For benefit of (FBO) accounts

fbo accounts at cross river if you plan on offering payment solutions for your end users, or if you are operating under a partner managed issuing bin sponsorship model, cross river may recommend an fbo or "for benefit of" account for you these accounts can be for one customer or for many you use this account to make and receive payments on behalf of your own customers one way that this is implemented is using subledgers docid\ odzf 4ainebu2yuz5grcs fbo types at cross river standard fbo account the standard setup for an fbo includes subledgers (sometimes referred to as virtual accounts) used for reconciliation and tracking of individual customer funds funds remain in this account or its subledgers only long enough for a payment window to be completed or closed however, this construct can also be used to support more complex use cases, such as to simulate a bank account experience in this case, partners can assign individual subledgers to their customers for the purpose of sending, receiving, or holding funds in those subledgers debit and prepaid cards can also be issued against the subledgers either in the partner managed or integrated issuing model pooled fbo account a pooled fbo account behaves in many ways like a dda for example, funds can be deposited and withdrawn with no limitations a pooled fbo account does not have subledgers it usually holds funds that support a partner managed prepaid card or debit card program the funds in a pooled account are fdic insured down to the user a pooled fbo account is limited to using only ach to send or receive payments if you use a pooled fbo account, and cross river is providing fdic pass through insurance, you must report to cross river every day about the balance and reconciliation example of how an fbo is used the structure of an fbo account to support your needs depends on your specific operational model as you are onboarding, cross river will work with you to determine the best structure to support you here’s an example of how an fbo account is often structured to support a fintech use case the fintech opens a single bank account with cross river the account is titled something like fintech inc fbo \[its users] this shows the bank that the account funds don’t belong to the fintech itself they belong to its users the fintech keeps a ledger —a digital record—that tracks how much of that money belongs to each user the bank does not manage this breakdown; it only sees the total balance in the fbo account the account is not fdic insured per individual user by default , but it can be set up to do so if the fintech and the bank meet certain pass through requirements, like proper user identification and record keeping if done correctly, each user’s funds in the fbo are protected just like a personal checking account would be the structure of an fbo account to support your needs depends on your specific use case as you are onboarding, cross river will work with you to determine the best structure to support you cross river recommendation for fbo and subledger use if you send payments on behalf of your customers, you should use subledgers for those customers under an fbo account, if the fbo account is on your tax id you as a partner are a direct customer of crb (and not your individual customers) because each subledger has its own unique account number, it makes account and payment reconciliation easier (or even possible without unique account numbers it’s impossible to keep track of who sent or received a payment) all transactions on the master account need to be reported together on a single monthly statement advantages fbos are widely used in fintech because they avoid the need to individually open and manage thousands or millions of individual bank accounts still comply with financial regulations, like storing customer funds separately from company funds