Do you need to be regulated to hold client money?

Do you need to be regulated to hold client money?

You must ensure that you comply with the Money Laundering Regulations 2017. An unregulated firm will need to comply with the Regulations if, for example, they: Hold client money as part of a transaction (i.e. estate administration)

Can a client money account be overdrawn?

The client account bank balance should not be overdrawn, nor should the cash book ever show a negative position. Firms must implement controls to ensure that client ledger balances do not become overdrawn.

What is client money rules?

Client money is money which a firm holds or receives for or from a client. There are many rules that firms must follow to ensure they’re holding this money safely and legally. Client money must be held in the currency in which it was received unless the client instructs otherwise in writing.

What is a client monies account?

Client Money is money that a Firm holds or receives for or from a client and can be of any currency. This could be in the form of cash, draft, cheque or electronic transfer and includes money held by the Firm as stakeholder, and which is not immediately due or payable on demand to the Firm for its own account.

Who do client money rules apply to?

The FCA’s client money rules apply to all regulated firms that receive money from a client, or hold money for a client in the course of carrying out MiFiD business and/or designated investment business. Client Money is money that a Firm holds or receives for or from a client and can be of any currency.

Who needs a CASS audit?

Firms such as financial advisors, investment managers, stockbrokers, debt management and claims management firms usually need an annual client asset (‘CASS’) audit in addition to any statutory audit – and their CASS auditor submits the report directly to the FCA within four months of the period end.

How long does a firm have to remove firm money from a client bank account?

(b) ) subject to paragraph (3A), the firm must be able to make withdrawals of client money promptly and, in any event, within one business day of a request for withdrawal.

How often is client money calculated?

In order to check whether sufficient funds are held in the client money bank accounts the insurance intermediary is required by the FCA to reconcile (at least every 25 business days) regularly their accounting records (‘the client money requirement’) to their banking records (‘the client money resource’).

When can client money be placed in a client bank account?

There are many rules outlined in CASS 7. For example: Receiving, recording and banking client money: Client money should be paid into a client bank account as soon as practicable. Usually, this means the money should be in the client bank account by the following business day.

Why do we segregate client money?

A firm must segregate client funds from those it holds in its own name. In doing this it must maintain records so that it may, within two business days of a request, demonstrate how much client money is held for every individual client.

Do I need a client account?

Yes – providing it is appropriate in the circumstances. For example, you may need a facility for holding client money (such as damages awarded in a litigation case) on a temporary basis and you do not want to open a client account. A TPMA can provide an alternative for receiving the damages and making any payments.

What are the CASS rules?

A fundamental requirement of the CASS Rules is that firms must keep client money separate from firm money in segregated client money bank accounts and register custody assets appropriately. This ensures that client money and custody assets are ring-fenced in the event of the insolvency of the firm.

How often is a CASS audit?

A total of 3,500 CASS audits are currently carried out every year. There is a requirement to audit FCA-registered firms (however, some are out of scope) and our webinar details the process by which firms can decipher whether or not they require a CASS audit.

What is client money calculation?

For the cash-based method, the client money resource should be calculated as the total of: (a) the balances of the firm’s client bank accounts, as at close of business on the previous business day; plus. (b) the value of client money held at third parties; plus.

What is the basis of the client money calculation?

The client money resource is simply calculated as the sum of those balances plus any client money that has been passed on to third parties4 at the date of the calculation.

Are deposits client money?

overnight money market deposits which are clearly identified as being client money (for example, in the client bank account acknowledgment letter). Firms are reminded of their obligations under ■ CASS 7.18 (Acknowledgment letters) for client bank accounts.

Is interest a clients money?

The professional rules governing the payment of interest on client funds can be found at Rule 7 of the Solicitors Accounts Rules 2019 (see If funds are held on a separate designated client deposit account, the interest earned on that account will be accounted to the client.

What is the purpose of a client account?

2.2 The purpose of a client account is to protect client money and prevent it from being mixed with monies related to the adviser’s general business activities.

What is a client account used for?

Client accounts A client account is a practice’s account used for holding client money. It must: be a bank or building society account. be held at a branch or head office in England or Wales.

Who is responsible for Cass?

The Prescribed Responsibility for CASS is PR Z and must be given to the individual who is ultimately responsible within the firm for compliance with the CASS rules.