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What is Safeguarding?

By May 14, 2024May 20th, 2024No Comments

In today’s rapidly evolving financial landscape, non-bank payment providers are assuming an increasingly pivotal role in facilitating cross-border transactions and offering international funds collection solutions. With the global economy becoming more interconnected, the demand for efficient and secure payment solutions has never been greater.

Payments can take various forms, ranging from traditional bank transfers to innovative digital platforms. While some transactions are processed through traditional banks, others rely on non-bank payment service providers like Rutland FX to meet their diverse financial needs.

Among non-bank payment service providers, two main categories stand out:

  1. Electronic Money Institutions (EMIs): EMIs are at the forefront of the digital payment revolution. They handle electronic money, commonly known as e-money, which is stored digitally, typically in an online account, wallet, or on a prepaid card. E-money can be used for purchases of goods and services, and EMIs may also offer non-bank current accounts to their customers, providing a seamless financial experience.
  2. Authorised Payment Institutions (APIs): APIs offer a wide range of payment services, including credit card payment processing and money remittance. However, unlike EMIs, they cannot hold funds or issue electronic money. Instead, APIs act as intermediaries, facilitating transactions between parties while adhering to strict regulatory guidelines.

When selecting a provider for your day-to-day payment needs, it’s crucial to understand how your money is safeguarded. Safeguarding, as mandated by the Payment Services Regulations 2017 (PSRs 2017) and the Electronic Money Regulations 2011 (EMRs), is a regulatory requirement for Electronic Money Institutions (EMIs) to protect customers’ funds. This involves segregating customers’ funds from the institution’s own working capital or other funds and placing them in separate accounts, or securing them with appropriate insurance policies or guarantees.

The two primary methods of safeguarding outlined by the PSRs 2017 and EMRs are:

  • Segregation Method: This involves segregating customers’ funds in separate accounts, distinct from the institution’s own funds. By keeping customers’ funds separate, EMIs ensure that they are readily available to fulfill customer obligations, even in the event of the institution’s insolvency.
  • Insurance or Comparable Guarantee Method: Alternatively, EMIs may opt to secure customers’ funds with appropriate insurance policies or guarantees. This provides an additional layer of protection and ensures that customers’ funds are safeguarded against unforeseen risks.

At Rutland FX, your funds are safeguarded by Currencycloud through a strict segregation of clients’ funds from our company assets. We achieve this by placing them in dedicated safeguarding accounts held with reputable banks in both the UK and EU such as Barclays. In the unlikely event of Currencycloud or Rutland FX facing insolvency, the funds held in these safeguarding accounts would constitute a separate asset pool. This pool would prioritise the claims of our e-money holders (our clients) above those of other creditors, ensuring that their funds are protected and readily available when needed.

It’s important to note that the banks or authorised credit institutions have no entitlements over the funds in Currencycloud’s safeguarding accounts. Additionally, Currencycloud does not have any authority over our clients’ accounts, except as explicitly stated in the Terms and Conditions. This ensures transparency and accountability, providing customers with peace of mind when using our services.

Still not sure?

If you are still unsure or have any further questions, please call us on 0203 026 0112 or request a callback below to discuss your requirements.