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. Official Settlement Account

    A type of account used in balance of payments accounting to keep ...
  2. Transaction Deposit

    A banking deposit that has immediate and full liquidity, with ...
  3. Accounting Event

    A transaction or change recognized on the financial statements ...
  4. Bank Deposits

    Money placed into a banking institution for safekeeping. Bank ...
  5. Accounting

    The systematic and comprehensive recording of financial transactions ...
  6. Account History

    All activity within an account, usually since inception. In a ...
Related Articles
  1. Small Business

    Best Checking Accounts For Small Businesses

    What you need to know to choose the best checking account for your small business – and where to look.
  2. Personal Finance

    Handling High-Yield Savings Accounts

    Is this the savings route for you? Read on to find out what these accounts have to offer.
  3. Financial Advisor

    Concentrated Funds: Here's What to Know

    Concentrated funds can help clients achieve returns with a smaller base of diversification than traditional funds. Here's what you should know about them.
  4. Investing

    What is Accounting?

    Accounting is the recording of financial transactions of a business or organization. It also includes the process of summarizing, analyzing and reporting these transactions in financial statements.
  5. Personal Finance

    Find the Best Savings Account Rates

    You know how to spot the highest interest rate, but how do you really get the best deal on savings accounts?
  6. Financial Advisor

    College Funding Decisions: 529 and Custodial Plans

    A look at the differences between custodial accounts and 529 plans, including which to draw upon first to begin funding your child’s college tuition.
  7. Investing

    What is a Demand Deposit?

    A demand deposit is any type of account where the money in the account may be withdrawn at any time without prior notice to the financial institution.
  8. Personal Finance

    Accountant: Job Description & Average Salary

    Discover what the job description of an accountant entails, along with education and training, salary and skills necessary for success.
RELATED FAQS
  1. What determines the interest rate in my money market account?

    Placing funds in a money market account may provide a higher interest rate than a savings account due to the underlying securities ... Read Answer >>
  2. How liquid are money market accounts?

    Understand the characteristics that distinguish money market accounts from checking, savings account and money market funds ... Read Answer >>
  3. For what types of accounts are demand deposits available?

    Learn about the different types of accounts designated as demand deposit accounts, such as savings accounts and money market ... Read Answer >>
  4. What's the difference between the current account and the capital account?

    Learn the difference between the current account and capital account in the balance of payments. Compare and contrast their ... Read Answer >>
  5. Why would you keep funds in a money market account and not a savings account?

    Read about the differences between money market accounts and savings accounts, and see why a depositor would elect a money ... Read Answer >>
  6. Does it make sense for me to have a money market account if I don't want to buy any ...

    Saving funds within a money market account or mutual fund does not have to be limited to those wanting to buy or sell securities ... Read Answer >>
Trading Center