Becoming an EMI Agent: Updated FCA Requirements and Compliance Obligations

Operating as an agent of an authorised electronic money institution provides a route to offering payment and e-money distribution services without the cost and complexity of obtaining your own FCA authorisation. However, the FCA's increased scrutiny of agent networks means that the bar for agent appointment has risen significantly. This article provides an updated guide to becoming an EMI agent in 2026, covering the requirements, process and ongoing obligations.

What Is an EMI Agent?

An EMI agent is a firm or individual that provides payment services on behalf of an electronic money institution (EMI) and is included on the FCA register. A distributor is a business that only distributes or redeems e-money for the EMI, for example by selling prepaid cards. Neither can issue e-money: regulation 33 of the EMRs 2011 reserves issuance to the EMI itself. The agent operates under the principal EMI's authorisation and is registered with the FCA through the Financial Services Register. Common agent activities include distributing e-money products, processing payment transactions, facilitating customer onboarding and providing customer support.

The agent does not hold its own FCA authorisation: it operates within the scope of the principal's permissions and is subject to the principal's oversight and compliance framework.

What the Law Requires

Agent registration is governed by regulation 34 of the EMRs 2011. The application must name the agent's directors and managers, include evidence that they are fit and proper, and list the services the agent will provide. The FCA can refuse registration only on set grounds, including incomplete information, unfit management or concerns about money laundering or terrorist financing. In practice, principal EMIs expect prospective agents to demonstrate:

Robust AML controls. A comprehensive AML framework including customer due diligence procedures, transaction monitoring, suspicious activity reporting and staff training. The AML framework must be tailored to the specific services the agent will provide and the risk profile of its customer base.

Operational capability. Adequate technology, staffing and operational processes to deliver services reliably and in compliance with regulatory requirements. The principal will assess the agent's operational infrastructure before appointment.

Financial standing. Sufficient financial resources to sustain operations and meet any liabilities arising from the agent's activities. While there are no minimum capital requirements for agents, the principal will assess financial viability.

Fitness and propriety. Key individuals must be fit and proper: free from criminal convictions, regulatory sanctions and other disqualifying factors. The principal will conduct background checks on directors and beneficial owners.

The Registration Process

1. Identify and approach a principal EMI. Research authorised EMIs whose business model aligns with your proposed activities. Principal EMIs vary in their appetite for agent appointments, their oversight approach and their commercial terms.

1. Principal due diligence. The principal EMI will conduct comprehensive due diligence on your business, including AML framework review, financial assessment, operational review and fitness and propriety checks on key individuals.

1. Agent agreement. Negotiate and execute an agent agreement with the principal, covering the scope of permitted activities, compliance obligations, reporting requirements, termination provisions and commercial terms.

1. FCA registration. The principal EMI submits the agent registration application to the FCA. Agents cannot apply for themselves. The FCA must give its decision within two months of receiving a complete application (regulation 34 of the EMRs 2011).

1. Commencement. Once the FCA confirms registration on the Financial Services Register, the agent may commence the permitted activities.

Ongoing Compliance Obligations

Agent registration is not a one-time event. The EMI must make sure the agent tells customers it acts on the EMI's behalf, and must notify the FCA without undue delay of any change to the registered information. Agents must maintain compliance on an ongoing basis:

• Maintain and update the AML framework as customer base and risk profile evolve
• Conduct ongoing transaction monitoring and submit SARs where required
• Handle customer complaints in accordance with the principal's procedures
• Provide regular compliance reporting to the principal
• Cooperate with the principal's monitoring activities including compliance testing and audits
• Notify the principal immediately of any material compliance issues, regulatory communications or adverse events

Selecting the Right Principal

Not all principal EMIs offer the same level of support, commercial terms or regulatory standing. When selecting a principal, consider:

• The principal's regulatory track record and FCA supervisory history
• The scope of permitted activities under the agent agreement
• The quality of compliance support and training provided
• Commercial terms including revenue share, fees and minimum volumes
• The principal's technology platform and integration capabilities
• The principal's approach to agent oversight: firms with robust oversight programmes are safer partners

When to Get Your Own Licence

The agent model suits firms that want to launch under another firm's licence. Firms that want to issue e-money, hold customer funds themselves or control their own product roadmap usually move to their own licence: EMI authorisation, API authorisation or, for smaller volumes, small payment institution registration.

Regulatory Counsel advises prospective EMI agents on principal selection, compliance framework development and the registration process. Contact us for a written proposal.