diff --git a/contracts/smart-account/interfaces/modules/ISecurityPolicyPlugin.sol b/contracts/smart-account/interfaces/modules/ISecurityPolicyPlugin.sol
index 25e9c069..974a79e4 100644
--- a/contracts/smart-account/interfaces/modules/ISecurityPolicyPlugin.sol
+++ b/contracts/smart-account/interfaces/modules/ISecurityPolicyPlugin.sol
@@ -9,8 +9,5 @@ interface ISecurityPolicyPlugin {
     ///      set in the security policy of the smart contract wallet.
     /// @param _scw  The address of the smart contract wallet
     /// @param _plugin The address of the plugin to be installed
-    function validateSecurityPolicy(
-        address _scw,
-        address _plugin
-    ) external view;
+    function validateSecurityPolicy(address _scw, address _plugin) external;
 }
diff --git a/contracts/smart-account/modules/SecurityPolicyManagerPlugin.sol b/contracts/smart-account/modules/SecurityPolicyManagerPlugin.sol
index 1d3e8bf3..4a195bfc 100644
--- a/contracts/smart-account/modules/SecurityPolicyManagerPlugin.sol
+++ b/contracts/smart-account/modules/SecurityPolicyManagerPlugin.sol
@@ -19,6 +19,9 @@ contract SecurityPolicyManagerPlugin is ISecurityPolicyManagerPlugin {
         address _setupContract,
         bytes calldata _setupData
     ) external override returns (address) {
+        // The Setup Contract must satisfy all security policies
+        _validateSecurityPolicies(msg.sender, _setupContract);
+
         // Instruct the SA to install the module and return the address
         ISmartAccount sa = ISmartAccount(msg.sender);
         (bool success, bytes memory returndata) = sa
@@ -37,8 +40,11 @@ contract SecurityPolicyManagerPlugin is ISecurityPolicyManagerPlugin {
 
         address module = abi.decode(returndata, (address));
 
-        // Validate the security policies
-        _validateSecurityPolicies(msg.sender, module);
+        // If the setup contract differs from the installed module,
+        // Validate the module as well
+        if (module != _setupContract) {
+            _validateSecurityPolicies(msg.sender, module);
+        }
 
         return module;
     }
diff --git a/test/foundry/module/SecurityPolicy/SecurityPolicyManagerPlugin.ModuleInstallation.t.sol b/test/foundry/module/SecurityPolicy/SecurityPolicyManagerPlugin.ModuleInstallation.t.sol
index c8b7fd2a..844a07fd 100644
--- a/test/foundry/module/SecurityPolicy/SecurityPolicyManagerPlugin.ModuleInstallation.t.sol
+++ b/test/foundry/module/SecurityPolicy/SecurityPolicyManagerPlugin.ModuleInstallation.t.sol
@@ -8,13 +8,29 @@ import {SecurityPolicyManagerPlugin, SENTINEL_MODULE_ADDRESS} from "modules/Secu
 import {ISecurityPolicyPlugin} from "interfaces/modules/ISecurityPolicyPlugin.sol";
 import {ISecurityPolicyManagerPlugin, ISecurityPolicyManagerPluginEventsErrors} from "interfaces/modules/ISecurityPolicyManagerPlugin.sol";
 import {UserOperation} from "aa-core/EntryPoint.sol";
+import {MultichainECDSAValidator} from "modules/MultiChainECDSAValidator.sol";
 import "forge-std/console2.sol";
 
 contract TestSecurityPolicyPlugin is ISecurityPolicyPlugin {
     bool public shouldRevert;
+    bool public wasCalled;
 
-    function validateSecurityPolicy(address, address) external view override {
-        require(!shouldRevert, "TestSecurityPolicyPlugin: shouldRevert");
+    mapping(address => bool) public blacklist;
+
+    constructor() {
+        blacklist[address(0x2)] = true;
+    }
+
+    error TestSecurityPolicyPluginError(address);
+
+    function validateSecurityPolicy(
+        address,
+        address _plugin
+    ) external override {
+        wasCalled = true;
+        if (shouldRevert || blacklist[_plugin]) {
+            revert TestSecurityPolicyPluginError(address(this));
+        }
     }
 
     function setShouldRevert(bool _shouldRevert) external {
@@ -22,6 +38,12 @@ contract TestSecurityPolicyPlugin is ISecurityPolicyPlugin {
     }
 }
 
+contract TestSetupContractBlacklistReturn {
+    function initForSmartAccount(address) external view returns (address) {
+        return address(0x2);
+    }
+}
+
 contract SecurityPolicyManagerPluginModuleInstallationTest is
     SATestBase,
     ISecurityPolicyManagerPluginEventsErrors
@@ -33,6 +55,8 @@ contract SecurityPolicyManagerPluginModuleInstallationTest is
     TestSecurityPolicyPlugin p3;
     TestSecurityPolicyPlugin p4;
 
+    MultichainECDSAValidator validator;
+
     function setUp() public virtual override {
         super.setUp();
 
@@ -95,5 +119,140 @@ contract SecurityPolicyManagerPluginModuleInstallationTest is
             alice
         );
         entryPoint.handleOps(arraifyOps(op), owner.addr);
+
+        // Create MultichainValidator
+        validator = new MultichainECDSAValidator();
+    }
+
+    function testModuleInstallation() external {
+        bytes memory setupData = abi.encodeCall(
+            validator.initForSmartAccount,
+            (alice.addr)
+        );
+
+        UserOperation memory op = makeEcdsaModuleUserOp(
+            getSmartAccountExecuteCalldata(
+                address(spmp),
+                0,
+                abi.encodeCall(
+                    ISecurityPolicyManagerPlugin.checkSetupAndEnableModule,
+                    (address(validator), setupData)
+                )
+            ),
+            sa,
+            0,
+            alice
+        );
+
+        vm.expectEmit(true, true, true, true);
+        emit ModuleValidated(address(sa), address(validator));
+
+        entryPoint.handleOps(arraifyOps(op), owner.addr);
+
+        assertTrue(p1.wasCalled());
+        assertTrue(p2.wasCalled());
+        assertTrue(p3.wasCalled());
+        assertTrue(p4.wasCalled());
+        assertTrue(sa.isModuleEnabled(address(validator)));
+    }
+
+    function testShouldRevertModuleInstallationIfSecurityPolicyIsNotSatisifedOnSetupContract()
+        external
+    {
+        TestSetupContractBlacklistReturn blacklistReturn = new TestSetupContractBlacklistReturn();
+
+        bytes memory setupData = abi.encodeCall(
+            validator.initForSmartAccount,
+            (alice.addr)
+        );
+
+        UserOperation memory op = makeEcdsaModuleUserOp(
+            getSmartAccountExecuteCalldata(
+                address(spmp),
+                0,
+                abi.encodeCall(
+                    ISecurityPolicyManagerPlugin.checkSetupAndEnableModule,
+                    (address(blacklistReturn), setupData)
+                )
+            ),
+            sa,
+            0,
+            alice
+        );
+
+        vm.recordLogs();
+        entryPoint.handleOps(arraifyOps(op), owner.addr);
+        Vm.Log[] memory logs = vm.getRecordedLogs();
+        UserOperationEventData memory eventData = getUserOperationEventData(
+            logs
+        );
+        assertFalse(eventData.success);
+        UserOperationRevertReasonEventData
+            memory revertReasonEventData = getUserOperationRevertReasonEventData(
+                logs
+            );
+        assertEq(
+            keccak256(revertReasonEventData.revertReason),
+            keccak256(
+                abi.encodeWithSelector(
+                    TestSecurityPolicyPlugin
+                        .TestSecurityPolicyPluginError
+                        .selector,
+                    p4
+                )
+            )
+        );
+
+        assertFalse(sa.isModuleEnabled(address(validator)));
+    }
+
+    function testShouldRevertModuleInstallationIfSecurityPolicyIsNotSatisifedOnInstalledPlugin()
+        external
+    {
+        bytes memory setupData = abi.encodeCall(
+            validator.initForSmartAccount,
+            (alice.addr)
+        );
+
+        UserOperation memory op = makeEcdsaModuleUserOp(
+            getSmartAccountExecuteCalldata(
+                address(spmp),
+                0,
+                abi.encodeCall(
+                    ISecurityPolicyManagerPlugin.checkSetupAndEnableModule,
+                    (address(validator), setupData)
+                )
+            ),
+            sa,
+            0,
+            alice
+        );
+
+        p4.setShouldRevert(true);
+
+        vm.recordLogs();
+        entryPoint.handleOps(arraifyOps(op), owner.addr);
+        Vm.Log[] memory logs = vm.getRecordedLogs();
+        UserOperationEventData memory eventData = getUserOperationEventData(
+            logs
+        );
+        assertFalse(eventData.success);
+        UserOperationRevertReasonEventData
+            memory revertReasonEventData = getUserOperationRevertReasonEventData(
+                logs
+            );
+        assertEq(
+            keccak256(revertReasonEventData.revertReason),
+            keccak256(
+                abi.encodeWithSelector(
+                    TestSecurityPolicyPlugin
+                        .TestSecurityPolicyPluginError
+                        .selector,
+                    p4
+                )
+            )
+        );
+
+        assertFalse(sa.isModuleEnabled(address(validator)));
     }
 }