Concentration Account

DEFINITION of 'Concentration Account'

A deposit account used to aggregate funds from several locations into one centralized account. Concentration accounts are used by institutions to process and settle internal bank transactions. Concentration accounts are typically used for fund transfers, private banking transactions, trust and custody accounts, and international transactions.

BREAKING DOWN 'Concentration Account'

Concentration accounts have been under scrutiny by U.S. authorities due to the possibility of money laundering. For example, it may be difficult to trace the money trail if funds are being collected in one central source and if customer-identifying information is being separated from the transaction - this may open the door for abuse.

RELATED TERMS
  1. Depository Trust Company - DTC

    One of the world's largest securities depositories, it holds ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out ...
  3. Night Cycle

    An option created in 1979 to process Automated Clearing House ...
  4. Concentration Bank

    A financial institution that is the primary bank of an organization, ...
  5. Finance

    The science that describes the management, creation and study ...
  6. General Ledger

    A company's main accounting records. A general ledger is a complete ...
Related Articles
  1. Credit & Loans

    The Evolution Of Banking

    Banks are a part of ancient history. Find out how this system of money management developed into what we know today.
  2. Insurance

    Your First Checking Account

    This owner's manual will show you what to expect from your bank.
  3. Options & Futures

    Choose To Beat The Bank

    From internet banking to credit unions, it's in your power to cut fees and maximize service.
  4. Budgeting

    When Good People Write Bad Checks

    Overdraft protection can help when you overestimate your balance, but it will cost you.
  5. Term

    Understanding Remittance

    Remittance is the process of sending money to remove or pay an obligation.
  6. Savings

    Banks: Brick-and-Mortar or eBank?

    Brick-and-mortar banks and ebanks usually offer the same services, but there are differences between the two.
  7. Economics

    Calculating Tier 1 Common Capital Ratio

    The tier 1 common capital ratio compares a financial institution’s core equity capital to its risk-weighted assets.
  8. Stock Analysis

    Bank of America's 3 Key Financial Ratios (BAC)

    Discover some of the key financial ratios that show the quality of Bank of America's loan portfolio and how profitable the bank has been.
  9. Stock Analysis

    Wells Fargo's 3 Key Financial Ratios (WFC)

    Look at some of most important financial ratios for with Wells Fargo & Co. and understand why they are so important for analyzing the bank's core business.
  10. Economics

    What's a Non-Banking Financial Company?

    A non-banking financial company, or NBFC, does not hold a banking license, yet it still provides many banking services.
RELATED FAQS
  1. Will Netspend cards let you overdraw your account?

    NetSpend lets cardholders overdraw their accounts, but only if they previously enrolled in the overdraft protection service. ... Read Full Answer >>
  2. Does the FDIC cover business accounts?

    Bank deposits owned by corporations, partnerships, limited liability companies (LLCs), and unincorporated associations, including ... Read Full Answer >>
  3. How can I avoid escheatment of my bank account?

    To avoid escheatment of a bank deposit account, either checking or savings, the owner should log on to his online account; ... Read Full Answer >>
  4. Are bank accounts escheatable?

    If banks are unable to contact account owners at their last known addresses, or receive no response, by law, the accounts ... Read Full Answer >>
  5. How does your checking account affect your credit score?

    Your credit report provides a snapshot for prospective lenders, landlords and employers of how you handle credit. For any ... Read Full Answer >>
  6. What is the banking sector?

    The banking sector is the section of the economy devoted to the holding of financial assets for others, investing those financial ... Read Full Answer >>
Hot Definitions
  1. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  2. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  3. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  4. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  5. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
Trading Center