IEIM401920 - Financial Accounts: Segregated Accounts

Financial Accounts: Segregated Accounts

Segregated accounts are accounts in which the customer’s funds are held separate from the funds of the broker or Financial Institution acting for them.

Where an investment manager [see IEIM401280] is appointed to provide direct investment management services by the legal owner of assets, as segregated accounts, then these accounts are not financial accounts of the investment manager, but may be treated as custodial accounts [see IEIM401580] of a Custodial Institution [see IEIM400640]. In such cases the investment manager will need to treat the investors as its Account Holders as there is no interposing fund.

In determining whether an investment manager is acting as a Custodial Institution, cases where an investment manager also holds assets on behalf of clients must be taken into account as reporting will also be required on those accounts where the investment manager falls within the definition of a Custodial Institution.

There will be situations where an investment manager does not hold custody for its customers (e.g. investment managers who arrange for custody as agent on their customers’ behalf or where the custody accounts are pooled nominee accounts) but holds the information required for due diligence and reporting.

The investment manager will be the Reporting Financial Institution for those accounts by virtue of its status as an Investment Entity where:

• it alone has direct knowledge of its customers and their accounts and

• it carries out the AML/KYC procedures on those accounts.