In the UK Currencies Direct is authorised by the Financial Conduct Authority as an Electronic Money Institution (“EMI”). As an authorised firm, we are required to safeguard client monies by holding those monies in a segregated client account, separate from our own business accounts. These accounts are designated as client accounts and protected in the event of our insolvency or the insolvency of the banks we use to hold the client funds.
Our safeguarding obligations are outlined in the FCA Approach document which can be found here.
Our EU services are provided by Currencies Direct Spain, EDE SL. Currencies Direct Spain, EDE SL, is authorised by the Bank of Spain as an Electronic Money Institution under Law 21/2011 of 26 July and Royal Decree 778/2012 of 4 May. Our registration number with the Bank of Spain is 6716. Please refer to our Security of Funds document for more information.
Safeguarding is the obligation to identify and keep client monies segregated and protected from all other funds that the business may hold, moving the funds to a safeguarding account if they are still held by the firm the day after receipt. The obligation commences as soon as funds are identified as client monies (and stops when funds are remitted to the clients’ recipient). For an electronic money institution, relevant funds are deemed as follows: Funds received by the firm when e-money is issued – i.e. where funds are visible in a client’s wallet.
The funds are no longer deemed relevant once the firm has remitted them to the recipient and can reasonably assume that the funds have reached the recipient's bank account.
Funds that are not deemed relevant include the following:
- Deposits for forward contracts, until they are released into the client’s wallet following the forward contract being settled.
- Margin calls on forward contracts until they are released into the client’s wallet following the forward contract being settled.
- Unclaimed or unknown funds – where funds come in with no client reference, and despite reasonable efforts we cannot allocate them to a client wallet
Where client funds are subject to safeguarding, that means that client monies benefit from the arrangements put into place to protect these funds in the event of an insolvency event of the firm. Client funds are held in segregated accounts, and moved to safeguarded accounts if the monies are still with the firm the day after receipt. Both accounts are designated as client accounts.
- What happens if funds get lost in transit i.e. we send them out but funds don’t arrive as expected? What processes do we have in place to monitor this? If funds do not arrive within expected time frames a ‘trace’ can be placed by our Operations Team to track the progress of the payment. Occasionally payments can be delayed by intermediary banks and in extreme cases may be returned if the bank account details are deemed invalid. Depending on the location of the beneficiary bank account and the reason for the delay, a trace is usually able to resolve any issue within a few days.
- If Currencies Direct were to go out of business, how would our clients get their money back?
In the event of the firm going out of business, a liquidator would be appointed to handle the distribution of the firm’s assets. The client accounts have processes designed to ensure that on a daily basis, the value and identification of client funds is calculated and checked against actual cash held. . The liquidator would use the records to ensure that all client funds are returned back to the underlying clients as first priority to all other creditors (other than in respect of the costs associated with the liquidation which if they exceed any funds held for the business may mean the liquidator can recover their costs from client funds).
This does also mean that, as the liquidation and reconciliation process is underway, it could take longer for monies to be refunded than if the funds were covered under the FSCS.
- Are Currencies Direct clients covered under the FSCS? No - As an EMI firm, we are not in scope of the FSCS, which has a cap of coverage of £85,000. An EMI firm, however, is required to safeguard the entire value of relevant client funds, even where this is above £85,000, so is not subject to a cap. Subject to any insolvency costs, clients may get most, if not all, of their money back
- How does an EMI differ from a bank?
An E-Money Firm in the UK is authorised by the FCA. A Bank is regulated by the FCA and PRA.
Under the FCA rules and guidance, a bank’s client money rules are governed by the Client Assets Sourcebook (CASS) regime. An EMI firm’s client money rules are governed by the safeguarding rules outlined in the FCA’s Approach document which can be located here.
Currencies Direct’s FCA entry can be found here