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.

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