Commingled Funds

Commingled Funds:
Commingled funds, also known as pooled funds, refer to the aggregation of funds from multiple clients or sources into a single account. In the context of MSBs, these funds can be from various customers who are transferring money or from different transactions.

How are they used?
In the money services business, commingled funds are often used to streamline operations. Instead of handling each transaction separately, MSBs can pool multiple transactions together, making it easier to manage and process.

How are they structured?
Commingled funds are structured in a single account where funds from various sources are pooled together. Each contributor’s share in the pool is represented by units or a percentage of the total pool.

Where are they held?
These funds are typically held in a bank or financial institution. The specific location or account type can vary based on the MSB’s operational model and regulatory requirements.

Who is responsible for them?
The MSB or money transfer business that pools the funds is responsible for managing and safeguarding the commingled funds. They must ensure accurate record-keeping, compliance with regulations, and proper distribution of funds to the rightful owners.

Who can transact with them?
Only the MSB or authorized personnel within the money transfer business can transact with the commingled funds. They are responsible for ensuring that the funds are correctly allocated and disbursed to the respective recipients.


  1. Efficiency: Pooling funds can streamline operations and reduce transaction costs.
  2. Flexibility: MSBs can quickly allocate and disburse funds as needed.
  3. Liquidity Management: Helps in maintaining a steady flow of funds and managing liquidity.


  1. Risk of Mismanagement: If not properly managed, there’s a risk of misallocating funds.
  2. Regulatory Concerns: Commingling can raise regulatory issues, especially if funds are not separated as required by law.

Scenarios or Cases:
Commingled funds are often used in scenarios where multiple transactions are processed simultaneously, such as bulk money transfers, remittances, or when an MSB operates in multiple jurisdictions and needs to manage funds efficiently.

Real-world Analogy:
Imagine a large water tank where residents of a community deposit water from their individual sources. The water (funds) from different sources (clients) is pooled (commingled) in this tank. The community manager (MSB) is responsible for ensuring that each resident gets their rightful share of water when needed. While this system allows for efficient water distribution, there’s also a risk—if the manager isn’t careful, someone might get less water than they deposited.

In conclusion, while commingling funds offer operational advantages to MSBs, they come with their set of challenges, especially concerning regulatory compliance and risk management. Proper management and adherence to regulations are crucial to ensure the trust and safety of clients’ funds.

This page was last updated on August 23, 2023.

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