CASS 15.3 The segregation method

1. (1) The segregation method is the method of safeguarding relevant funds described in regulation 21 of the Electronic Money Regulations or regulations 23(5) to (11) of the Payment Services Regulations.

2. (2) An effect of regulation 20(6) of the Electronic Money Regulations is that where an electronic money institution or credit union receives relevant funds for the execution of payment transactions that are not related to the issuance of electronic money, it must keep those funds segregated from relevant funds relating to the issuance of electronic money.

A safeguarding institution that receives mixed remittances must maintain a written policy for the purpose of demonstrating its approach to complying with regulation 20(3) of the Electronic Money Regulations and regulation 23(2) of the Payment Services Regulations.

A safeguarding institution that segregates relevant funds in a different currency from that in which they were received or in which the safeguarding institution is liable to the relevant client must ensure that the amount held is adjusted each day on which it performs an internal safeguarding reconciliation to an amount at least equal to the original currency amount (or currency in which the safeguarding institution has its liability to its clients, if different), calculated at the previous day's closing spot exchange rate.