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Status: You are viewing the version of the handbook as on 2009-03-31.

ELM 6.3 Duty to redeem

Person entitled to redemption

ELM 6.3.1R

A firm must, if requested to do so, redeem, at par, any e-money it has issued if the request is from a person who lawfully holds the e-money and who is:

  1. (1)

    the person to whom the firm issued the e-money; or

  2. (2)

    any other person holding the e-money in accordance with the e-money scheme rules other than a merchant who has accepted e-money in the course of business in settlement of goods or services.1

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Currency of redemption

ELM 6.3.2R

A firm must give a person who is exercising a redemption right against the firm the right to have the proceeds of redemption paid to him in the currency in which the e-money is denominated.

Time of redemption

ELM 6.3.3R

A firm must give a person who is exercising a redemption right against the firm in accordance with ELM 6.5.1 R:

  1. (1)

    (in the case of redemption for cash) the right to receive the cash immediately following the completion of the procedures in ELM 6.3.4 R;

  2. (2)

    (in the case of redemption in accordance with ELM 6.5.1 R (2)) the right to be paid as follows:

    1. (a)

      the firm must give the necessary payment instructions immediately following the completion of the procedures in ELM 6.3.4 R; and

    2. (b)

      the firm must ensure that the funds reach the holder's account within five business days of the day on which it gave the instructions in (2)(a).

Money laundering and other checks

ELM 6.3.4R
  1. (1)

    The procedures referred to in ELM 6.3.3 R are the carrying out of any checks that are reasonably required to prevent money laundering or fraud or to check whether the holder of the e-money is a person who is entitled to redeem it.

  2. (2)

    A firm must complete any procedures referred to in (1) as soon as reasonably possible.

ELM 6.3.5R

Nothing in ELM 6.3 requires a firm to do anything:

  1. (1)

    [deleted]2

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  2. (2)

    prohibited by the Money Laundering Regulations; or

  3. (3)

    that would be a criminal offence under the law of any part of the United Kingdom; or

  4. (4)

    (in relation to e-money) that would be a criminal offence under the law of a country other than the United Kingdom in which the firm redeems or would redeem that e-money.

Redemption prevented by circumstances beyond the firm's control

ELM 6.3.6R

A firm does not breach ELM 6.3.3 R (2) if the failure of the funds to reach the holder's account in time is caused by a failure outside the firm's control on the part of any third party that is involved in the funds transfer.

Guidance

ELM 6.3.7G

Merchants who accept e-money in the course of their business do not benefit from this right to redemption but will usually make separate contractual arrangements for redemption1.

ELM 6.3.8G

ELM 6.3.3 R recognises that it may not be possible to make electronic payments to e-money holders at once owing to the timetable of the settlement cycle for retail payments.

ELM 6.3.9G

The par value of e-money is its monetary value.

ELM 6.3.10G

The redemption right applies against the issuer of e-money. Issuer means the same thing as it does for the purpose of article 74A of the Regulated Activities Order (Electronic money). There is guidance on the meaning of issuer under that article in 3PERG 33 (Guidance on the scope of the 4 regulated activity of issuing e-money).

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