The UK payments sector continues to evolve rapidly. Electronic Money Institutions (EMIs) and Payment Institutions (PIs) are handling increasing volumes of customer funds, cross-border payments and increasingly complex payment flows. At the same time, regulatory expectations around financial crime controls, safeguarding, governance and operational resilience continue to develop.

For firms operating in the UK, Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF), sanctions controls, customer due diligence and safeguarding are important components of a robust regulatory framework.

The Financial Conduct Authority (FCA) requires firms applying for payment or e-money authorisation to demonstrate appropriate governance, internal controls, risk management and compliance with the Money Laundering Regulations. The FCA’s current application guidance also emphasises that policies and procedures should be tailored to the firm’s specific business model rather than relying on generic templates.

For EMIs and PIs, this means compliance needs to be integrated into the operating model and technology architecture from the outset.

In this guide, we examine key AML and financial crime compliance considerations for UK EMIs and PIs and explore how technology can support more connected and auditable compliance operations.

Why Financial Crime Compliance Matters for UK Payment Firms

Payment and e-money businesses can have complex risk profiles because of their products, customer journeys, transaction volumes, geographic exposure and use of third parties.

Depending on the business model, firms may need to manage risks associated with:

• Digital and non-face-to-face onboarding

• Cross-border payments

• Multi-currency transactions

• Agents and other third parties

• Complex payment flows

• Higher-risk customers or jurisdictions

• Rapidly changing transaction patterns

The FCA expects firms to have appropriate governance, internal controls and risk management arrangements. For firms applying for authorisation as PIs or EMIs, compliance with the Money Laundering Regulations is also an explicit requirement.

Rather than treating AML as a standalone policy function, firms should build financial crime controls into their customer onboarding, payment processing, transaction monitoring and operational workflows.

Key Financial Crime Risks for EMIs and PIs

1. Product and Jurisdictional Risk

A firm’s financial crime risk profile depends heavily on its products, services, customers and geographic exposure.

Potential risk factors can include:

• Cross-border payment activity

• Multi-currency wallets

• Exposure to higher-risk jurisdictions

• High-volume payment flows

• Complex customer or merchant structures

• Use of agents, distributors or other third parties

A Business-Wide Risk Assessment (BWRA) should therefore be specific to the firm’s actual business model.

The FCA’s current authorisation guidance makes clear that firms should provide policies and procedures that are tailored to their business rather than relying on generic templates.

How to strengthen your approach

A robust risk assessment should consider:

• Customer risk

• Product and service risk

• Geographic risk

• Delivery-channel risk

• Transaction risk

• Third-party risk

• Emerging financial crime risks

The assessment should then inform the firm’s controls, monitoring and risk appetite.

2. Weak Customer Due Diligence

Customer Due Diligence (CDD) is a fundamental component of an effective AML framework.

Depending on the customer’s risk profile and applicable requirements, firms may need to establish and verify:

• Customer identity

• Beneficial ownership

• Nature and purpose of the relationship

• Source of funds

• Expected transaction activity

• Relevant risk factors

Digital onboarding can improve customer experience and operational efficiency, but firms still need appropriate controls to identify impersonation, identity fraud and other financial crime risks.

How to strengthen CDD

Technology can support:

• Digital identity verification

• KYC workflows

• KYB verification

• Beneficial ownership checks

• Risk-based onboarding

• Automated screening

• Enhanced Due Diligence workflows

The objective should be to create a consistent and auditable onboarding process that can adapt to different customer risk levels.

3. Treating Compliance as a Secondary Priority

One common technology mistake is to develop the customer journey and payment infrastructure first and attempt to add compliance controls later.

This can create significant integration and operational challenges.

Compliance requirements can affect:

• Customer onboarding

• KYC and KYB

• Transaction monitoring

• Sanctions screening

• Case management

• Audit trails

• Reporting

• Customer risk scoring

Adding these capabilities after the core platform has already been built may require additional development work and complex system integrations.

How to strengthen your approach

Adopt a compliance-by-design approach.

Financial crime controls should be considered during product and technology architecture planning rather than treated as a separate layer added at the end of development.

4. Weak AML Transaction Monitoring

Transaction monitoring is an important component of financial crime risk management for payment and e-money businesses.

A monitoring system should be capable of identifying activity that may require further investigation based on the firm’s risk profile and applicable requirements.

However, simply deploying transaction monitoring software is not enough.

Firms should consider:

• Monitoring scenarios and rules

• Threshold calibration

• Alert volumes

• False-positive rates

• Investigation workflows

• Escalation procedures

• Management information

• Periodic testing and tuning

• Changes in customer and transaction behaviour

Why monitoring effectiveness matters

As a payment business grows, transaction patterns can change significantly.

Monitoring rules that were appropriate for a smaller customer base may become less effective as transaction volumes, products, geographies and customer segments expand.

Firms should therefore periodically assess whether their monitoring framework remains appropriate for their current risk profile.

5. Inadequate Sanctions Screening

Sanctions controls should form part of a firm’s broader financial crime control framework.

Depending on the business model and applicable requirements, screening may need to cover relevant parties such as:

• Customers

• Beneficial owners

• Counterparties

• Other relevant individuals or entities

Effective screening also requires appropriate processes for managing alerts.

Firms should have documented procedures covering:

• Alert generation

• Investigation

• Escalation

• Decision-making

• False-positive handling

• Record-keeping

• Ongoing screening

Technology can help automate screening workflows while providing an auditable record of decisions and actions.

6. Weak Governance and Compliance Oversight

Technology alone cannot create an effective compliance framework.

Firms need clear ownership of financial crime risks and appropriate governance arrangements.

The FCA expects payment and e-money applicants to demonstrate robust governance arrangements, internal controls and risk management procedures.

A strong governance framework should establish:

• Clear ownership of financial crime risks

• Defined compliance responsibilities

• Appropriate escalation procedures

• Management reporting

• Internal controls

• Risk management processes

• Regular compliance reviews

Where applicable, senior management and the Money Laundering Reporting Officer (MLRO) should have appropriate visibility over material financial crime risks and investigations.

7. Poor Documentation and Record-Keeping

A strong compliance programme needs evidence.

It is not enough for a firm to have policies describing what it intends to do. The business should also be able to demonstrate how controls operate in practice.

Relevant records may include:

• Customer due diligence information

• KYC and KYB results

• Risk assessments

• AML alerts

• Investigation records

• Screening results

• Compliance decisions

• Policy reviews

• Audit records

• Transaction monitoring activity

How technology can help

A centralised compliance environment can provide:

• Automated record retention

• Audit trails

• Centralised customer information

• Investigation histories

• Role-based access

• Reporting dashboards

• Structured compliance workflows

This can make information easier to retrieve and improve operational visibility.

8. Failing to Keep Up With Regulatory Changes

The regulatory environment for payments and e-money businesses continues to evolve.

Firms need to monitor developments affecting areas such as:

• AML and financial crime controls

• Safeguarding

• Consumer protection

• Operational resilience

• Digital payments

• Cross-border payments

• Emerging financial technologies

The FCA’s current application guidance directs payment and e-money applicants to relevant Handbook requirements, including safeguarding provisions and other regulatory material.

How to strengthen your approach

Firms should establish processes to:

• Monitor relevant regulatory updates

• Review policies periodically

• Assess the impact of regulatory changes

• Update internal controls

• Document implementation decisions

• Communicate material changes to relevant teams

Technology should support this process by making control changes and operational evidence easier to manage.

9. Overlooking Third-Party Compliance Risk

EMIs and PIs frequently depend on third parties for services such as:

• KYC verification

• KYB verification

• Payment processing

• Banking connectivity

• Cloud infrastructure

• Fraud detection

• Screening

• Transaction monitoring

Third-party providers can improve speed and scalability, but they also introduce additional operational dependencies.

Firms should understand how third-party services affect their own risk management and control environment.

Key areas to assess

Vendor due diligence may include:

• Security controls

• Service reliability

• Regulatory and compliance capabilities

• Data protection

• Business continuity

• Incident management

• Operational resilience

• Contractual responsibilities

Ongoing monitoring is important because third-party risk can change over time.

10. Weak Safeguarding and Reconciliation Processes

Safeguarding is a separate but critical regulatory obligation for relevant payment and e-money firms.

The FCA’s safeguarding framework was strengthened from 7 May 2026, with applicable requirements now set out across the relevant PSRs/EMRs provisions and FCA Handbook modules, including CASS 10A and CASS 15 and related supervisory requirements.

The FCA states that payment and e-money institutions required to safeguard relevant funds must follow the applicable safeguarding requirements designed to protect customer funds in the event of insolvency.

Firms should therefore pay close attention to areas such as:

• Safeguarding arrangements

• Identification and segregation of relevant funds

• Reconciliation processes

• Governance and oversight

• Supporting systems and records

• Safeguarding audits

• Reporting requirements

• Third-party arrangements

• Wind-down and resolution planning

The specific requirements applicable to a firm depend on its regulatory status, activities and circumstances.

Building a Stronger AML and Compliance Technology Framework

For modern EMIs and PIs, compliance should not operate as a collection of disconnected tools.

A connected technology architecture can bring together:

• Digital customer onboarding

• KYC verification

• KYB verification

• Customer risk assessment

• Sanctions screening

• AML transaction monitoring

• Case management

• Compliance workflows

• Audit trails

• Operational reporting

An integrated approach can reduce manual handoffs between systems and give compliance and operations teams greater visibility into customer and transaction activity.

However, technology should support – not replace – the firm’s governance, risk management, compliance oversight and decision-making responsibilities.

How AnankAI Supports Compliance Technology for EMIs and PIs

AnankAI provides fintech technology infrastructure designed to support payment businesses, EMIs, PIs, digital wallet providers and other financial technology companies.

Its technology capabilities can support connected workflows across:

• Digital onboarding

• KYC and KYB workflows

• AML transaction monitoring

• Compliance workflow automation

• Customer risk management

• Case management

• Payment infrastructure

• Digital wallet infrastructure

• Operational dashboards

• Audit trails and reporting

By connecting these capabilities within a technology environment, fintech businesses can reduce fragmented workflows, improve operational visibility and build more scalable compliance operations.

AnankAI provides the technology infrastructure; regulatory responsibilities, compliance decisions and legal obligations remain with the relevant financial institution and its responsible teams.

Practical AML Technology Checklist for UK EMIs and PIs

Before scaling a payment or e-money operation, firms should assess whether their technology environment can support:

Customer onboarding

• Digital KYC

• KYB verification

• Beneficial ownership checks

• Risk-based onboarding

Financial crime controls

• AML screening

• Sanctions screening

• Transaction monitoring

• Customer risk assessment

Compliance operations

• Case management

• Alert investigation

• Escalation workflows

• Audit trails

• Management reporting

Payment operations

• Payment processing

• Multi-currency transactions

• Wallet infrastructure

• Transaction data integration

Governance and evidence

• Centralised records

• Role-based access

• Reporting

• Control monitoring

• Evidence retrieval

The objective is not simply to add more compliance tools. It is to create a technology architecture in which customer, transaction and compliance information can move securely between the relevant processes.

Conclusion

Financial crime compliance is a core part of operating a payment or e-money business in the UK.

For EMIs and PIs, a robust approach should combine appropriate governance, risk assessment, customer due diligence, transaction monitoring, sanctions controls, documentation, safeguarding and ongoing oversight.

The FCA’s current requirements also demonstrate the importance of tailoring controls to the firm’s business model rather than relying on generic policies or disconnected processes.

As payment businesses scale, technology can play an important role in connecting onboarding, KYC/KYB, AML monitoring, case management, payment operations and reporting.

AnankAI provides technology infrastructure to help fintechs build these connected workflows and support scalable, auditable financial operations.

Explore how AnankAI can support your fintech technology infrastructure.