Can a fund hold multi-currency balances outside its bank?
Yes. Payment institutions and e-money institutions authorised by the FCA can hold balances for a fund in many currencies, but the money is protected differently from a bank deposit.
At a bank, money is a deposit. At a payment or e-money institution, the firm must safeguard client money, usually by keeping it in a segregated account at a bank or covering it with insurance or a guarantee. The FCA's strengthened safeguarding rules for these firms, known as CASS 15, came into force on 7 May 2026 and require daily reconciliation, a monthly safeguarding return to the FCA, an annual safeguarding audit for many firms and a resolution pack so money can be returned quickly if the firm fails.
Do not count on the FSCS either way. It does not cover e-money or payment services, and even at a bank the deposit limit is £120,000 since 1 December 2025, with collective investment undertakings, investment firms and other financial institutions excluded from protection altogether. For most funds and managers, how the provider safeguards money matters more than compensation schemes. Our guide to choosing an FX provider explains what to look for, including what happened to clients of Argentex in 2025.
What should we compare before opening one?
Whose name is on the account, how the money is safeguarded, the payment routes and cut-offs, the controls, and the reporting your administrator needs.
| Feature | What to check | Why it matters |
|---|---|---|
| Account name | An account, or account details, in the fund entity's own name rather than a pooled account with a reference | Investors and counterparties see the right name, and a named account is easier for auditors and administrators |
| Currencies | Which currencies can be held, which can be paid out, and which have local account details for receiving | Holding a currency is not the same as being able to pay in it locally |
| Safeguarding | Segregated account at which bank, or insurance or guarantee from whom, and how often it is reconciled | Decides how quickly money comes back if the provider fails |
| Payment routes | SWIFT, SEPA, Faster Payments, CHAPS and local routes in other countries, with cut-off times for each | Local routes are usually cheaper and faster than international wires |
| Charges | Account fees, payment fees, receiving fees and the FX spread, plus who pays intermediary bank charges | On small payments the fees can outweigh the rate |
| Entities | Separate accounts for the fund, the general partner, feeders and each SPV | Keeps money and records apart, as fund documents usually require |
| Controls | Dual approval, user roles, payment limits, beneficiary approval and strong sign-in | The same controls you expect from your bank, set up before the first payment |
| Reporting | Statements and transaction files in formats your administrator can load, read-only access for the administrator | Saves rekeying and speeds up reconciliation and NAV work |
| Onboarding | Time to open accounts for your fund type and domicile, and what documents are needed for each entity | Decides how early you need to start before the account is needed |
How do we pay suppliers, advisers and investors abroad?
From the balance in the right currency, using a local payment route where one exists, with the beneficiary approved by a second person first.
Paying a German law firm in euros over SEPA from a euro balance is usually same day and costs a fraction of an international wire from a sterling account. For investors, batch payment files let a distribution go out in one approved run. Two habits prevent most problems: check new beneficiary details by phone on a number you already hold, and choose who pays intermediary charges so the recipient receives the full amount.
Most UK payment firms now run a Confirmation of Payee name check when you add a sterling beneficiary. Treat a mismatch as a reason to stop and verify, not to override.
Can investors pay capital into a local currency account?
Yes. Many providers can give the fund local account details in euros, US dollars and other currencies, so investors pay locally rather than by international wire.
Local collection details cut the charges investors pay and make short receipts less likely. The fund then decides when to convert, usually in one larger trade. Ask investors to quote the reference on the notice so your administrator can match each receipt. More on how this fits into a call in FX for capital calls and distributions.
How should accounts work for SPVs and feeder entities?
One set of accounts per legal entity, in that entity's name, with transfers between entities recorded as such.
Mixing money from different entities in one account creates reconciliation work and can breach fund documents. Most providers can open accounts for several related entities under one relationship, with one onboarding process for the group and separate KYC for each entity. Decide early which entity contracts with the provider for FX, because that entity's name will appear on confirmations and on any credit terms.
What controls and approvals should a fund account have?
At least what you have at your bank: two-person approval, limits, beneficiary approval and a full audit trail.
- Separate users for preparing and approving payments, with limits by amount.
- Beneficiary approval, so no payment goes to a new payee without a second person.
- Strong sign-in for every user, and a leavers process that removes access the same day.
- Alerts for new beneficiaries, large payments and changes to users.
- An audit trail showing who prepared, approved and released each payment.
What reporting will our administrator need?
Daily balances and transactions for each entity, in a file format it can load, plus confirmations of every FX trade showing the rate.
Most administrators can take bank statement files in standard formats or CSV exports, and many prefer read-only access to the provider's platform. Ask your administrator what it needs before you choose a provider, and ask the provider whether trade confirmations show the time of each trade, which makes a later cost review far more accurate. If your administrator runs payments for many funds, see FX and payments for fund administrators.
Sources
- Financial Conduct Authority, PS25/12 Changes to the safeguarding regime for payments and e-money firms, published 7 August 2025, rules in force 7 May 2026.
- Financial Services Compensation Scheme, deposit limit increase to £120,000 from 1 December 2025, checked 1 November 2026.
- PRA Rulebook, Depositor Protection, Annex 3 exclusions list, checked 1 November 2026.