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A regulatory requirement demanding immediate attention – A necessity to ensure that client funds are safeguarded
The regulatory framework for Electronic Money Institutions (EMIs) and Payment Institutions (PIs) obliges institutions to manage and safeguard client funds in a specific effective manner. The Central Bank of Cyprus (CBC) has set out clear requirements that EMIs and PIs must adhere to safeguard client funds, strengthen oversight, and align with the least acceptable operational standards. As part of the process of safeguarding, institutions must now provide to the CBC independent third-party evidence demonstrating that their safeguarding frameworks are fully operational and effective.
A critical deadline is approaching
All supervised entities are required to submit an independent assurance report on safeguarding requirements by 30 September 2026.
This is far from a routine compliance exercise. The engagement must be performed by an independent statutory auditor in accordance with ISAE 3000 (Revised), ensuring a high level of objectivity and clear separation from both internal and external audit functions.
For the EMIs and PIs any delays, control gaps, or insufficient evidence could lead in increased supervisory scrutiny and potential reputational risk.
Scope of the new requirement
The assessment extends well beyond existing documented policies. The subject matter is to prove with clear evidence that:
- Safeguarding controls are properly designed
- Safeguarding controls are implemented through their design and continue to maintain their effectiveness over time
- The organization introduced monitoring mechanisms to identify and mitigate risks to client funds.
Any institution must prove that their safeguarding practices operate throughout all their business activities instead of treating them as isolated activities for compliance purposes.
Where institutions often struggle
Based on industry experience, common challenges include:
- Safeguarding procedures based on industry norms but not in accordance with the legislation and the current rules and regulations
- Safeguarding procedures not in line with the CBC regulations, particularly if they have been designed based on guidelines from other regulatory bodies
- Fragmented or outdated safeguarding procedures
- Insufficient evidence demonstrating control effectiveness
- Gaps between policy design and operational execution
In case these issues remained unaddressed, this can significantly complicate the assurance process and increase the risk of adverse findings.
Why early preparation matters
Engaging an independent practitioner early is not just advisable; it is strategic.
The proactive approach enables institutions to:
- Strengthen internal controls and governance frameworks
- Ensure readiness for a smooth and efficient assurance engagement
- Avoid last-minute pressure and regulatory risk and uncertainty
Beyond Compliance - A strategic opportunity
Institutions that approach safeguarding requirements proactively will stand out.
A robust assurance outcome signals to regulator, partners, and clients that your organisation operates with discipline, transparency, and integrity.
In a competitive and rapidly evolving payments landscape, this can be a powerful and meaningful differentiator reinforcing trust and sustainable growth.
The deadline is fixed. The expectations are clear. The time to act is now.
How we can support you
We offer complete support to EMIs and PIs through our work as independent external auditors and practitioners who handle regulatory assurance assignments at all stages from initial assessments to final report delivery. In addition, we offer specialised review procedures in assessing and evaluating the safeguarding of fund procedures in place for the EMIs or the PIs.
Our approach is practical, efficient, and aligned with requirements, helping you not only meeting the requirement but do so with confidence.
As the largest independent consulting firm in Cyprus, with an established international presence including offices in London and Malta, K. Treppides & Co. Limited offers a comprehensive range of legal, tax, accounting, audit, consulting, and financial advisory services. Our experienced teams support international investors and businesses across a wide spectrum of industries, guiding them throughout their investment journey in and through Cyprus.
Contact Details:
gstrati@treppides.com
www.treppides.com
