Regulatory Licensing and Compliance Advisory for Electronic Money Institutions
Regulatory Counsel advises electronic money institutions on authorisation, safeguarding, prudential requirements, financial crime controls and ongoing compliance. We work with firms issuing wallets, stored value products, multi-currency accounts and card programmes in the UK and across the European Union.
FCA authorisation under the Electronic Money Regulations 2011
Small electronic money institution registration and upgrade planning
Safeguarding design under the current UK safeguarding framework
Own funds, initial capital and prudential method selection
Governance, financial crime and regulatory reporting frameworks
EU EMI authorisation and cross-border expansion strategy
How we advise electronic money institutions
An electronic money institution issues electronic money: monetary value stored electronically, issued on receipt of funds, and accepted as a means of payment by persons other than the issuer. In the UK, EMIs are authorised or registered under the Electronic Money Regulations 2011 and supervised by the Financial Conduct Authority. In the EU, the equivalent regime derives from the Electronic Money Directive as applied by each national competent authority.
The commercial question is rarely whether the firm can obtain an EMI authorisation. It is whether the firm needs one, and whether its safeguarding and prudential design can carry the balances it intends to hold.
When does a payment business need an EMI rather than a PI?
A firm needs an electronic money institution authorisation when it stores value for customers that can be spent later with third parties. If funds are only ever received to execute a specific payment transaction and are passed on, a payment institution permission is usually the correct route.
The practical test is whether a customer holds a balance. Wallets, prepaid programmes, multi-currency accounts and stored balances that persist between transactions point to e-money issuance. Collection and disbursement flows where funds are received for onward execution point to payment services.
Firms frequently misclassify here, because a product roadmap adds a balance feature after authorisation. Adding stored value to a payment institution permission is not a product decision; it is a variation of permission or a new authorisation.
| Feature | Points to payment institution | Points to EMI |
|---|---|---|
| Customer balance | Funds held only to execute an instructed transaction | Balance persists and can be spent later |
| Redemption | No redemption right over a stored balance | Customer can redeem stored value at par at any time |
| Product | Remittance, acquiring, collections, disbursement | Wallets, prepaid cards, multi-currency accounts |
| Prudential | Initial capital by payment service and own funds methods | Higher initial capital plus own funds based on outstanding e-money |
What are the safeguarding obligations for an EMI?
An electronic money institution must safeguard funds received in exchange for electronic money that has been issued, from the moment of receipt, using segregation in a designated safeguarding account or an insurance policy or comparable guarantee.
The FCA has strengthened its safeguarding expectations and firms should assume rigorous scrutiny of reconciliation frequency, record keeping, the safeguarding resolution pack and the annual audit. For an EMI the exposure is structurally larger than for most payment institutions, because outstanding e-money accumulates rather than passing through.
Where a firm issues e-money and also provides unrelated payment services, the safeguarding analysis has to distinguish the two categories of relevant funds rather than treating the safeguarding account as a single undifferentiated pool.
- -Identifying and documenting relevant funds for e-money and for payment services separately
- -Daily internal and external reconciliation with an evidenced break resolution process
- -Safeguarding account arrangements, acknowledgement letters and bank due diligence
- -The safeguarding resolution pack and its maintenance
- -Annual safeguarding audit readiness and management of audit findings
What prudential requirements apply to an electronic money institution?
An authorised EMI must hold initial capital and maintain own funds calculated by reference to outstanding electronic money, together with any additional own funds required for unrelated payment services provided.
Firms often model capital at the point of authorisation and never revisit it. Own funds are a live obligation that moves with outstanding e-money, so a successful product launch can itself create a prudential shortfall. We build the calculation into the monthly finance cycle rather than leaving it as an annual exercise.
What ongoing compliance do EMIs need after authorisation?
Authorised EMIs must maintain governance and control frameworks, safeguard relevant funds continuously, calculate and monitor own funds, run proportionate financial crime controls, submit accurate regulatory returns, notify material changes and evidence compliance monitoring against their actual risk profile.
Operationalise the framework
Convert authorisation commitments into live controls, owners and management information before launch.
Safeguard and reconcile
Daily reconciliation, break management and resolution pack maintenance.
Monitor and test
Risk-based compliance monitoring, transaction monitoring calibration and periodic financial crime risk assessment.
Report and notify
Regulatory returns, safeguarding reporting and prompt notification of material change.
Respond and remediate
Information requests, supervisory engagement, independent reviews and credible remediation plans.
How does Regulatory Counsel support EMIs internationally?
We advise UK EMIs establishing EU entities, EU institutions entering the UK, and groups running parallel authorisations. The work is structural: deciding where the regulated entity sits, which entity contracts with customers, and how safeguarding, capital and financial crime oversight operate across the group.
A single global product frequently creates several regulatory obligations at once. A wallet issued from an EU EMI, funded by cards acquired in the UK and used for remittance into North America, engages more than one regime, and the group needs a coherent answer before, not after, launch.
Practitioner observations from electronic money institutions engagements
Product roadmaps outrun permissions
The most common EMI compliance problem is a feature shipped ahead of the permission that supports it. Compliance change control has to sit inside the product process, not alongside it.
Safeguarding failures are reconciliation failures
Firms rarely intend to hold relevant funds outside safeguarding. It happens because settlement timing, partner sweeps and fee deduction were designed without reference to the safeguarding rules.
Group structures need one regulatory narrative
Where a group holds a UK EMI and an EU EMI, supervisors expect a consistent account of governance, outsourcing and intragroup dependency. Two separately drafted stories create supervisory questions on both sides.
Licences and registrations for this sector
UK Electronic Money Institution
Full FCA authorisation under the Electronic Money Regulations 2011.
View licenceUK Small Electronic Money Institution
Registration route below the outstanding e-money threshold.
View licenceUK Authorised Payment Institution
Where the model does not involve stored value.
View licenceEU MiCA CASP Licence
Where the group also provides crypto-asset services in the EU.
View licenceHow we support firms in this sector
Regulatory Licensing & Authorisation
EMI authorisation strategy, preparation and submission management.
Safeguarding & Client Money
Safeguarding method design, reconciliation and audit readiness.
Ongoing Compliance Support
Post-authorisation monitoring, reporting and governance support.
Regulatory Reporting
Return preparation, data quality and reporting governance.
Discuss an EMI authorisation or safeguarding review
Tell us your business model, the markets you serve and the permissions you hold. We will tell you what is actually in scope and what the credible route looks like.
Your enquiry
Related insights
EMI vs Payment Institution Licence: Which Does Your Business Need?
Understanding the fundamental legal and commercial differences between EMI and payment institution authorisation, and how to determine which your business requires.
LicensingFCA Authorisation: Step-by-Step Guide to the Application Process
A detailed walkthrough of the FCA authorisation process: from pre-application planning through to determination and post-authorisation obligations.
LicensingPassporting and Cross-Border Licensing Post-Brexit: UK Firms' Options
How UK financial services firms can serve EU/EEA customers after the loss of passporting rights, including subsidiary options, equivalence and reverse solicitation.
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Frequently asked questions
An electronic money institution issues stored value that customers can hold and spend later with third parties. A payment institution executes payment transactions with funds received for that purpose. The presence of a persistent customer balance, and a right of redemption at par, is the practical dividing line.
An authorised EMI must hold initial capital and then maintain own funds by reference to average outstanding electronic money, plus additional own funds for unrelated payment services. The requirement changes as the book grows, so it should be monitored monthly rather than at authorisation only.
Yes, but the upgrade is a full authorisation assessment rather than an administrative change. Firms that expect to exceed the outstanding e-money threshold should plan the application well before the threshold is reached, because operating above it without authorisation is a breach.
In the UK, an authorised EMI is supervised for anti-money laundering purposes by the FCA as part of its authorisation, so no separate registration is required. Different rules apply in other jurisdictions, and firms adding cryptoasset activity may trigger a separate registration or authorisation.
The FCA has tightened safeguarding expectations across payments and e-money, with greater emphasis on record keeping, daily reconciliation, resolution planning and independent audit. EMIs are most exposed because outstanding e-money accumulates, so shortfalls compound rather than clearing with each settlement cycle.
Not on the basis of UK authorisation. Passporting ended with Brexit, so serving EEA customers generally requires authorisation from an EEA national competent authority, with genuine local substance and governance.
Most delays come from unresolved questions about the flow of funds, unclear responsibility between the firm and its partners, safeguarding arrangements that do not match the product, and financial forecasts that are inconsistent with the stated volumes.
Primary regulatory sources
This page summarises regulatory requirements for orientation. It is not legal advice. The primary sources below govern.