What is a concentration account?
The concentration account is a central place for possession of funds. Such accounts allow you to save money and payment without any transaction involving immediate access to other accounts. They can be used by banks, usually for internal transactions or clients to help manage certain types of other accounts. Many people who promote the use of concentration accounts claim to make cash management more efficient. However, there are critics who claim that these accounts can facilitate illegal activity.
In order to understand the concentration account, it can help think about a joint check account. Funds can be stored and downloaded by all account holders without weighing whose money is involved in each transaction. Similarly, concentration accounts of funds of funds that financial institutions often use to process internal transactions such as fund transfers. Opten supporters emphasize these characteristics such as features of concentration accounts and insist on facilitating and more efficient cash management. NBank clients also use concentration accounts to help manage their individual accounts. This is often seen in companies that have zero balance accounts.
As the name suggests, the zero balance account is an account in which the account holder usually does not want to maintain the balance. Based on the function known as sweeping, often at the end of the day, the money that remains in such an account is moved to a concentration account. If debit is made between sweeping that leaves an account insufficiently financed, the funds can be moved from the account of the concentration account to the zero balance account.
In some cases, this type of system is determined with those who have an account goals. When the client sets out the goal, it determines how much money the maintenance of the account would want. The concentration account is then used to maintain this balance that acts as a source of funding or place for possession of funds depending onon the need.
Concentration accounts are sometimes criticized because of the risk that they can be used to facilitate illegal activities such as money washing. The processing of a financial transaction generally leaves a trail. After the transaction, later, if you are reviewed, information such as the authorization side or the client account number can be determined. However, there are concerns that aggregation of funds on a concentration account involves the risk of separating important information from specific funds or transactions.