UK Small EMI Registration: FCA Thresholds, Capital, Safeguarding and Timeline

What a small EMI can do

A small EMI can issue e-money in the UK and provide payment services connected with it, such as a customer paying a bill from a wallet balance. It can issue any e-money product, including wallets, prepaid cards and multi-currency balances. The category is defined by size, not by product type.

It can also provide payment services that are unrelated to its e-money, such as standalone money transfers, provided the monthly average of those transactions stays within €3 million. It cannot provide account information services or payment initiation services, the two open banking services, under any circumstances.

The registration conditions in regulation 13

• - The application meets the information requirements and includes the firm's safeguarding arrangements
• - Average outstanding e-money does not exceed €5 million, using projections for a new firm
• - Unrelated payment transactions do not exceed a monthly average of €3 million over 12 months, using projections for a new firm
• - The business does not include account information or payment initiation services
• - The firm holds any initial capital required by Part 1 of Schedule 2
• - Governance arrangements and risk management procedures are sound and proportionate to the business
• - Directors and managers are of good repute with appropriate knowledge and experience
• - A business plan with a forecast budget for the first three financial years
• - No person responsible for management has a conviction for money laundering, terrorist financing, sanctions or other financial crime offences
• - The firm is a body corporate with its head office in the UK
• - The firm meets any registration requirement under the Money Laundering Regulations 2017

How the €5 million threshold is measured

Average outstanding e-money is the average of the firm's total e-money liabilities at the end of each calendar day over the preceding six calendar months. It is recalculated on the first day of each month and applied for that month. In plain terms, it is a six-month average of the customer balances the firm owes.

A new applicant uses the projected figures in its business plan, and the FCA can require adjustments to those projections. Where the firm's e-money is used partly for unrelated payment services and the e-money figure is not known in advance, regulation 14 allows a representative portion to be used, assessed from historical data or projections.

For the €3 million payment services test, the FCA considers it reasonable to convert each month's turnover to euro using the European Commission's monthly accounting rate. Firms should apply the same method every month and record it.

Capital and own funds

The capital requirement scales with the float. Below €500,000 of average outstanding e-money there is no initial capital or own funds requirement. At €500,000 or more, the firm must hold initial capital of at least 2 per cent of average outstanding e-money, and maintain own funds of at least 2 per cent on an ongoing basis.

At the €5 million cap, 2 per cent is €100,000. A full EMI, by comparison, needs €350,000 of initial capital. A firm without trading history calculates the requirement from its business plan projections. Evidence of capital, such as the Companies House share allotment form and a bank statement, must be in place before registration is granted.

Safeguarding and CASS 15 from 7 May 2026

A small EMI must safeguard funds received for e-money on the same basis as a full EMI, either by segregating them in a designated account with an authorised bank, or through an insurance policy or comparable guarantee. The FCA confirms that safeguarding is mandatory for small EMIs. Funds received for unrelated payment services may be safeguarded by choice, and the firm tells the FCA which approach it takes.

The FCA's supplementary safeguarding rules in CASS 15, introduced by PS25/12, have applied since 7 May 2026. They turn safeguarding into a daily operating process with defined records, reconciliations, reporting and assurance.

• - A single director or senior manager is responsible for safeguarding compliance and reports to the board (CASS 15.2.4R)
• - Internal and external reconciliations at least once each reconciliation day, which is each day excluding weekends, bank holidays and days when relevant foreign markets are closed
• - Acknowledgement letters signed by the firm and countersigned by each safeguarding bank, reviewed at least annually (CASS 15.7)
• - A resolution pack kept up to date so customer funds can be returned quickly if the firm fails (CASS 10A)
• - Monthly safeguarding return to the FCA within 15 business days of the end of each month
• - An annual safeguarding audit under SUP 3A, delivered within four months of the period end. A firm is exempt if it has not been required to safeguard more than £100,000 at any time over at least 53 weeks
• - At least two months' notice to the FCA before first relying on insurance or a guarantee, or changing that cover (CASS 15.5.7R)

Directors, controllers and financial crime controls

The FCA applies the same fitness and propriety test to the directors and managers of a small EMI as to a full EMI. Controllers, meaning anyone with a holding of 10 per cent or more or significant influence, are identified in the application form. Small EMIs do not need to submit separate controller forms.

The FCA is the anti-money laundering supervisor for small EMIs, so the small EMI application also serves as registration under the Money Laundering Regulations. The application describes the firm's anti-money laundering policies, procedures and controls, which should reflect e-money risks such as how wallets are funded and withdrawn.

Because e-money is delivered through technology, the FCA also expects a description of IT systems, security policy and incident management proportionate to the business.

What the application contains

• - Application form on Connect, signed by the appropriate persons for the company
• - Programme of operations: a step-by-step account of how e-money is issued to and redeemed by the customer, and how each payment service fits the statutory list
• - Business plan covering background, sources of funding, target markets and marketing plan, with a separate plan for any unrelated payment services
• - Three-year forecast budget showing the firm can meet the capital and own funds requirement as the float grows, and how it will monitor the €5 million and €3 million thresholds
• - Safeguarding arrangements, including the designated account or insurance cover, reconciliation process and responsible individual
• - Governance and risk management description, internal control mechanisms and IT and security arrangements
• - Anti-money laundering policies, procedures and controls
• - Details of directors, managers and controllers, with criminal record disclosures
• - Evidence of initial capital where the projected float is €500,000 or more

When to move from small EMI to full EMI

Regulation 16 sets the trigger. If a small EMI no longer meets the €5 million e-money condition, the €3 million payment services condition, the criminal record condition or the UK head office condition, it must apply for authorisation as an authorised EMI within 30 days of becoming aware of the change, if it intends to continue issuing e-money in the UK. It must also notify the FCA of the change without undue delay under regulation 37.

The full EMI application is a substantial piece of work: initial capital of €350,000, a fee of £5,640 and a three-month statutory decision period from a complete application. Firms whose plans show the float approaching €5 million should prepare the authorised EMI application in advance, so it is ready to file within the 30-day window.

Some firms register as a small EMI to launch quickly and build a track record. Others with a clear path above €5 million in the first years apply directly for full authorisation. The three-year forecast settles which route fits.

Ongoing obligations after registration

• - Monthly safeguarding return and annual FIN060 small EMI return within 30 business days of the accounting reference date
• - Annual financial crime return (REP-CRIM) once the firm reports total revenue of £5 million or more
• - E-money issued at par on receipt of funds and redeemed at par on request, under regulation 39
• - Consumer Duty for retail customers, and complaints handled under DISP with access to the Financial Ombudsman Service
• - Monitoring of average outstanding e-money and unrelated payment volumes each month against the registration conditions
• - Notifications of significant changes, including changes to safeguarding arrangements, directors and controllers