What Regulations Are There For Using E-money? Find Out Here

What Regulations Are There For Using E-money? Find Out Here

Daniel Hall 06/12/2021
What Regulations Are There For Using E-money? Find Out Here

There are a few regulations that apply to the use of e-money. 

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Most notably, e-money must be backed by funds in a bank account, and it cannot be used for illegal activities. But, if you know what other regulations exist, keep reading to find out.

1. You need an EMI license

The first regulation that e-money users need to be aware of is the fact that a license may be required to use this type of money. The Electronic Money Institution (EMI) was established in 2010. Their goal is to help protect consumers and manage risks with electronic money. If you're using e-money, then you need an EMI license. If not, then they can take legal action against your company for breaking the law. This is a UK electronic money institution license, but it is something that you need to look out for if you are using e-money in any other countries as well. It can be a very helpful license to have. It gives you the ability to work with other electronic money institutions and access their customer base as well.

2. E-money can't be used for illegal activities

Another regulation that you need to be aware of is the fact that e-money can't be used for illegal activities. If you are caught using it for these purposes, then your account will most likely be terminated right away. You must ensure that you are following all laws and regulations when operating an e-money account. This means establishing policies regarding money laundering. It also means having reports on suspicious transactions made with your accounts so that you can properly monitor what's going on. Laundering money is not allowed, but if someone makes a large transaction, then they have five days to explain where the money came from or else their funds may be frozen or confiscated by their bank or other financial institution. 

3. You need to have money in an account to back it up

The next regulation that you need to be aware of is the fact that you have to have money in an account to back up e-money. The money can't just exist in your e-wallet, it must be stored elsewhere. This means that even if someone makes a purchase with their electronic card or smartphone app, they have to have enough funds stored away somewhere else so that the bank doesn't get stuck with the bill. If you are using e-money for any business purposes, then this regulation is especially important because you don't want anyone running up debts on your account without having the money available in some other location as well. 

4. There are rules about disclosing information when asked by the authorities

Another regulation that you need to be aware of is the fact that there are rules about disclosing information when asked by the authorities. If the government asks for access to e-money accounts, then they have to get it. For instance, if someone had criminal charges brought against them and law enforcement wanted access to their funds, then they would get what they need. You do not get to protect your clients in this way no matter how much you want to unless you want some serious legal consequences coming your way. This also means that if there were any legal proceedings such as a divorce or bankruptcy case for one of your customers, then all of their data could become available without warning too. 

5. You need to report any suspicious transactions

Yet another regulation that you need to be aware of is the fact that you need to report any suspicious transactions. This means that if you see anything that looks out of the ordinary, then you need to report it to your bank or other financial institution right away. This is in place to help protect against money laundering and other illegal activities. You don't want to be the one who is responsible for allowing these things to take place, so do your part and report anything that looks suspicious. 

6. E-money is different from regular currency

One thing to keep in mind is that e-money is different from regular currency. There are some requirements that you need to understand. For instance, if someone were trying to get cash back on an electronic purchase, then the bank would probably say no because of legal implications. You can't really get away with misusing e-money like this, either. If you try, then law enforcement will eventually find out, and you'll be in trouble, so it's best not to risk it. Most people don't realize how much regulation is placed around this kind of thing, but after reading this article, hopefully, they do now! 

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These are just a few of the regulations that e-money users need to be aware of. By knowing what they are, you can ensure that you are following all the necessary rules and guidelines. It's important to remember that breaking any of these regulations can lead to some serious consequences, so make sure to stay on top of things!

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Daniel Hall

Business Expert

Daniel Hall is an experienced digital marketer, author and world traveller. He spends a lot of his free time flipping through books and learning about a plethora of topics.

 

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