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What are the benefits of an FBO account?
One benefit of an FBO account is that it may provide the user regulatory coverage and may allow some companies to avoid the cumbersome process of becoming registered money transmitters. All companies should seek independent legal advice on their regulatory obligations regarding money transmission.
For some companies, an FBO account may reduce the impacts of short-term changes in the regulatory landscape impacting their operations. In some cases, businesses may also obtain FDIC coverage with potentially up to $250,000 in FDIC insurance on each virtual account under their FBO account.
Other questions about FBO accounts
An FBO account, or a For Benefit Of account, allows a company to manage funds on behalf of—or for the benefit of—one or more of their users, without assuming legal ownership of the account.
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An FBO typically poses the same level of risk as other business bank accounts, from a bank counterparty perspective.
An FBO account is not technically a trust account, although some similarities exist between the two.
The beneficial owner of the account (or the party in whose name the account or sub-account was opened) owns the funds in an FBO.
The “FBO” in an FBO account stands for “for benefit of.”