Electronic money institutions: safeguarding requirements

Read about the safeguarding requirements for authorised EMIs, small EMIs and credit unions that issue e-money and their responsibility to protect safeguarded funds.

Safeguarding requirements 

The EMRS impose safeguarding requirements to protect customer funds. They apply to:

  • authorised EMIs
  • small EMIs 
  • credit unions that issue e-money

Read more about safeguarding requirements in Chapter 10 of our Approach Document

All EMIs are required by regulation 20 to safeguard funds received in exchange for e-money that has been issued.

Credit unions and safeguarding requirements

A credit union that issues e-money will have a Part 4A permission under FSMA to issue e-money. It is required under the EMRs to safeguard funds received in exchange for e-money as if it were an EMI, see regulation 20(5).

Safeguarding funds from unrelated payment services 

EMIs and credit unions are entitled to provide payment services that are unrelated to the issuance of e-money.

Authorised EMIs that provide unrelated payment services are subject to the safeguarding provisions of the PSRs (regulation 19 of the PSRs) as if they were authorised payment institutions.

Small EMIs that provide unrelated payment services are in the same position as small payment services providers.

Small EMIs and credit unions may choose to safeguard funds received in exchange for unrelated payment services.

Funds that need to be safeguarded 

EMIs and credit unions must safeguard funds that have been received in exchange for e-money that has been issued (referred to as ‘relevant funds’).

Authorised EMIs must also separately safeguard funds received in exchange for unrelated payment services.

Read more about the safeguarding requirements in Chapter 10 of our Approach Document. This includes:

  • How funds must be safeguarded, including the segregation and insurance methods.
  • Protection from the claims of other creditors.
  • Relevant systems and controls.
  • Effect of an insolvency event.