Concentration account
Encyclopedia
A concentration account is a sole account used for the internal purposes of a financial institution
to facilitate the processing and settlement
of multiple or individual customer transactions
within the institution, usually on the same day. Such accounts can lead to the concealment by financial institutions of transactions made by customers. However section 325 of Title III
of the USA PATRIOT Act
banned their use for such purposes by prohibiting financial institutions from allowing clients to direct transactions that move their funds into, out of, or through the concentration accounts of the financial institution; and prohibit the financial institutions from informing clients about the existence of such accounts and disallows any disclosure that may allow a customer a way of identifying such accounts that the financial institution may use. Section 325 also requires that financial institutions document and follow methods of identifying where the funds are for each customer in a concentration account that comingles funds belonging to one or more customers.
Financial institution
In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...
to facilitate the processing and settlement
Settlement (finance)
Settlement of securities is a business process whereby securities or interests in securities are delivered, usually against payment of money, to fulfill contractual obligations, such as those arising under securities trades....
of multiple or individual customer transactions
Financial transaction
A financial transaction is an event or condition under the contract between a buyer and a seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals.-History:...
within the institution, usually on the same day. Such accounts can lead to the concealment by financial institutions of transactions made by customers. However section 325 of Title III
USA PATRIOT Act, Title III
The USA PATRIOT Act was passed by the United States Congress in 2001 as a response to the September 11, 2001 attacks. It has ten titles, each containing numerous sections...
of the USA PATRIOT Act
USA PATRIOT Act
The USA PATRIOT Act is an Act of the U.S. Congress that was signed into law by President George W. Bush on October 26, 2001...
banned their use for such purposes by prohibiting financial institutions from allowing clients to direct transactions that move their funds into, out of, or through the concentration accounts of the financial institution; and prohibit the financial institutions from informing clients about the existence of such accounts and disallows any disclosure that may allow a customer a way of identifying such accounts that the financial institution may use. Section 325 also requires that financial institutions document and follow methods of identifying where the funds are for each customer in a concentration account that comingles funds belonging to one or more customers.