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Understand safeguarding reconciliation requirements and common break controls for payments firms.
An operational guide to safeguarding reconciliation for electronic money institutions and payment service providers. This guide covers the daily reconciliation process, common causes of breaks, resolution procedures, and the evidence required to demonstrate compliance to the FCA.
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Understand EMD2 and PSR safeguarding requirements for your firm.
Safeguarding requirements exist to protect customer funds in the event that a payment institution (PI) or electronic money institution (EMI) becomes insolvent. The regulatory framework is set out in the Payment Services Regulations 2017 (PSRs) and Electronic Money Regulations 2011 (EMRs).
At its core, safeguarding requires firms to segregate customer funds from the firm's own money and hold them in a way that ensures they remain available for customers if the firm fails. This typically means holding funds in designated safeguarding accounts at authorised credit institutions.
The FCA has published detailed guidance on safeguarding in its Approach Document for payment services and electronic money, supplemented by supervisory statements and Dear CEO letters. Understanding these requirements in detail is essential for designing compliant reconciliation processes.
Related Nasara Connect Feature: This chapter aligns with our safeguarding module.