An Introduction to EMI and PSR Safeguarding Audits


An Introduction to EMI and PSR Safeguarding Audits

This page was last updated on April 12, 2024
In this article we explain why eMoney Institutions (EMI) and the Payment Service Regulations (PSR) require a safeguarding audit to be conducted, and what is involved.

In the fast-paced world of digital finance, eMoney Institutions (EMIs) play a crucial role in facilitating electronic payments and managing digital currencies.

With the rise of online transactions and digital wallets, ensuring the security and integrity of these systems is paramount. This is where the Payment Service Regulations (PSR) safeguarding audit requirements come into play.

What are EMIs?

EMIs are financial entities that are licensed to issue electronic money, store funds electronically, and facilitate electronic payment transactions. They operate in the digital realm, providing services such as prepaid cards, mobile wallets, and online payment platforms.

In recent years EMIs have gained popularity due to their convenience, accessibility, and ability to cater to the needs of the digital economy.

The Importance of PSR / EMI Safeguarding Audit Requirements

PSR/ EMI safeguarding audit requirements are regulations designed to protect consumers and ensure the security of funds held by EMIs. These requirements aim to prevent fraud, mismanagement, and misuse of customer funds.

By mandating regular audits and stringent compliance measures, PSR safeguarding audit requirements help maintain trust and confidence in the electronic payment ecosystem.

Key Components of Safeguarding

There are 4 key areas of focus when it comes to safeguarding.

1. Segregation of Funds

EMIs are required to segregate customer funds from their own operational funds. This ensures that customer funds are protected in the event of insolvency or bankruptcy.

2. Safeguarding Procedures

EMIs must implement robust safeguarding procedures to securely manage and protect customer funds. This includes employing advanced encryption technologies, multi-factor authentication, and secure data storage practices.

3. Conduct Regular Audits

The PSR mandates EMIs to undergo regular audits conducted by independent third-party auditors. These audits must assess the EMI’s compliance with safeguarding requirements, financial stability, risk management practices, and adherence to regulatory standards.

4. Reporting Requirements:

EMIs are required to submit periodic reports to regulatory authorities detailing their safeguarding measures, financial status, and compliance efforts. Transparency and accountability are essential in maintaining regulatory compliance and trust within the industry.

Compliance and integrity

Ensuring compliance and security compliance with PSR safeguarding audit requirements is not only a legal obligation but also a critical aspect of maintaining EMIs’ integrity and reputation.

By adhering to these regulations, EMIs demonstrate their commitment to protecting customer funds and upholding the highest standards of security and trust.

To ensure compliance and security, EMIs should:

See our Payment and E-money firms 8-point checklist to help businesses strengthen their compliance in this area ahead of their audit.

Also read, our answers to common questions around Payment and E-money Safeguarding Audits


At Shipleys, we’ve been helping many payment and e-money issuing businesses comply with the latest regulations. For further information, contact one of our specialists shown on this page.

Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary. If you would like advice or further information, please speak to your usual Shipleys contact.

Copyright © Shipleys LLP 2024

Current Issues

Financial Services sector - digital style image image of graphs, numbers etc

Financial Services Update – May 2024

In this issue we cover the latest FCA developments and guidance notes for the sector.

Property update: Spring 2024

Our property specialists give a round-up of the latest developments and tax changes for property owners

Preparing for the 2025 scrapping of non-domiciled status

Chancellor Jeremy Hunt’s March Budget included an announcement that non-domiciled tax status is to be abolished.