What Compliance Challenges Do E-Money Institutions Face in Europe? (2026)

What Compliance Challenges Do E-Money Institutions Face in Europe? (2026)

Electronic money institutions in Europe face a compliance landscape that is broad, fast-moving and increasingly demanding. The main challenges in 2026 are the transition from the second Payment Services Directive to its successor framework, the overlap between e-money regulation and the Markets in Crypto-Assets Regulation for stablecoin activity, a new centralised anti-money-laundering regime with an EU-level authority, the operational-resilience requirements of the Digital Operational Resilience Act, the fragmentation that comes with authorisation in one member state and passporting across others, and rising expectations around fraud, safeguarding of customer funds and consumer protection. Managing these simultaneously, across multiple jurisdictions and supervisors, is the central difficulty for e-money institutions operating in Europe.

This guide sets out the principal compliance challenges, why each matters, and how e-money institutions can approach them. It is written for EMIs, their compliance teams and firms considering the European market.

The shifting payments framework

The foundational challenge is that the legal framework itself is changing. E-money institutions in the EU are regulated under the Electronic Money Directive and the Payment Services Directive, and the payment services regime is being modernised through a successor framework that combines a directive and a directly applicable regulation. This transition affects authorisation, conduct, safeguarding, fraud liability and reporting, and firms must track the detail as it is finalised and implemented, because obligations that are settled today may change. For a firm operating across several member states, the challenge is compounded by the need to monitor implementation in each jurisdiction, since directives are transposed nationally and timing and detail can vary.

Overlap with MiCA and stablecoins

A significant and relatively new challenge is the interaction between e-money regulation and the Markets in Crypto-Assets Regulation. Under MiCA, a stablecoin pegged to a single fiat currency is an e-money token, and issuing one requires authorisation as an electronic money institution or credit institution, plus a MiCA white paper. This places EMIs at the centre of the EU's stablecoin regime and means that an EMI contemplating stablecoin issuance must navigate both the e-money framework and MiCA simultaneously, including the reserve, redemption and disclosure obligations that MiCA imposes. Even EMIs that do not issue stablecoins are affected, because the boundary between e-money, e-money tokens and crypto-asset services must be assessed carefully to determine which authorisations an activity requires.

The new anti-money-laundering regime

Anti-money-laundering compliance is becoming both more harmonised and more demanding. The EU is moving to a single AML rulebook and has established a central Anti-Money Laundering Authority to supervise and coordinate across member states, reducing the divergence that previously existed between national regimes but also raising the baseline expectation. For e-money institutions, which are frequently used for cross-border and higher-risk payment flows, this means maintaining a robust, well-evidenced AML programme, including risk assessment, customer due diligence, transaction monitoring, sanctions screening and reporting, to a standard that will be scrutinised more consistently across the EU. Keeping pace with the new rulebook and the expectations of a central authority is a substantial ongoing task.

Operational resilience under DORA

The Digital Operational Resilience Act imposes detailed requirements on financial entities, including e-money institutions, to manage information and communications technology risk. Firms must have in place ICT risk-management frameworks, incident reporting, resilience testing and, importantly, oversight of critical third-party ICT providers. For EMIs, which are typically technology-led and heavily reliant on third-party infrastructure, DORA is a significant compliance undertaking that reaches into vendor management, contractual arrangements and testing regimes. It is not a one-off exercise but a continuing obligation to demonstrate operational resilience, and supervisors expect boards to be able to evidence effective oversight of ICT and operational risk.

Passporting and fragmentation

A structural challenge for EMIs is that authorisation is granted by a single national competent authority and then passported across the European Economic Area, but supervision, expectations and, in some areas, national requirements still vary. A firm authorised in one member state and operating across many must manage the expectations of its home-state regulator while complying with host-state rules where they apply, and must handle reporting, complaints and conduct requirements that are not fully uniform. Choosing the right member state for authorisation, and managing the relationship with the home regulator, is a strategic decision with lasting compliance consequences. The fragmentation also means that a compliance issue in one jurisdiction can have implications across the passported footprint.

Safeguarding, fraud and consumer protection

Alongside these structural issues, EMIs face rising expectations on the protection of customer funds, on fraud prevention, and on consumer outcomes. Safeguarding of customer funds is a core prudential requirement, and supervisors across Europe are increasingly focused on ensuring that customer funds are genuinely protected and recoverable if a firm fails. Fraud, including authorised push payment fraud, is a growing area of regulatory and political attention, with expectations around prevention, detection and, in some regimes, reimbursement. Consumer-protection expectations are also rising. For EMIs, whose customers often include vulnerable and financially excluded groups, meeting these expectations is both a compliance obligation and a matter of supervisory priority.

How Buckingham Capital Consulting can help

Buckingham Capital Consulting advises electronic money institutions on the compliance challenges of operating in Europe. We help firms navigate the changing payments framework, assess the interaction between e-money regulation and MiCA where stablecoin activity is contemplated, build anti-money-laundering programmes to the standard the new EU regime expects, and address operational-resilience obligations. We also advise on the choice of member state for authorisation and on managing the compliance implications of passporting across the European Economic Area. Because these challenges must be managed together rather than in isolation, our value lies in helping firms build a coherent, cross-jurisdictional compliance framework.

If you operate, or plan to operate, an electronic money institution in Europe, contact our team for an initial assessment of the compliance framework you need.

Email: info@buckinghamcapitalconsulting.co.uk.

Frequently asked questions

What is the biggest compliance challenge for e-money institutions in Europe?

There is no single challenge; the difficulty is that several substantial obligations must be managed simultaneously. The most significant, however, are the transition to the modernised payments framework, the interaction between e-money regulation and MiCA for stablecoin activity, the more harmonised and demanding EU anti-money-laundering regime with its central authority, and the operational-resilience requirements of the Digital Operational Resilience Act. For firms operating across multiple member states, the passporting model adds a further layer, because supervision and some requirements still vary by jurisdiction. The core challenge is therefore integration: building a compliance framework that addresses all of these obligations coherently, across every jurisdiction in which the firm operates, rather than treating each as a separate, isolated project.

How does MiCA affect e-money institutions?

MiCA affects e-money institutions most directly through its treatment of stablecoins. Under MiCA, a stablecoin pegged to a single fiat currency is classified as an e-money token, and issuing one requires authorisation as an electronic money institution or credit institution, together with a MiCA white paper and compliance with reserve, redemption and disclosure obligations. This places EMIs at the centre of the EU's stablecoin framework: an EMI that wishes to issue a stablecoin must comply with both the e-money regime and MiCA at once. Even EMIs that do not issue stablecoins are affected, because they must assess carefully where the boundaries lie between e-money, e-money tokens and crypto-asset services, to determine which authorisations any given activity requires and to avoid operating outside the scope of their permissions.

What is DORA and does it apply to e-money institutions?

The Digital Operational Resilience Act, known as DORA, is EU legislation that imposes detailed requirements on financial entities to manage information and communications technology risk, and it does apply to electronic money institutions. DORA requires firms to maintain an ICT risk-management framework, report significant ICT-related incidents, carry out resilience testing, and oversee the risks arising from critical third-party ICT providers. For e-money institutions, which are typically technology-led and heavily dependent on third-party infrastructure, DORA is a substantial and continuing compliance obligation that extends into vendor management, contracts and testing. Supervisors expect firms, and their boards, to be able to demonstrate genuine operational resilience and effective oversight of ICT and operational risk, so DORA compliance is an ongoing programme rather than a one-off implementation exercise.

How does the new EU anti-money-laundering regime affect EMIs?

The EU is moving to a single anti-money-laundering rulebook and has established a central Anti-Money Laundering Authority to supervise and coordinate across member states. For e-money institutions, this reduces the divergence that previously existed between national AML regimes but raises the baseline expectation and introduces more consistent, EU-level scrutiny. Because EMIs are often used for cross-border and higher-risk payment flows, they are likely to be a focus of attention, and they must maintain a robust, well-evidenced AML programme, covering risk assessment, customer due diligence, transaction monitoring, sanctions screening and reporting, to a standard that will be applied more uniformly across the EU. Keeping pace with the new rulebook and the expectations of the central authority is a significant and ongoing compliance task for EMIs.

Can an EMI authorised in one EU country operate across the EU?

Yes, through passporting. An electronic money institution authorised by the national competent authority of one European Economic Area member state can passport its services across the other member states, either on a cross-border services basis or by establishing a branch. However, passporting does not make compliance uniform. Supervision, expectations and some national requirements still vary, so a firm operating across multiple states must manage its relationship with its home-state regulator while complying with host-state rules where they apply, and must handle reporting, complaints and conduct requirements that are not fully harmonised. The choice of member state for authorisation is therefore a strategic decision with lasting compliance consequences, and firms should weigh the home regulator's approach, the local ecosystem and the practicalities of passporting when deciding where to authorise.