CASS 15.1 Purpose and application

Regulation 20 of the Electronic Money Regulations and regulation 23 of the Payment Services Regulations require safeguarding institutions to safeguard relevant funds. The rules and guidance in this chapter supplement those requirements.

This chapter applies to the following persons that receive or hold relevant funds:

1. (1) authorised payment institutions;

2. (2) small payment institutions that voluntarily safeguard under regulation 23 of the Payment Services Regulations; 

3. (3) electronic money institutions; and

4. (4) credit unions that issue electronic money.

This chapter applies with respect to the provision of payment services or issuance of electronic money that is within the scope of the Payment Services Regulations or Electronic Money Regulations.

PERG 15 provides guidance on the territorial scope of the Payment Services Regulations. Funds received by safeguarding institutions that relate to transactions that are not in scope of the Payment Services Regulations or Electronic Money Regulations do not need to be safeguarded and, where the safeguarding institution uses the segregation method, such funds must be kept separate from relevant funds.

One of the effects of CASS 15.1.3R is that CASS 15 does not apply where payment services are being provided to both the payer and the payee from outside of the UK (eg, a transfer between an account operated by a PSP from a branch in Japan to an account operated by another PSP from a branch in Hong Kong). Funds received for these transactions should not be mixed with relevant funds, even if funds are routed through a correspondent PSP in the UK.

1. (1) Electronic money institutions and credit unions may execute payment transactions that are not related to the issuance of electronic money. They must safeguard relevant funds relating to such transactions separately to relevant funds relating to the issuance of electronic money, and should apply the provisions of CASS 15 accordingly. 

2. (2) Paragraph (1) will be relevant where the safeguarding institution provides payment services that are independent from its electronic money products. The requirement to separately safeguard relevant funds will not apply where the safeguarding institution simply transfers funds from an electronic money account, such as where a customer uses electronic money to pay a bill.

If a small payment institution makes an election pursuant to regulation 23(16) of the Payment Services Regulations to voluntarily safeguard, the rules and guidance in this chapter will apply to the small payment institution as if it were an authorised payment institution.

If a small electronic money institution or a credit union makes an election pursuant to regulation 23(16) of the Payment Services Regulations, as applied by regulation 20(6) of the Electronic Money Regulations, to voluntarily safeguard, the rules and guidance in this chapter will apply to the small electronic money institution or credit union as if it were an authorised electronic money institution.