Escrow arrangement can take many forms, but they will all generally involve a trusted third party holding title to specific assets, subject to the fulfilment of pre-determined conditions.
Escrow accounts give all parties confidence that the Escrow Assets will be available upon satisfaction of the conditions and that there will be no issue in enforcing payment or similar.
An Escrow Account is a designated account with a regulated bank to hold cash. It is important that the account is structured in such a way that only Escrow funds are held in the account and it is clear to the bank that the funds are client funds and are not the funds of the Escrow Agent. It is also best practice for funds being held for any length of time, that the funds are segregated from any other Escrow funds, to ensure that it is clear which funds belong to which client.
In the event that the Escrow Agent becomes insolvent, provided the Escrow arrangements have been structured properly (as Elemental’s all are), the Escrow funds will be fully protected and separate from the insolvency. Elemental complies with the FCA’s safeguarding requirements, which means that we segregate all Escrow funds.
The Escrow Arrangement is governed by the Escrow Agreement and this sets out the rights and obligations of all parties. Generally, the Escrow Agreement is between the Escrow Agent and two or more Appointors. Elemental will usually draft the Escrow Agreement to meet the requirements of the Appointors, but it is also possible to use a draft provided by the Appointors, subject to certain conditions.
The fees are dependent on a variety of factors including (i) the purpose of the Escrow account; (ii) the value of the Escrow assets; and (iii) the likely duration of the Escrow account and (iv) the number of transactions on the Escrow account. A specific quote will be provided upon request.
From our perspective, the Escrow arrangement can be set up and operational with a few days. However, this is dependent on prompt provision of all relevant Know Your Client (KYC) information and agreeing the Escrow Agreement. Therefore, it can often take longer to set up the arrangement, if this information is delayed.
Elemental needs to undertake thorough Know Your Client (KYC) checks on all appointors, which will likely involve the following:
If a law firm or accountancy firm is advising you on the structure, we may be able to rely on the Know Your Client (KYC) information held by such firm and provided to us.
Elemental CoSec Limited is authorised by the FCA (Ref 806870) under the Payment Services Regulations 2017 (“PSRs“). Elemental CoSec Limited complies with the safeguarding requirements under the PSRs, ensuring that funds are segregated from our own funds.
Elemental is also regulated by HM Revenue & Customs for the purposes of the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017 and by the Information Commissioner’s Office for Data Protection.
Apart from our regulation, Elemental is run and managed by UK solicitors and accountants to the highest of standards, which is recognised by our wide and prestigious client base.
We are trusted to provide services to the UK Government (HM Treasury), as well as being a member of the UK Government’s Advisory Network. As well as this, Elemental works with most of the UK magic circle law firms, a range of leading banks and financial institutions, including the European Investment Bank, Credit Agricole and the Bank of China.
You can also look at our testimonials page, for further evidence of the excellence of our work and track history.
Elemental can hold cash in almost any currency in the world. The most common currencies are GBP, EUR and USD, but specific foreign currency accounts can be set up as needed.
We only use UK regulated banks and, as at the date of writing, we use client accounts with Barclays Bank plc and Metro Bank plc.
The starting point under most Escrow appointments, is that funds are released upon receipt of a signed Release Notice from the appointors. However, specific arrangements can be put in place to deal with a dispute. These will be negotiated and agreed between the parties. Ultimately, this may require the obtaining of a court order or arbitration decision.
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If you would like to find out more about our services and how we can help support your business, please get in touch.