What is an FBO account?

Introduction and function

FBO accounts are widely used by fintechs, payment service providers, and investment platforms that manage funds for multiple customers but do not hold individual bank accounts for each. The account is legally owned by the platform or operator, but funds are held "for the benefit of" the underlying customers.

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This structure allows businesses to offer financial services such as payments or deposits without requiring every end user to open a separate account. It also ensures customer funds are held securely and clearly segregated from the company’s own operating funds, which is critical for compliance and transparency.

How FBO accounts work

In an FBO setup, a company opens a pooled account with a regulated bank. The company maintains an internal ledger that records the balance and transaction history for each end user.

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When money is received, the total balance is deposited into the FBO account, and the platform updates its internal ledger to credit the appropriate user. Similarly, when funds are withdrawn, the platform debits the user’s ledger balance and executes the movement from the pooled account.

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Because the funds legally belong to the customers, FBO accounts must be managed with strict controls to maintain segregation and transparency.

Regulatory safeguards and benefits

Although the account is legally owned by the business, customer funds in FBO accounts are typically held in trust, ensuring those funds are protected and are not treated as company assets in the event of insolvency. Regulators require firms to implement robust reconciliation and recordkeeping to ensure customer balances match the funds held at the bank—often referred to as safeguarding.

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This structure offers significant advantages:

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• Operational efficiency: Funds for many customers can be managed within a single bank account.
• Regulatory clarity: Funds are clearly segregated from company capital, reducing risk.
• Scalability: Platforms can support large volumes of users without requiring new accounts.

FBO accounts in treasury and payments operations

For treasury teams at fintechs or payment providers, FBO accounts are key to managing inflows and outflows efficiently. They act as a bridge between customer transactions and the banking relationships, allowing payments, settlements, and reconciliations to occur automatically at scale.

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Integrating FBO accounts with internal ledgers and bank data is vital for compliance. Automated reconciliation tools and real-time monitoring help treasury teams maintain the precise balance between total customer funds and the corresponding bank account balance.

How Atlar helps with segregated fund tracking

Atlar connects directly to banks and provides real-time visibility into balances and movements across all connected accounts and entities.

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The platform's automated data syncing and organizational tools (like account grouping and entity tracking) help finance and operations teams maintain accuracy and control over specific pools of funds. By combining direct bank connectivity with features like automated reconciliation and detailed audit trails, Atlar simplifies how businesses manage segregated funds at scale, reducing manual effort and ensuring funds are always accounted for.

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