Key takeaways
- Every major payments market requires firms that hold customer money to protect it from the firm's own creditors, but the methods differ.
- The UK, EU, Canada and Singapore use segregation or insurance and guarantee methods; the US uses permissible investments held against outstanding obligations.
- Timing, reconciliation frequency, reporting and audit requirements vary widely, with the UK currently the most prescriptive on daily operations.
- Groups operating in several markets need one reconciled data set that each regime's rules can be applied to.
Why compare
A payments business that grows internationally does not face one customer-money rule. It faces one per licence. A group with entities in the US, UK, EU, Canada, Australia, Singapore and Hong Kong must meet seven sets of requirements, each written for a different legal system and enforced by a different supervisor. Treasury, finance and compliance teams need to know where the rules agree, so they can build one process, and where they differ, so they can adapt it.
The table below compares the regimes at a glance. Each row links to a detailed guide.
| Jurisdiction | Main rule | Protection method | Timing | Reconciliation and reporting |
|---|---|---|---|---|
| United States | State money transmission laws, many based on the MTMA | Permissible investments at least equal to outstanding obligations at all times | At all times | Quarterly MSB call report; state examinations |
| United Kingdom | EMRs, PSRs, CASS 15 | Segregation in designated accounts or secure liquid assets; or insurance or guarantee | Segregate by end of business day after receipt | Daily internal and external reconciliation; monthly return; annual audit above £100,000 |
| European Union | PSD2 and EMD2, moving to PSD3 | Segregation or insurance or guarantee | By end of business day after receipt | Set by national supervisors; more harmonised under PSD3 |
| Canada | Retail Payment Activities Act | Trust account, or segregated account with insurance or guarantee | Safeguarded until withdrawn or transferred | Written framework; annual and event-driven reports to the Bank of Canada |
| Australia | Payments licensing reforms (draft legislation 2026) | Safeguarding of relevant payment service money, primarily segregated accounts | To be set in final rules | ASIC licensing; APRA prudential standards for major stored value facilities |
| Singapore | Payment Services Act 2019 | Bank undertaking or guarantee, trust account, or other MAS-permitted method | Promptly after receipt | MAS supervision of major payment institutions |
| Hong Kong | SVF Ordinance (Cap. 584); Stablecoins Ordinance (Cap. 656) | Float protected and segregated; stablecoin reserves fully backed on trust | Continuous; one-day stablecoin redemption | HKMA supervision, audits and reporting |
Where the regimes agree
Underneath the differences, every regime asks the same three questions. How much does the firm owe its customers? How much does it hold for them, in a protected form? And can it prove the second is at least equal to the first, on any day a supervisor chooses? The answer to all three comes from reconciliation: the firm's ledger of customer balances matched with bank, processor, custodian and wallet records, every day.
That shared foundation is why a group can run one reconciliation process for every entity. What changes from one regime to the next is how the reconciled figures are tested: which assets count, how quickly differences must be corrected, and how the result is reported.
Where they differ most
The biggest structural difference is between the US and everyone else. Most regimes protect customer money by separating it, in designated accounts or on trust, or by insuring it. The US permissible investment model does not require separate accounts. Instead, the transmitter must hold eligible assets at least equal to its obligations, with limits on concentration and ageing. A dollar held in an operating account can count, provided the test is met. Our guide to permissible investments explains the calculation.
The second difference is how prescriptive the daily process is. The UK's CASS 15 sets the reconciliation method, frequency and correction deadline in detail. Other regimes state the outcome and leave more of the method to the firm, while supervisors test whether it works. For stablecoins, redemption timing varies: one business day in Hong Kong, two business days under New York guidance, and at par at any time under MiCA.
Running it across a group
Build one reconciled data set for every entity, from native bank, processor and custodian files. Apply each entity's rules to its own data. Report each regime from the same figures. Keep a calendar of every deadline and the source of every reported number. Our guide to multi-entity reconciliation and the regulatory reporting calendar cover the method.
Safeheld was built for exactly this: one workflow that reconciles every entity and applies the rules of each of these seven jurisdictions. See what safeguarding is and Safeheld reconciliation.
Frequently asked questions
How do safeguarding rules differ between the US and UK?
The UK requires segregation or insurance with daily reconciliation under CASS 15; the US requires permissible investments at least equal to outstanding obligations at all times.
Which jurisdiction has the most prescriptive daily requirements?
The UK, under CASS 15, which sets the reconciliation method, frequency and correction deadline in detail.
Can one process serve several jurisdictions?
Yes. The reconciliation is the same; each regime's rules are applied to the reconciled figures.
Do all regimes require daily reconciliation?
Not all state it explicitly, but every regime requires firms to be able to show coverage on any day, which in practice requires daily reconciliation.
References
- FCA, PS25/12: Changes to the safeguarding regime for payments and e-money firms
- Massachusetts General Laws c.169B §9: permissible investments
- Directive (EU) 2015/2366 (PSD2)
- Bank of Canada, Retail payment supervision
- Payment Services Act 2019 (Singapore)
- Payment Systems and Stored Value Facilities Ordinance (Cap. 584)
About Safeheld
Safeheld reconciles client money every day, resolves every difference and prepares every regulatory return for sign-off, for regulated firms in the United States, the United Kingdom, the European Union, Canada, Australia, Singapore and Hong Kong. To discuss your operations, contact us at safeheld.com/contact.
This article is for general information and does not constitute legal or regulatory advice.