What is fbo in banking?

FBO stands for "For Benefit Of" in the context of banking. It is a term used to describe an account that is opened and maintained by one party for the benefit of another party. This type of account is commonly used in situations where one party, typically a financial institution or trustee, holds and manages assets on behalf of an individual or entity.

FBO accounts are commonly used in trust arrangements, where the trustee holds and manages assets on behalf of the beneficiaries. In this case, the account is titled in the name of the trustee "for the benefit of" the beneficiaries. The trustee has the responsibility to manage the assets in the account in accordance with the terms of the trust agreement.

FBO accounts are also used in securities transactions, where a financial institution holds securities on behalf of its customers. In this case, the account is opened in the name of the financial institution "for the benefit of" the customer. The financial institution acts as a custodian for the securities and provides services such as safekeeping, settlement, and asset management.

Overall, FBO accounts are a common banking arrangement that allows one party to hold and manage assets for the benefit of another party. This type of account provides a layer of protection and transparency for both parties involved in the financial transaction.