Ring-Fenced Accounts
A ring-fenced account is a specific way of protecting certain accounts and client funds from difficulties elsewhere in the business. For example, a bank may ring-fence its consumer retail accounts from its merchant banking and investment activities.
For money transfers, some currency exchange providers ring-fence clients funds away from their operations, costs and any associated risks. This separation means that if a financial services provider experiences difficulties in one part of the organization, money in the ring-fenced accounts will not be impacted.
Ring-fenced accounts are often a requirement for licensing a financial services business. For example, the Financial Conduct Authority in the UK has strict requirements on large financial institutions protecting consumer accounts through ring-fencing.
The Monito Glossary
When it comes to moving money, don't let yourself be bogged down by all the jargon. Explore The Monito Glossary to get up to speed with everything you need to know about money transfers.
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