Are you wondering what a safeguarding account is and if your business needs one? It’s essentially a separate account that keeps your customers’ funds separate from your company’s operational funds.
So essentially, it serves as added protection for your customers’ money. Do you need one? That really depends on the type of business you have and the regulations and laws that apply to it.
It’s always a good idea to do some research and consult with a financial professional to determine if a safeguarding account is necessary for your specific business.
What is a safeguarding account?
A safeguarding account is a type of segregated account that financial institutions use to keep customers’ funds separate from the company’s operational funds.
This account is also sometimes referred to as a trust account or a custody account. The main purpose of this account is to protect customer funds in the event that the company becomes insolvent.
By keeping your customer funds in a fully segregated, safeguarding account, you can make managing your finances much easier. You’ll have a clearer view of which funds are yours, as the business, and which belong to your customers.
And if the worst should happen and your business goes into insolvency, the customer funds will still be protected. So, it’s definitely worth considering this option for your online marketplace business.
Does my business need a safeguarding account?
As an EMI or PI, it’s important to have a safeguarding account to protect your clients’ funds. This is because the FSCS does not cover EMIs or PIs.
A safeguarding account ensures that your clients’ funds are protected in the event that something happens to your business. It also gives you peace of mind knowing that your client’s funds are safe.
How do I get a safeguarding account?
Getting a safeguarding account is not as simple as just opening a corporate bank account. In order to get a safeguarding account, you will need to partner with a bank that is licensed to issue them.
There is also a process of collecting documentation and performing AML/KYC checks on your business. The timeline for this can vary depending on your business and jurisdiction, therefore, do not hesitate to contact us to get more information.
Safeguarding accounts are essential for businesses that handle large amounts of money, so it is important to take the time to get everything set up correctly.