CRS for EMIs: when an EMI is a Reportable Financial Institution
“CRS doesn’t apply to us — we’re an EMI” was always a risky reading. Since 1 January 2026 it is simply wrong for most e-money issuers. Council Directive (EU) 2023/2226 rewrote the definition of a Depository Institution in the Common Reporting Standard annex so that holding E-money for customers is, on its own, enough. The test is mechanical, it turns on a five-condition definition and a 60-day rule, and it puts a hard due-diligence line at 31 December 2025. This walks through when an EMI is a Reporting Financial Institution, what E-money means for this purpose, and how the regime sits alongside DAC8 and FATCA.
1. What CRS is, and what changed
The Common Reporting Standard is the OECD’s framework for the automatic exchange of financial-account information for tax purposes. It applies in the EU through Council Directive 2014/107/EU (DAC2), which inserted the CRS rules as Annex I to Directive 2011/16/EU. A Reporting Financial Institution identifies which account holders are tax-resident in another jurisdiction, collects defined data, and reports annually to its home tax authority, which forwards to the jurisdiction of residence.
The OECD approved a set of amendments to the CRS on 26 August 2022, published as Part II of the Crypto-Asset Reporting Framework and Amendments to the Common Reporting Standard. The scope was expanded to cover specific electronic money products and central bank digital currencies, to catch indirect crypto exposure through derivatives and investment vehicles, and to tighten due diligence.
The EU implemented those amendments through Council Directive (EU) 2023/2226 of 17 October 2023 — DAC8 — whose Annex I amends the CRS annex. Recital 27 gives the reasoning: electronic money as defined in Directive 2009/110/EC is widely used in the Union, was not explicitly covered by Directive 2011/16/EU, and member states had adopted diverse approaches, so rules were needed to make reporting obligations apply to it. Under Article 2(1), member states had to adopt and publish the implementing provisions by 31 December 2025 and apply them from 1 January 2026. One naming trap: the OECD text calls the product a Specified Electronic Money Product; DAC8 calls it Electronic Money or E-money. The substantive conditions are the same.
2. The classification test now has a second limb
As amended, Annex I Section VIII, subparagraph A(5) defines a Depository Institution as any entity that:
- accepts deposits in the ordinary course of a banking or similar business; or
- holds E-money or Central Bank Digital Currencies for the benefit of customers.
The old debate is over. It used to turn on whether safeguarded e-money balances in named accounts amounted to “deposits in the ordinary course of a banking or similar business” — an argument with respectable answers on both sides. Limb (b) removes the argument: an entity holding E-money for customers is a Depository Institution without any further test, and therefore a Financial Institution and, absent an exemption, a Reporting Financial Institution.
Section VIII, subparagraph A(11) defines a Central Bank Digital Currency as any digital Fiat Currency issued by a Central Bank or other monetary authority. And Fiat Currency itself (A(10)) is defined to include commercial bank money and electronic money products.
3. What counts as E-money — and the 60-day rule
Subparagraph A(9) defines Electronic Money as any product that is all five of the following: a digital representation of a single Fiat Currency; issued on the receipt of funds for the purpose of making payment transactions; represented by a claim on the issuer denominated in the same Fiat Currency; accepted in payment by a natural or legal person other than the issuer; and, by virtue of regulatory requirements to which the issuer is subject, redeemable at any time and at par value for the same Fiat Currency on the holder’s request.
Then the carve-out that decides most real cases. The term does not include a product created for the sole purpose of facilitating the transfer of funds from a customer to another person on the customer’s instructions. But a product is not created for that sole purpose if, in the ordinary course of the transferring entity’s business, either the funds connected with the product are held longer than 60 days after receipt of instructions to make the transfer, or — where no instructions are received — the funds are held longer than 60 days after receipt of the funds.
That is a dwell-time test, not a product-label test. It is the single most useful line in the amendment for a payments firm, because it is measurable from data the firm already holds.
4. Worked example: the pass-through wallet at day 61
Facts: a payment firm operates a collection product. Customers fund a balance, and in the ordinary course those funds leave within a week. But a segment of dormant balances — unclaimed refunds and abandoned onboarding — sits for months, and no transfer instruction was ever received.
What the rule says: the sole-purpose-of-transfer carve-out is disapplied where, in the ordinary course of business, funds are held beyond 60 days after receipt of instructions or, absent instructions, beyond 60 days after receipt of the funds. The dormant segment is exactly the second branch, so the product is E-money and the firm is a Depository Institution under limb (b).
What the practitioner does: runs the dwell-time distribution before arguing the classification, because the answer is in the ledger. Where the tail is genuine and recurring, classify in scope. Where it is an operational defect, fixing the escheatment and refund process may keep the product outside the definition — but the fix has to be real and in the ordinary course, not a policy statement.
5. The account, and the 31 December 2025 line
DAC8 also amended the account definitions. Section VIII, subparagraph C(2) now provides that a Depository Account includes an account or notional account that represents all E-money held for the benefit of a customer, and an account that holds one or more Central Bank Digital Currencies for a customer. The word “notional” matters: a firm cannot argue itself out of scope because its ledger holds allocations against a pooled safeguarding account rather than individual accounts at a bank.
The most consequential amendment for an operations team is in subparagraph C(9). A Pre-existing Account means a Financial Account maintained as of 31 December 2015 — or, where the account is treated as a Financial Account solely by virtue of the DAC8 amendments, as of 31 December 2025. Newly caught e-money accounts therefore get their own pre-existing/new boundary.
Facts: an EMI concludes in early 2026 that it is a Reporting Financial Institution and starts collecting self-certifications from new customers, planning to backfill the legacy book “when there is capacity”.
What the rule says: accounts open at 31 December 2025 are Pre-existing Accounts and run down the pre-existing due-diligence track — residence-address and electronic-indicia review under Section III for individuals, and the Section V procedures for entities. Accounts opened from 1 January 2026 are New Accounts, where a valid self-certification is required as part of account opening.
What the practitioner does: splits the book on that date and runs two workstreams. Treating the legacy book as if it needed self-certifications is slower and less complete than the indicia review the rules actually prescribe.
6. Thresholds, and the two numbers people mix up
Two USD figures appear in the CRS due-diligence sections and they do different jobs.
| Threshold | What it governs | Effect |
|---|---|---|
| USD 1,000,000 | Pre-existing individual accounts | At or below, the account is a Lower Value Account; above, it is a High Value Account with enhanced review including a relationship-manager enquiry |
| USD 250,000 | Pre-existing entity accounts | Unless the institution elects otherwise, an account at or below this need not be reviewed, identified or reported until it exceeds the figure at the last day of a later calendar year |
Neither is a de minimis for the entity-level obligation. They reduce the volume of due-diligence work, not the classification. Alongside them sit the standard mechanics: self-certification of tax residence and TIN at onboarding for New Accounts, a reasonableness check against AML/KYC data and other indicia, and re-certification on a change in circumstances.
7. CRS, DAC8 and FATCA — and why e-money is not double-reported
The obvious worry for a firm holding both an e-money and a crypto authorisation is reporting the same balance twice. The amendment answers it. Section VIII, subparagraph A(13) defines a Reportable Crypto-Asset as any Crypto-Asset other than a Central Bank Digital Currency, Electronic Money, or a Crypto-Asset the Reporting Crypto-Asset Service Provider has adequately determined cannot be used for payment or investment purposes. E-money and CBDC are carved out of the crypto reporting stream precisely because they are now inside the financial-account stream.
- CRS / DAC2 as amended — financial accounts held by non-residents: fiat balances, E-money, CBDC, interest, dividends, asset proceeds.
- DAC8 crypto reporting — exchange transactions and transfers in Reportable Crypto-Assets, by Reporting Crypto-Asset Service Providers. Crypto-Asset takes its meaning from Article 3(1), point (5) of Regulation (EU) 2023/1114.
- FATCA — accounts held by US tax persons, on a bilateral basis.
One entity can be in all three. The due-diligence layers overlap heavily, which is why one combined tax-classification layer behind onboarding is materially cheaper than three — the point developed in our note on the DAC8 data build. National implementations then diverge on forms and portals: Spain, for instance, is folding the new financial-account details into modelo 289.
8. FAQ
Is an EMI a Reporting Financial Institution under CRS?
From 1 January 2026, an entity that holds E-money for the benefit of customers is a Depository Institution under Annex I Section VIII, subparagraph A(5)(b), as amended by DAC8 — and therefore a Reporting Financial Institution unless a specific exemption applies.
What is the 60-day rule?
A product created solely to facilitate transfers is outside the E-money definition, but that carve-out fails if, in the ordinary course of business, funds are held more than 60 days after transfer instructions are received, or more than 60 days after receipt where no instructions are received.
Are pooled prepaid balances in scope?
Pooling is not the test. A Depository Account expressly includes an account or notional account representing all E-money held for the benefit of a customer, so ledger-level allocation against a pooled safeguarding account is enough.
Which accounts count as pre-existing?
For accounts that became Financial Accounts only because of the DAC8 amendments, the pre-existing boundary is 31 December 2025 rather than 31 December 2015. Accounts opened from 1 January 2026 are New Accounts requiring self-certification at onboarding.
Will an e-money balance be reported twice, under CRS and DAC8?
No. Reportable Crypto-Asset is defined to exclude Electronic Money and Central Bank Digital Currencies, so those balances are reported through the financial-account channel rather than the crypto channel.
Does CRS apply to corporate customers?
Yes. Entity account holders require classification of the entity and, for passive non-financial entities, identification of controlling persons — so corporate onboarding has to feed the CRS layer too.
9. What to do, today
- Classification: re-run the entity analysis against limb (b) of the Depository Institution definition, not against the deposit-taking limb. A conclusion reached before 2026 was answering a different question.
- Data: measure dwell time on every product where balances can sit, and test it against the 60-day branches. Keep the output — it is the evidence for whichever conclusion you reach.
- Book split: freeze the customer population as at 31 December 2025 and run pre-existing indicia review and new-account self-certification as two separate workstreams.
- Thresholds: check that your due-diligence rules apply USD 1,000,000 to pre-existing individual accounts and USD 250,000 only to pre-existing entity accounts.
- If you also hold a CASP authorisation: confirm the reporting engine routes E-money and CBDC to the financial-account return and not to the crypto return.
- Registration: check whether your home tax authority requires notification or registration before a first filing — most do, and the step is easy to discover late.
Related: DAC8 — EU crypto reporting · DAC8 XML reporting — the data build · Spain’s crypto-asset information returns · What is CESOP reporting? · Where to base your EMI · Modelo 720 — Spain’s foreign asset declaration · CARF and how it lines up with DAC8
