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What is an FBO account?

By Ben Tabas, Intrica Research · Updated · US

Answer

An FBO (for benefit of) account is one bank account that a company opens to hold many customers' money, where the customers own the funds and the company tracks each person's share. The FDIC says, in guidance last updated May 29, 2024, that pass-through insurance up to $250,000 per owner applies only if bank records show the agency nature of the account and the owners' identities and interests.

How it works

The bank sees one pooled account. The fintech keeps a ledger of who owns how much.

Galileo, a SoFi company, described this on Aug. 14, 2024 as a one to many structure, where the bank manages the account in aggregate and the fintech manages sub-accounts per customer.

Stripe's Treasury docs, checked Oct. 28, 2026, give a live example. Stripe records each business's share of an FBO balance and reconciles it against the funds held at the bank.

When FDIC insurance passes through

  • The funds are owned by the customers, not by the company that opened the account.
  • The bank's account records show the custodial nature of the account.
  • Records show each owner's identity and ownership interest.
  • If these conditions are not met, the FDIC memo of Sept. 17, 2024 says the deposit is insured to the named account holder only, combined with its other deposits.

What changed after Synapse

The CFPB says partner banks found $60 million to $90 million less than the records of Synapse, a middleware provider that filed for chapter 11 on April 22, 2024.

On Sept. 17, 2024, the FDIC proposed a rule for custodial accounts held for the benefit of beneficial owners with commingled funds. Banks would keep beneficial ownership records and reconcile them at least daily.

As of Oct. 28, 2026, the 2026 Unified Agenda, published Aug. 14, 2026, listed that rule as a long term action, with the final rule date to be determined.

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Sources

  1. Pass-Through Deposit Insurance Coverage · FDIC, May 29, 2024Supports: The three requirements for pass-through deposit insurance.
  2. Notice of Proposed Rulemaking on Requirements for Custodial Deposit Accounts with Transactional Features · FDIC, Sept. 17, 2024Supports: The $250,000 limit, the definition of a custodial account held for the benefit of beneficial owners and the daily reconciliation proposal.
  3. Recordkeeping for Custodial Accounts (RIN 3064-AG07) · Office of Information and Regulatory Affairs, reginfo.gov, Oct. 28, 2026Supports: Checked Oct. 28, 2026: the rule's agenda stage and final rule date to be determined.
  4. Synapse Financial Technologies, Inc. · Consumer Financial Protection Bureau, Sept. 15, 2025Supports: Synapse's bankruptcy date and the $60 million to $90 million shortfall.
  5. What are For the Benefit Of (FBO) accounts? · Galileo (SoFi Technologies), Aug. 14, 2024Supports: The one to many structure of an FBO account.
  6. Treasury · Stripe, Oct. 28, 2026Supports: Checked Oct. 28, 2026: a live FBO account product and how Stripe reconciles it.

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General information, not legal advice.

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