstrate their ability to produce the required regulatory reports, often in French. The ACPR also pays close attention to the AML/CFT officer’s ability to interact effectively with French authorities in French.

The most common difficulties initially relate to the quality of the file submitted through the home-state regulator. Where communication between authorities is incomplete or inefficient, timelines can be significantly extended.

We also observe situations where institutions that are fully compliant in their home jurisdiction discover that certain French expectations are more detailed or demanding than those they are accustomed to. These may include local guidelines, governance requirements, or specific compliance arrangements.

The ACPR places particular emphasis on local substance. It expects local management to have genuine decision-making authority, especially regarding compliance, incident management, fraud prevention, and regulatory interactions.

Finally, outsourcing remains a major area of scrutiny. Critical outsourced services – particularly technology functions and cybersecurity arrangements – must remain sufficiently controlled and overseen by the institution. This expectation has become even more significant following the implementation of DORA (Digital Operational Resilience Act).

Based on your experience, how long does the branch authorization process actually take? What practical steps can institutions take to avoid delays and regulatory friction?

Under both ACPR guidance and the latest PSD3 compromise text, the statutory assessment period is three months from receipt of a complete application.

In practice, however, timelines in France are often longer, typically ranging from five to nine months, and sometimes beyond where additional information requests are issued or coordination between authorities is delayed.

It is important to remember that an application is only considered complete once the supervisor is satisfied that all necessary information has been provided. As long as follow-up questions remain outstanding, the official review period has not truly begun. Ultimately, this assessment remains at the discretion of the supervisory authority.

The best approach is therefore to prepare a comprehensive application from the outset, anticipate the French regulator’s specific expectations, and seek support from local regulatory specialists.

At Regsharp, we also recommend proactive engagement with the regulator. Where a project involves particular complexity or unique features, a preliminary presentation can help identify key areas of focus and facilitate future discussions.

It is equally important to appoint a dedicated point of contact early in the process, ideally someone who is French-speaking and familiar with the French regulatory framework.

Finally, institutions that prepare their local operating model in advance – including internal controls, governance, compliance arrangements, and IT systems – generally experience a smoother review process.

Our recommendation remains consistent: conduct a thorough pre-assessment and gap analysis before any formal notification is submitted.

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Establishing a branch is only the first step. In the second part of our interview, Franck Manoukian explains the ongoing compliance obligations facing foreign PIs and EMIs, the impact of PSD3, PSR, CESOP and FNC-RF, and how Regtech solutions can help institutions build scalable compliance frameworks.

Part 2, “Compliance, Fraud Prevention and Regulatory Change for PIs & EMIs in France” will be published in the upcoming weeks.