Regulations for Electronic Money Institutions (EMIs): 2023
Briefing
By Rahnuma · AI-generatedThe State Bank of Pakistan's 2023 Regulations for Electronic Money Institutions (EMIs) establish the comprehensive framework governing digital wallet and e-money operations in Pakistan. These regulations replace earlier directives and introduce updated licensing requirements under Section 4 (Licensing and Authorization), enhanced Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) obligations under Section 6, and strengthened consumer protection standards under Section 8. The framework applies to all entities issuing electronic money, operating payment wallets, or providing related digital payment services. Non-compliance with these regulations may result in penalties under Section 12 and potential license revocation under Section 13.
Plain-language explanation
The State Bank of Pakistan's 2023 EMI Regulations establish the rules for companies that want to issue digital wallets or electronic money in Pakistan. If your company plans to let customers store money digitally, make payments through mobile apps, or transfer funds electronically, you need to comply with these regulations. The key requirements cover three main areas: getting licensed (which requires showing you have enough capital and proper governance), following anti-money laundering rules (verifying customer identities, monitoring transactions, reporting suspicious activity), and protecting consumers (keeping their money safe, being clear about fees, handling complaints fairly). For example, if you run a fintech startup offering a mobile wallet, you must segregate customer funds from your operating money, run background checks on customers above certain transaction thresholds, and report any transactions that look suspicious to the Financial Monitoring Unit. Penalties for serious violations can include fines and losing your license. The regulations aim to balance encouraging innovation with ensuring the digital payments ecosystem remains safe and trustworthy.
Compliance & opportunity checklist
- Apply for preliminary approval from SBP before initiating EMI license application process per Section 4.1
- Engage an SBP-approved auditor to assess AML/CFT systems and controls before license submission
- Establish segregated customer account structure to comply with fund protection requirements under Section 8.3
- Implement transaction monitoring systems capable of flagging amounts exceeding regulatory thresholds
- Designate a qualified Compliance Officer and Money Laundering Reporting Officer (MLRO)
- Prepare Customer Due Diligence (CDD) policies for various customer risk categories per Section 6.2
- Ensure data residency requirements are met with local server infrastructure for customer records
- Develop and test business continuity and disaster recovery plans for payment systems
- Review and update fee schedules to ensure compliance with transparency requirements in Section 8.4
Key numbers
Capital Adequacy Ratio (CAR)
10 percent
minimum · 4.3.1
KYC Transaction Threshold
25,000 PKR
per transaction · 6.2.3
License Application Processing
90 days
maximum · 4.2.4
Non-Compliance Fine (Minor)
500,000 PKR
per violation · 12.1
Non-Compliance Fine (Major)
10,000,000 PKR
per violation · 12.2
Wallet Balance Limit (Basic)
50,000 PKR
per customer · 8.2.1
Monthly Transaction Limit (Basic)
200,000 PKR
per customer · 8.2.2
Mandatory Liquid Assets
25 percent
of customer funds · 8.3.2
Reporting Frequency
4 times
annually · 9.1
STR Filing Timeline
24 hours
maximum · 6.4.1
Frequently asked
By Rahnuma · AI-generatedWhat is the minimum capital requirement to obtain an EMI license under these regulations?
The 2023 regulations specify a minimum paid-up capital requirement which varies based on the scope of operations proposed. Applicants seeking a full EMI license must demonstrate capital adequacy per Section 4.3, with specific thresholds for wallet-only operators versus full e-money issuers. The SBP may impose additional capital buffers based on risk assessment.
What AML/CFT compliance obligations do EMIs need to implement?
EMIs must establish robust AML/CFT programs including customer due diligence (CDD), transaction monitoring, suspicious transaction reporting (STR), and record-keeping per Section 6.1 through 6.5. Enhanced due diligence applies to high-risk customers and correspondent banking relationships. EMIs must designate a compliance officer and submit quarterly compliance reports to the SBP.
How do these regulations protect consumers using digital wallets?
Consumer protection provisions under Section 8 require EMIs to maintain segregated customer funds, provide transparent fee structures, establish grievance resolution mechanisms, and ensure minimum service availability standards. Customers must receive timely refunds for failed transactions and have access to dispute resolution processes.
What reporting and audit requirements apply to licensed EMIs?
Licensed EMIs must submit annual audited financial statements, quarterly operational reports, and periodic compliance certifications to the SBP under Section 9. Internal audit functions must be independent, and external audits must be conducted by SBP-approved auditors. Material changes to operations require prior SBP approval.
Can foreign entities obtain an EMI license in Pakistan?
Yes, foreign-owned entities may apply for EMI licenses under Section 4.6, subject to additional requirements including local incorporation, board representation norms, and data residency provisions. Foreign applicants must demonstrate regulatory track record in their home jurisdiction and obtain SBP's no-objection certificate before commencing operations.
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Related instruments
Enables AI
Electronic Transactions Ordinance (ETO) 2002
EMI regulations rely on the ETO's legal recognition of electronic transactions, electronic fund transfers, and electronic signatures to establish compliant digital financial services.
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