Key takeaways
- Article 25 of Lithuania's Law on Electronic Money and Electronic Money Institutions requires e-money institutions to safeguard funds received for e-money by segregation or by insurance or guarantee.
- Segregated funds still held at the end of the next working day must be in a separate account at an EU credit institution or central bank, or in secure, liquid, low-risk assets.
- Payment institutions follow Article 17 of the Law on Payment Institutions, and e-money institutions apply it to payment services unrelated to e-money.
- The Bank of Lithuania has fined firms for holding client funds at other e-money or payment institutions and in accounts not designated for safeguarding.
- Safeguarding is reported quarterly within 20 calendar days of quarter end and confirmed in the compliance report form.
What are the key facts on safeguarding in Lithuania?
Lithuanian e-money and payment institutions must keep customer funds apart from their own and protected if the firm fails.
| Item | Position |
|---|---|
| Rule | Law on Electronic Money and Electronic Money Institutions, Article 25; Law on Payment Institutions, Article 17 |
| Regulator | Bank of Lithuania (Lietuvos bankas) |
| Applies to | Electronic money institutions and payment institutions licensed in Lithuania |
| Timing | By the end of the working day after receipt; card receipts within 5 working days of issuing e-money |
| Reporting | Quarterly report on safeguarding of received funds, within 20 calendar days of quarter end |
| Last checked | 11 October 2026, against the consolidated law and Bank of Lithuania publications |
What does Article 25 require?
It requires e-money institutions to safeguard funds received for e-money by one of two methods: segregation, or insurance or a guarantee.
Article 25 of the Law on Electronic Money and Electronic Money Institutions implements Article 7 of the second E-Money Directive. Under the segregation method, the funds must not be commingled with the funds of any other person. Under the insurance or guarantee method, an insurance contract, guarantee or surety from an insurer or credit institution outside the institution's group must cover the same amount that would otherwise be segregated, payable if the institution cannot meet its obligations. The law also states that the funds remain the property of the e-money holders, cannot be used to satisfy the institution's creditors, and must be protected in particular on insolvency.
Payment institutions safeguard under Article 17 of the Law on Payment Institutions, and an e-money institution that also provides payment services unrelated to its e-money applies Article 17 to those funds. The Bank of Lithuania's compliance report form asks firms to confirm compliance with Article 17 and Article 25 by name. Our guide to PSD2 safeguarding explains the EU model these articles implement.
Where can segregated funds be held?
In a separate account at a credit institution or central bank in Lithuania or another EU Member State, or in secure, liquid, low-risk assets.
Funds still held at the end of the working day after receipt must be placed in one of those locations. The Bank of Lithuania's enforcement notices show the boundary clearly: accounts at other e-money institutions or payment institutions do not qualify, and neither do ordinary bank accounts that are not designated for safeguarding.
| Location of client funds | Permitted? | Bank of Lithuania source |
|---|---|---|
| Separate safeguarding account at a bank or credit union in Lithuania or another EU Member State | Yes | PanPay Europe, 2019 |
| Account at the Bank of Lithuania or another EU central bank | Yes | SatchelPay, 2019 |
| Secure, liquid, low-risk assets | Yes, under Bank of Lithuania rules | Article 25 of the law |
| Account at another e-money or payment institution | No | Wallter, 2020 |
| Bank account in another legal entity's name | No | Wallter, 2020 |
| Ordinary EU bank account not intended for safeguarding | No | SatchelPay, 2019 |
When must funds be safeguarded?
From receipt, with placement in a safeguarding location by the end of the next working day.
Segregation applies as soon as the funds are received, so they must never be mixed with the institution's own money. If they are still held at the end of the working day following receipt, they must be in a safeguarding account or eligible assets. Funds received by payment instrument, such as a card, need to be safeguarded only once they are credited to the institution's account or otherwise made available to it, and in any event within five working days of the date the e-money was issued. Where only part of a receipt relates to e-money or payment services, that part must be safeguarded, and a representative share estimated from historical data may be used if the amount varies.
What have Bank of Lithuania enforcement cases shown?
They show fines for holding client funds in the wrong places and for reporting balances incorrectly.
| Date | Firm | Fine | Main failing |
|---|---|---|---|
| 7 August 2019 | UAB deVere E-Money | EUR 21,600 | Most client funds not held with credit institutions; incorrect reports of balances |
| 23 August 2019 | UAB PanPay Europe | EUR 16,800 | Most client funds held with e-money and payment institutions in other Member States; incorrect reports |
| 6 December 2019 | SatchelPay, UAB | EUR 23,000 | Funds at e-money and payment institutions and in an EU bank account not intended for safeguarding |
| 1 October 2020 | Wallter, UAB | EUR 90,000 | Funds at e-money and payment institutions, in other entities' names and in non-safeguarding accounts; EUR 60,000 of the fine for incorrect information |
Every case combined a safeguarding failure with inaccurate reporting of where client funds were held. A firm that cannot list each account holding client funds, with its balance, at the end of a quarter will fail both tests at once, because the report it submits will be wrong as well.
What must be reported to the Bank of Lithuania?
A quarterly report that covers safeguarding of received funds, plus event-driven notices and an annual compliance confirmation.
The Bank of Lithuania's reporting calendar requires e-money institutions to submit, within 20 calendar days after each quarter, financial and activity reports including a report on performance indicators and safeguarding of received funds. Annual audited financial statements follow. Major changes to safeguarding arrangements must be notified. The compliance report form opens with 13 questions on safeguarding, covering the agreement with the credit institution holding the segregated account, any insurance or guarantee, whether safeguarding documents are current, and confirmation of compliance with Article 17 or Article 25 and the Bank's Description of Institutional Management System Requirements.
How does Lithuania compare with other EU hubs?
The directive rules are the same, but the Bank of Lithuania's supervision focuses on where funds sit and on accurate reporting.
| Point | Lithuania | Ireland | Netherlands |
|---|---|---|---|
| Main legal provision | Article 25 e-money law; Article 17 Law on Payment Institutions | Regulation 17 (2018 PSR); Regulation 29 (2011 EMR) | Article 3:29a Wft; article 40a Bpr |
| Segregation vehicle | Separate account at an EU credit institution or central bank | Separate account at a credit institution | Foundation or segregated account at a Netherlands-based bank |
| Distinctive supervisory tool | Quarterly safeguarding report; compliance report form | 2023 safeguarding audit; Head of Safeguarding PCF-56 | Thematic reviews; quantitative safeguarding data since July 2024 |
Our guides to the Irish safeguarding audit and DNB safeguarding give the detail for the other two hubs.
Why do reporting errors matter so much?
Because the Bank of Lithuania has treated wrong balance reports as a separate breach, often fined more heavily than the safeguarding failure itself.
In the Wallter case, EUR 60,000 of the EUR 90,000 fine related to incorrect information: the firm had not disclosed all institutions and accounts holding client funds, or their balances, in its reports and during documentary supervision. The Bank said the firm knew this information, so the submissions were misleading. The lesson is practical. The account register, the daily reconciliation and the quarterly report must all describe the same set of accounts. If an account is opened at a new provider, it should appear in the register and the reconciliation from its first day, and be either designated for safeguarding or kept free of client funds.
How does a daily safeguarding check work?
The institution compares what it owes e-money holders with the funds held in permitted locations.
Worked example. A Lithuanian e-money institution has EUR 48.6 million of e-money outstanding at the end of a working day. EUR 0.9 million was issued against card payments that have not yet been credited to it, and is within the five working day window. Its client funds are held as follows.
| Holding | EUR m | Counts? |
|---|---|---|
| Safeguarding account at a Lithuanian bank | 30.0 | Yes |
| Safeguarding account at a German bank | 12.0 | Yes |
| EU government bonds held as secure, low-risk assets | 4.0 | Yes |
| Account at another e-money institution | 3.0 | No |
| Eligible total | 46.0 | |
| Requirement: 48.6 less 0.9 card funds not yet credited | 47.7 | |
| Shortfall | (1.7) |
The institution moves the EUR 3.0 million from the other e-money institution to a safeguarding bank account the same day. Eligible holdings rise to EUR 49.0 million, covering the EUR 47.7 million requirement. It then tracks the EUR 0.9 million of card funds so that they reach a safeguarding account as soon as they are credited, and no later than five working days after issue.
What should a Lithuanian EMI check?
These checks address the failings seen in the Bank of Lithuania's cases.
- List every account and asset holding client funds, with the holder's name and the account's designation.
- Confirm each account is at an EU credit institution or central bank and is designated for safeguarding.
- Move any client funds held at other e-money or payment institutions.
- Reconcile e-money outstanding and payment service funds to safeguarding balances every working day.
- Track card receipts against the five working day limit from issue.
- Agree quarterly safeguarding figures to bank statements before submission.
- Keep safeguarding documents current and approved, as the compliance report form asks.
How does Safeheld help?
Safeheld reconciles bank and ledger records for each entity and currency every day, so every account holding client funds is visible with its balance.
Accounts that are not designated for safeguarding are flagged as breaks. See daily reconciliation and EU EMI safeguarding by country.
Frequently asked questions
Which law governs safeguarding for Lithuanian EMIs?
Article 25 of the Law on Electronic Money and Electronic Money Institutions, with Article 17 of the Law on Payment Institutions for payment services unrelated to e-money.
Where can a Lithuanian EMI hold safeguarded funds?
In a separate account at a credit institution or central bank in Lithuania or another EU Member State, or in secure, liquid, low-risk assets. Accounts at other e-money or payment institutions do not qualify.
When must funds be safeguarded in Lithuania?
From receipt. Funds still held at the end of the next working day must be in a safeguarding account or eligible assets; card receipts must be safeguarded once credited, and within five working days of issuing the e-money.
Can a Lithuanian EMI use insurance instead of segregation?
Yes. An insurance contract, guarantee or surety from an insurer or credit institution outside its group can cover the amount that would otherwise be segregated.
How often is safeguarding reported to the Bank of Lithuania?
Quarterly, within 20 calendar days after the quarter ends, as part of the financial and activity reports.
Must changes to safeguarding arrangements be notified?
Yes. The Bank of Lithuania's reporting calendar lists major changes to safeguarding arrangements for e-money holders' and payment users' funds among the event-driven notifications.
What fines has the Bank of Lithuania imposed for safeguarding failures?
Published cases include EUR 21,600 for deVere E-Money and EUR 16,800 for PanPay Europe in 2019, EUR 23,000 for SatchelPay in 2019, and EUR 90,000 for Wallter in 2020.
References
- Law of the Republic of Lithuania on Electronic Money and Electronic Money Institutions (consolidated English text, e-seimas)
- Bank of Lithuania, EMI reporting calendar
- Bank of Lithuania, Guidelines for completing the compliance report form
- Bank of Lithuania, Wallter, UAB fined for improper client funds protection (1 October 2020)
- Bank of Lithuania, UAB PanPay Europe fined for improper safeguarding of client funds (2019)
- Directive 2009/110/EC (EMD2)
About Safeheld
Safeheld is reconciliation and regulatory financial control software for regulated firms that hold client money. For Lithuanian e-money and payment institutions it reconciles every safeguarding account and asset daily by entity and currency, and keeps the account register and figures behind each quarterly report. To discuss your safeguarding operations, contact us at safeheld.com/contact.
This article is general information on EU safeguarding rules and is not legal or regulatory advice.