Concentration account

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Concentration account

A single centralized account into which funds collected at regional locations (lockboxes) are transferred.

Concentration Account

A large account kept by a bank or other financial institution for its own internal purposes. Financial institutions use the funds in their concentration accounts to settle numerous transactions that occur on a particular day. For example, if a customer closes his/her bank account, the money given to him/her likely comes from the concentration account. Often, the money in a concentration account comes from regional branches of a bank, which transfer funds to a central location. This is the origin of the name.

It was formerly relatively common for customers to transfer their own money through the concentration account of their banks, for both legitimate and illegitimate purposes. However, the USA PATRIOT Act forbade this practice.
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According to Citi, TreasuryVision Liquidity Manager's analytic dashboard enables many views of cash positioning and risk reporting with summarized and detailed views of end-of-day aggregate balances and analytic trending, grouped by header accounts in their Citi liquidity structure, including multi-currency notional pooling and global cash concentration accounts.
Two key components of effective centralized liquidity management--vesting control over concentration accounts in the treasury function and establishing protocols for ensuring reliable forecasting from offshore units--are policy matters that will generally require the support of senior management.
As Table 4 illustrates, these smaller units used various methods to decrease float and increase sustainable cash flows through the use of ACH, credit card acceptance, direct payroll and deposit, and the use of concentration accounts. The use of investment services, however, as compared to larger units, demonstrates the lack of idle cash for investments as well as a potential need for additional investment expertise within this area.
Among banking practices, the use of ZBAs or concentration accounts provide positive returns on investment while the use of credit services caused a reduction.
PB sroutinely use code names for accounts, concentration accounts (concentration accounts co-mingle bank funds with client funds, which cut off paper trails for billions of dollars of wire transfers) that disguise the movement of client funds, and offshore privateinvestment corporations (PICs) located in countries with strict secrecy laws (Cayman Islands, Bahamas, etc.).
On the contrary, the bank facilitated the outflow in its prepackaged format: shell corporations were established, code names were provided, funds were moved through concentration accounts, the finds were invested in legitimate businesses or in U.S.
Private banks, correspondent banks, off-shore banks, internet banking and gaming, international business companies, international trusts, wire transfers, concentration accounts, automated teller machines, pass-through accounts, mortgages, and brokerage accounts provide a rich source of tools by which criminals and their agents can launder money.
Concentration accounts permit funds from various individuals to be commingled without divulging their origins.
The use of omnibus or concentration accounts by private banking customers that seek confidentiality for their transactions poses an increased vulnerability to banking organizations that the transactions could be the movement of illicit proceeds.
Lockboxes are sometimes available for check payments, as are concentration accounts for incoming wire payments with detailed and balanced management reporting services.
Concentration Accounts. Banks can automatically transfer funds between accounts, combining dollars held in multiple collection or disbursement accounts.