Authorised electronic money institution AEMIGuide to applications and ongoing compliance

Issuing electronic money and providing applicable payment services require separate compliance with initial capital and safeguarding obligations. Electronic money balances are not bank deposits.

AEMI is an electronic money institution authorisation granted by FCA under the Electronic Money Regulations 2011 (EMRs), not a banking licence or a “highest-level full licence” covering all financial activities. Electronic money must be electronically stored monetary value representing a claim on the issuer, issued on receipt of funds for making payments and accepted by persons other than the issuer. Whether a digital wallet or prepaid card constitutes electronic money should be determined by the flow of funds and legal claims, not merely the product name.[1] [4]

A UK entity may provide related or unrelated payment services within its permitted scope while conducting compliant technology and other hybrid business activities; deposit-taking, investment, insurance and cryptoasset activities still require separate assessments of the permission boundaries. An AEMI applying through a UK branch of an overseas head office may only provide payment services related to issuing electronic money and cannot use this status to conduct standalone payment institution business; UK authorisation also does not restore EEA passporting rights that ended following Brexit.[4] [11]

Select the minimum sufficient combination of permissions that lawfully supports the actual business, client scope and financial responsibilities, rather than treating the broadest permissions or fastest approval as the sole objective.

• Suitable for digital wallet and prepaid card issuers that need to bear customer stored-value liabilities themselves, placing electronic money issuance, redemption and the payment chain under the responsibility of the same regulated entity. Unlike small electronic money institutions, AEMI is not subject to the registration threshold of 500 × 10,000 euros in average outstanding issuance applicable to SEMI, but its actual business remains subject to authorisation conditions, capital and safeguarding arrangements.[2] [4]

• A UK-established AEMI may conduct electronic money business and unrelated payment services within its authorised service combination, without mechanically adding a separate PI licence each time money remittance or acquiring is introduced. Unrelated payment services entail additional ongoing capital and safeguarding calculations and must be fully explained in the application; authorisation does not automatically confer all payment permissions.[2] [4]

• Eligible AEMI may apply for direct access to UK payment systems and a Bank of England RTGS settlement account, reducing reliance on a single commercial bank’s settlement sponsorship. Direct access separately requires payment system admission, a dedicated FCA assessment and a central bank decision. It is not an automatic right following AEMI approval and does not include eligibility for a central bank reserves account.[15]

• The applicant must be a legal person incorporated under the law of a part of the UK, with its head office and, where applicable, registered office in the UK; or a legal person with its head office outside the UK and a UK branch. The applicant must also conduct or plan to conduct at least part of its electronic money and payments business in the UK; an overseas incorporation certificate, a UK mailing address or an entirely overseas business plan alone is insufficient.[1] [4]

• The applicant must provide budget forecasts for the first three years, identifying customer types, currencies, charges, channels and the full flow of funds from loading to redemption. FCA will test whether projected outstanding issuance, payment volumes and capital requirements are consistent with one another; bank or card scheme access costs, personnel expenses and wind-down costs must not be hidden in a generic business plan.[1] [4]

• Corporate governance must have clear lines of responsibility, and directors and those responsible for electronic money and payment services must be of good repute and possess appropriate knowledge and experience. Compliance, finance, safeguarding and technology risk controls must be proportionate to the actual scale of operations; outsourced advisers cannot replace the board's ultimate responsibility.[1] [4]

• The applicant must explain whether its compliant safeguarding arrangement uses segregation, insurance or a guarantee, and describe operational controls for loading, payments, redemption and fee withdrawals. From 2026-05-07, the arrangements must also cover CASS 15, the resolution pack CASS 10A and applicable SUP audit and monthly reporting requirements; submitting only an outdated ‘client money segregation policy’ is insufficient.[6] [7]

• The anti-money laundering framework must identify customers and beneficial owners under the UK Money Laundering Regulations 2017, assess product, channel, geographical and transaction risks, and establish ongoing monitoring and suspicious activity escalation mechanisms. Application materials should demonstrate how responsible officers, staff training, sanctions screening and independent testing operate in practice, rather than merely list KYC software names.[1] [4]

• Payment technology systems must support accurate individual customer ledgers, funds reconciliation, access controls, incident response and recovery testing, and enable FCA to obtain records needed for supervision. If payment initiation or account information services are to be added, professional indemnity insurance or a comparable guarantee covering the relevant liabilities must also be arranged. The minimum amount is determined using the applicable calculation method, not a uniform fixed figure.[1] [4]

For shareholders, FCA reviews direct and indirect controllers with a qualifying holding, including those holding at least 10% of shares or voting rights and those able to exercise significant influence. Applicants must disclose the group structure, beneficial owners and sources of wealth and acquisition funds through the full ownership chain; close links must also be shown not to impede FCA supervision. Multiple layers of offshore companies cannot replace transparent disclosure.[1] [4]

The reputation, knowledge and experience of directors and persons responsible for managing electronic money and payment services are assessed through the EMD Individual process. Holding only EMRs authorisation does not, by virtue of AEMI status, automatically make the firm subject to FSMA’s SM&CR, SMF approval or annual certification regime. If the same company also has FSMA permission, a separate assessment is required under that permission. The enhanced senior management accountability proposals in the Treasury’s 2026 consultation must not be described as already fully implemented.[14] [16] [17]

Firms should appoint compliance and anti-money laundering leads with sufficient capability, time and authority, and clearly define board oversight, finance and safeguarding responsibilities. The substance of a UK entity's head office is assessed by the location of central management and control, significant day-to-day business decisions and central administrative functions. The legislation does not prescribe a uniform fixed number of directors, UK nationals or any particular professional certificate for all AEMI.[1] [4]

The minimum initial capital for AEMI is 350,000 euros (EUR), not 350,000 pounds or 500,000 euros. This is a regulatory eligible capital requirement, not a deposit or application fee paid to FCA. The legislation requires this amount to be met before authorisation, while FCA allows evidence of capital to be completed close to authorisation. It is therefore incorrect to claim universally that all capital must be injected before submitting an application. Where capital is held in another currency, conversion and exchange-rate fluctuations must be managed.[1] [2] [4]

Ongoing own funds must be at least the higher of 350,000 euros and the requirement calculated under paragraph 13 of Schedule 2 to EMRs; 35 × 10,000 euros must not be treated as a uniform lifetime requirement for institutions of all sizes. Electronic money issuance and related payments use Method D, namely 2% of the average daily closing electronic money liabilities over the preceding six calendar months, recalculated on the first day of each month for use during that month; new institutions use business plan projections accepted by FCA.[2] [3] [4]

When a UK entity conducts unrelated payment services, it must calculate the requirement for that business separately using Method A, B or C as specified by FCA and include it in the overall requirement; the same capital item cannot be used twice to satisfy component requirements. A is generally 10% of the previous financial year's fixed overheads; B applies bands to average monthly unrelated payment volume and a service scaling factor; C uses a banded income indicator calculation. FCA may adjust the calculated requirement upwards or downwards by up to 20% based on a risk assessment, but the floor of 350,000 euros still applies.[2] [3]

Initial capital must comply with applicable capital item and deduction rules; ordinary borrowings, unpaid capital commitments and safeguarded customer funds cannot directly be treated as eligible initial capital. Ongoing own funds may include other compliant capital instruments subject to corresponding proportional limits, so it is also incorrect to state that all capital can only ever be frozen cash. Expenses and losses erode capital; operating liquidity and orderly wind-down funding must be budgeted separately.[2] [4]

An applicant incorporated under UK law must have its head office and, where applicable, registered office in the UK, and its actual central management and control arrangements must support effective supervision by FCA. Office leases, staff locations, decision-making and record-access arrangements should be consistent with the business plan; a merely virtual address or occasional UK visits by an overseas team cannot replace this substantive requirement.[1] [4]

A legal entity headquartered overseas may apply through a branch located in the UK, but this is not remote authorisation without a local establishment, and its payment business is restricted by regulation 32(4) of EMRs. The Hong Kong or Shenzhen consultancy contact details of Ren Gang Yong Sheng (Hong Kong) Limited and Tang Shang Yong (Mr Tang) are not the applicant's UK regulated office address and must not be presented as official FCA contacts or recognised representatives.[1] [11]

• Submit incorporation and constitutional documents, a group organisation chart and the complete ownership chain, explaining the registered office, head office or UK branch arrangements. Controller materials should include identity, qualifications, declarations of regulatory and criminal history, and evidence of sources of wealth and capital contributions.[1] [4]

• Submit a programme of operations and a detailed business plan listing each proposed payment service, wallet and card product, target customer group and the issuer’s legal responsibilities. Use actual fund-flow diagrams to explain when electronic money is issued, when customer funds are received and when safeguarding obligations end.[4]

• Provide budgets, profit and loss statements, balance sheets and cash flow forecasts for the first three years, explaining key assumptions, sensitivities and capital replenishment arrangements. Initial capital may be evidenced by bank statements, SH01 capital contribution filings, recent financial statements or applicable interim accounts; evidence must match the form of capital and when it became available.[1] [4]

• Provide directors’ and managers’ EMD Individual forms, biographies and relevant suitability information, with a clear allocation of responsibilities and a staffing plan. Explain the day-to-day authority, escalation channels and cover arrangements for compliance and anti-money laundering officers. Do not substitute SM & CR Form A for the dedicated EMD procedure.[4] [14]

• Submit a safeguarding policy, account structure, bank or guarantor arrangements and due diligence evidence, showing internal and external reconciliation methods in detail. Documents should also cover account identification and acknowledgement, discrepancy handling, insurance continuity, a wind-down information pack and applicable independent audit arrangements.[6] [8] [10]

• Submit an institution-wide anti-money laundering risk assessment, customer and beneficial owner due diligence policies, enhanced due diligence, transaction monitoring and suspicious activity procedures. Explain, with reference to the actual business, how agents and distribution channels are checked, evidence is retained and staff are trained; avoid providing only regulatory summaries without identifying those responsible for implementation.[4]

• Submit security policies, system and data-flow architecture, access controls, business continuity and disaster recovery arrangements, together with incident classification and regulatory notification mechanisms. Material outsourcing should be supported by contracts, audit and regulatory access rights, service monitoring and exit plans, demonstrating that the institution can maintain control even when using third parties.[4]

• Provide customer terms, fee and exchange-rate disclosures, redemption conditions, complaints handling and applicable Consumer Duty arrangements. If PIS or AIS is included, attach professional indemnity insurance calculations and terms; if agents or distributors are used, explain their respective functions, registration requirements and oversight by the principal institution.[4] [12]

This is provided as a reference for organising the project; it cannot replace current official application forms or case-specific requests for additional materials. Please do not send identity documents or customer records through website forms.

• First assess from the fund flows whether the business constitutes electronic money, distinguishing related payments, unrelated payments, purely technical services and activities requiring other permissions. Then decide whether to use a UK legal entity or a UK branch of an eligible overseas legal entity; do not discover only after submission that the branch route cannot provide standalone payment services.[1] [4] [11]

• Establish genuine UK governance, teams, financial safeguards and technical architecture, and complete three-year forecasts and a capital plan. PASS may be used where FCA pre-application support is needed, but a pre-application meeting is not a mandatory statutory gateway and does not constitute an advance guarantee of approval by FCA.[4]

• Prepare all materials and EMD personal information in accordance with the FCA application guidance, submit through Connect and pay the correct application fee. As at the verification date, AEMI applications fall within Category 5, with a non-refundable fee of 5,640 pounds; annual regulatory fees, consultancy fees, banking and audit costs, and capital must be budgeted separately.[13]

• FCA first assesses the minimum information and application completeness, then evaluates the business model, safeguarding arrangements, controllers and personnel competence, and may raise enquiries, conduct interviews or require further evidence. Applicants should promptly explain changes in plans, personnel or sources of funds and must not treat an acknowledgement of submission as temporary permission to start issuing electronic money.[4]

• Before approval, meet capital requirements, implement safeguarding and satisfy other conditions as required, and check the scope, effective date and restrictions in the final authorisation notice. The relevant business may commence only once authorisation is effective and its conditions are met. FCA will update the public register, but the appearance of a company's name does not mean it holds all financial permissions.[1] [4] [5]

• After launch, establish a reporting calendar, capital monitoring, daily reconciliation and material incident escalation mechanisms, and maintain orderly wind-down capability. If direct access to RTGS is planned, complete the payment system and central bank processes separately; do not incorporate the clearing access project timetable into the AEMI authorisation process.[6] [15]

Article 9 of EMRs provides that a decision on a complete application for authorisation or variation of authorisation must be made within three months of FCA receiving the complete application; an incomplete application must be decided no later than twelve months after receipt of the original application. The statutory time limit is a deadline for a decision, not a guarantee of approval. Meeting the minimum submission requirements does not mean that FCA has deemed the application complete, so the commonly experienced project duration of six to twelve months cannot replace the statutory rules.[5]

There is no uniform statutory number of preparation months; timing depends on the readiness of bank safeguarding accounts, management, systems, three-year budgets and documentation. Rengang Yongsheng (Hong Kong) Limited and Tang Shangyong (Mr Tang) can develop project calendars based on actual readiness, but “one to two months” or “three to six months” of preparation can only be case-specific budgets with explicitly stated assumptions, not promises of universal deadlines or faster approval.[4]

Direct payment system access is a separate project. Bank of England guidance requires planning for at least twelve months for direct access even after completing the relevant FCA activities. The guidance also notes that FCA generally requires at least nine months of actual regulated business history before undertaking the relevant s166 assessment; this does not constitute a fixed waiting period for initial AEMI authorisation.[15]

A proposed controller acquiring or increasing control and crossing the 10%, 20%, 30% or 50% threshold, or gaining significant influence over management, must notify and obtain approval from FCA before the transaction. Reducing or relinquishing control also requires prior notification, but not the same approval required for an increase. The authorised firm itself should also promptly report known proposed changes in control.[4]

The assessment period for a complete control notification is generally sixty working days and may be interrupted for up to a further thirty working days for additional information under statutory conditions. The original page's statements to 'apply at least thirty days in advance' and 'report non-material changes within thirty days' cannot be used as general rules. Shareholder agreements, acting in concert, indirect holdings and group restructurings must all be included in the control analysis.[4]

Appointments of directors and persons responsible for electronic money and payment services should be notified through the EMD procedure before the change; departures must be notified no later than seven working days after the event. Changes to individual fitness information and MLRO must also be updated promptly. When adding services or removing existing authorisation restrictions, apply for a variation of authorisation under EMRs. Material changes to safeguarding methods, banks or guarantors should be notified in advance, rather than incorrectly applying all FSMA VoP processes or supplying documents only afterwards.[4] [14]

AEMI must submit applicable returns through designated channels such as My FCA and its RegData system. The FIN060 annual electronic money institution return is generally due within thirty working days after the accounting reference date; the annual payment and electronic money complaints return also has a corresponding thirty-working-day requirement. REP017 payment fraud data for AEMI is generally reported half-yearly, within two months after period-end. When payment services are provided, the REP018 operational and security risk assessment is required at least annually. All reporting must not be reduced to “quarterly financial statements”.[4]

From 2026-05-07, the REP027 safeguarding return is monthly and due within fifteen working days after month-end. Safeguarding methods, accounts, amounts, discrepancies and breaches must be recorded for each business activity. Internal and external reconciliations must be performed at least once on each reconciliation day. Exceptions, such as relevant markets being closed, should be interpreted under the rules; “daily” must not be reduced to a monthly spot check of balances.[6] [7]

Institutions subject to SUP 3A must appoint an independent external auditor. The safeguarding audit reporting period must generally not exceed fifty-three weeks, and reports are normally submitted within four months of period end. Transitional provisions extend this to six months after period end only where the reporting period ends within fifty-three weeks after 2026-05-07 takes effect. The general small-amount audit exemption requires that the institution has not been required to safeguard more than one hundred thousand pounds at any time for at least fifty-three weeks, but from 2026-05-07 to 2027-05-14 the transitional provisions require the observation period to be ‘since the rules took effect’ instead.[8] [9]

An audit of company financial statements and a safeguarding audit are separate obligations. Eligibility for the small company accounts exemption does not automatically exempt a company from a SUP 3A audit; conversely, it must not be asserted that all AEMI accounts unconditionally require the same type of annual audit. Hybrid institutions must identify the separate accounting information requirements for electronic money and payment business. Actual financial statement, audit and FCA submission obligations are determined jointly by EMRs, company law and individual conditions.[4] [8]

Client funds must be separated from own funds, using eligible bank accounts, qualifying low-risk liquid assets or insurance guarantees as permitted by legislation; account purposes and third-party rights are restricted. Banks and guarantors should be assessed continually, and an accurate, retrievable wind-down information pack maintained. Contingency arrangements should be in place three months before insurance or guarantees expire. Safeguarding still does not equate to FSCS deposit compensation or a promise of immediate full repayment following insolvency.[6] [10]

Ongoing anti-money laundering work includes risk updates, reviews of customer and beneficial owner information, enhanced due diligence, transaction and sanctions monitoring, staff training and record-keeping. Suspicious activity reports should be submitted to NCA as required, not merely to FCA. Firms serving retail customers must also implement applicable Consumer Duty requirements, payment and redemption disclosures and complaints handling, and promptly notify FCA of material business, security and funds risks. Paying annual regulatory fees is not an annual review that reissues a licence or guarantees automatic renewal.[4] [12] [13]

Acquiring AEMI means acquiring the authorised legal entity and its historical liabilities, not transferring a permission directly from the seller's company to the buyer's company. Due diligence should first check the FCA register, actual authorisation notice, service restrictions, regulatory requirements and controllers, identifying risks of prolonged inactivity, ongoing remediation or proposed cancellation of authorisation. Do not rely solely on FRN and the certificate of incorporation.[4]

Client money due diligence should verify individual ledgers against underlying bank, custody and insurance records, sampling reconciliation trails for top-ups, issuance, redemption and fee deductions. Focus on implementation of REP027, wind-down information packs and applicable audits after 2026-05, historical discrepancies and qualified audit opinions, and confirm whether any account set-off, pledges or intragroup funding arrangements breach requirements.[6] [8] [10]

The transaction must assess change-of-control clauses in bank safeguarding account, card scheme, payment system and material outsourcing contracts, because FCA approval does not automatically preserve commercial partnerships. It should also sample AML customer files, agents and distributors, fraud reimbursement and complaint liabilities, recalculate capital requirements for electronic money and unrelated payments, and budget the capital and liquidity needed for governance changes and system migration.[2] [4]

Completion conditions should include necessary change-in-control approvals, updates to director and EMD information, key contractual consents and ongoing safeguarding arrangements, with clear indemnity or retention mechanisms for historical breaches. Where the acquisition involves a UK branch of an overseas-headquartered institution, particular attention is required to the prohibition on unrelated payments in regulation 32(4) of EMRs. Service boundaries cannot be circumvented by renaming the business or merely replacing shareholders.[4] [11]

The following are specific permissions, organisational models or statutory categories covered by this topic. They do not necessarily each constitute a separate financial licence.

Primarily based on FCA, PRA / Bank of England, GOV.UK and current legislation. Older third-party guides supplied by users are used to organise business material and do not override the latest official requirements.

Information compiled by: RenGang Yongsheng (Hong Kong) Limited

Tang Shangyong (Mr Tang / Drew) · Business Manager
Global financial licence application, transaction and ongoing compliance services

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