What is a client money account (CMA)?

Introduction and safeguarding

Client money accounts are the key safeguard mechanism for regulated businesses that handle client funds (such as payment or investment firms). By separating client funds from a company’s own working capital, CMAs protect customers in the event of insolvency or financial distress.

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The funds held in these accounts belong to the clients, not the business, and are formally held "on trust." This provides a high degree of protection and traceability, making CMAs a cornerstone of regulatory compliance in financial services.

How client money accounts work

A CMA is opened with a regulated bank and clearly designated as holding client funds. When customer payments are received, they are deposited directly into the CMA. Regular reconciliation ensures that the total of client balances matches the amount held in the CMA.

CMA regulations and requirements

The rules governing client money accounts, such as the FCA's CASS rules in the UK or equivalent safeguarding requirements under PSD2 in the EU, mandate strict procedures:

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• Segregation: Client money must be kept legally separate from business funds.
• Reconciliation: Accurate, daily reconciliations must be maintained.
• Recordkeeping: Firms must maintain records identifying all clients and their respective balances.

Failure to comply can result in regulatory penalties and loss of customer trust, making strict adherence to these standards a critical operational priority.

CMA vs FBO accounts

While both client money accounts and FBO accounts are used to hold customer funds, they differ in legal structure and oversight. An FBO account is typically owned and managed by a company for the benefit of its customers but may not always fall under specific regulatory safeguarding rules.

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A client money account, by contrast, is a formally regulated account structure that explicitly separates client funds under trust or fiduciary obligations. It must follow defined safeguarding, reporting, and reconciliation procedures to remain compliant with financial regulations.

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In short, all CMAs are designed to protect client money, but not all FBO accounts qualify as regulated client money accounts.

Benefits and treasury operations

Client money accounts provide important financial and operational advantages:

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• Regulatory compliance: Meets legal requirements for safeguarding client funds.
• Customer protection: Ensures funds remain separate and secure.
• Transparency: Enables clear reporting of client balances and transactions.
• Trust: Strengthens client and partner confidence in how funds are managed.
• Auditability: Creates a clear record trail for regulators and auditors.

In practice, treasury teams use CMAs to monitor and reconcile balances in real time, ensuring accuracy across internal ledgers and bank data. This clear visibility over client money positions supports liquidity planning by distinguishing safeguarded funds from operational liquidity.

How Atlar helps with segregated fund visibility

Atlar connects directly to banks to give finance and operations teams real-time visibility into balances across all accounts and entities.

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This direct data flow and the platform's ability to organize accounts by entity help businesses track and monitor segregated fund balances. By providing transparency and comprehensive transaction records, Atlar supports the operational requirements for accurate client money reporting and control.

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Interested in how this works in practice? Book a demo with our team.