Frequently asked questions about the ring-fenced account
What is a ring-fenced account?
A ring-fenced account (also known as a safeguarding account) is a mandatory bank account for Payment Institutions (PIs) and Electronic Money Institutions (EMIs). Set out in Articles L. 522-17 and L. 526-32 of the French Monetary and Financial Code, it separates the institution's own funds from those deposited by its clients. This separation ensures that client funds remain protected, even in the event of a PI or EMI failure.
Is a ring-fenced account mandatory for a PI or an EMI?
Yes. PIs and EMIs are required to safeguard their clients' funds with a licensed credit institution no later than the business day following their receipt (D+1), in accordance with Articles L. 522-17 and L. 526-32 of the French Monetary and Financial Code. Entities benefiting from a partial exemption from the ACPR (position P-2022-01) may, under strict volume and scope conditions, benefit from a safeguarding waiver. This waiver ceases to apply as soon as volume thresholds are crossed or the activity extends beyond the declared scope, which requires continuous monitoring.
How do you ensure D+1 compliance?
Ring-fencing must take place no later than the business day following the receipt of funds — this is known as D+1 compliance. Failure to comply exposes the company to sanctions by the ACPR, which can go as far as the withdrawal of its licence.
Managing flows via API in real time enables full automation of the transfer from the settlement account to the ring-fenced account, with complete timestamping and traceability for your ACPR audits.
Are ring-fenced account balances remunerated?
Yes. Deposits in the ring-fenced account earn interest at 25% of the €STR by default. Interest is calculated daily and paid monthly into the main current account. Excess liquidity can also be invested in money market funds (D+1 availability), provided this has been included in your ACPR authorisation application.
Which bank can legally open a ring-fenced account?
Only a credit institution licensed by the ECB or an equivalent national authority. Payment institutions do not hold this status. Memo Bank is licensed by the ECB and regulated by the ACPR.
Are ring-fenced account funds covered by the Deposit Guarantee and Resolution Fund (FGDR)?
The FGDR applies a specific mechanism to third-party funds: the guarantee (up to €100,000) is calculated at the level of each beneficiary — meaning each end client whose funds are deposited in this account. Each client thus benefits individually from FGDR protection, up to the amount of their claim, without the cap being shared among all of the payment institution's clients (Article L. 312-4-1 of the French Monetary and Financial Code).
How are account access rights managed?
Consultation and operational rights on the ring-fenced account and settlement account are configured within the account agreement and managed from the Memo Bank platform.
Internal access: administrators have full rights by default, and team members can be invited with restricted permissions.
Third-party access: in arrangements involving multiple stakeholders (auditor, custodian bank, etc.), read-only access can be granted to external entities, directly from the Memo Bank platform or via standard banking exchange protocols (SWIFT MT940, EBICS). Incoming and outgoing flows can also be managed separately with differentiated rights — for example, granting the PI/EMI's agents management of incoming flows whilst allowing the PI/EMI itself to authorise debits.
What is the difference between a settlement account and a ring-fenced account?
The ring-fenced account is the regulatory account that legally protects client funds. The settlement account is the operational account that orchestrates flows: collection, controls, company charges, and balancing before ring-fencing. Both can be opened simultaneously under a single account agreement.
