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How an FCA Authorization Expands Escrow Collaboration in the U.K.

Acquiring an FCA license allows for growth in the U.K. and beyond, especially in cross border transactions

CSC was recently authorized by the Financial Conduct Authority (FCA) to operate as an authorized payment institution (API) in the U.K. The license allows CSC to continue to facilitate escrow services for clients with specific local needs in the U.K. market, including clients and partners in the legal, private equity, and M&A sectors. We spoke with Malin Holmlund, head of Escrow & Settlements U.K., who led the effort to obtain the license, about what the license means for the escrow business and our clients.

Why did CSC pursue the FCA authorization for escrow and settlement services?

CSC has long been providing Escrow and Settlement services in the U.K. through our PSD2 licensed Dutch escrow agent. Being a global service provider, it’s always been important for all our services to be offered across jurisdictions and particularly in financial hubs such as the U.K. However, Brexit-related regulatory changes meant that as of the end of 2023 our Dutch escrow agent license could no longer passport into the U.K. It was paramount for us to obtain this FCA authorization to continue to service customers here in the U.K. and provide the U.K. components of the global transactions on which CSC assists.

FCA authorization is a step forward in our ambition to continue to grow our presence in this market and become a preferred compliance and administration services provider. Our newly regulated U.K. escrow product complements our existing PSD2 offering and enables clients to benefit from our independent and regulated escrow services throughout EMEA. This is particularly important for complex, cross-border transactions that involve compliance with multiple jurisdictions’ laws and regulations.

Having secured the FCA authorization for escrow and settlement services, how do we ensure that our day-to-day operations continue to align with FCA requirements?

Throughout the application process, our compliance, financial, and operational infrastructures were subject to detailed scrutiny by the FCA. We were required to demonstrate that we have appropriate policies and procedures in place to ensure we comply with all applicable regulatory requirements.  We’ve also implemented a robust governance and oversight infrastructure, continuously monitoring and evaluating our compliance and ensuring that we keep up with the ever-changing regulatory environment.

What role do escrow services play, specifically in the U.K?

Law firms have grown increasingly reluctant to hold and deal with client funds. This is for several reasons, notably increased regulation and ever more complex deal structures where cross border, cross currency, and high volume payments have become the norm. Closing mechanics are increasingly complicated, carrying a heavy and costly administrative burden, including the responsibility of ensuring all payments are AML/CFT compliant. Using a third-party escrow and paying agent outsources this complicated process to a regulated provider with specialized expertise, freeing lawyers to focus on legal issues. Both buyer and seller can be reassured by knowing that a neutral entity is overseeing the payment mechanics of the transaction.

What trends and dynamics do you see shaping the future of escrow services in the U.K?

As part of the trend across all financial services, escrow agents are investing in technology to continuously improve their offering. This includes both improvements to internal processes as well as to the client experience and therefore the speed with which we can facilitate the escrow components of any given transaction. However, our unique value remains the same: our people, who comprise a mix or onboarding, legal, industry, and operational experts, are actively engaged to facilitate each step of an escrow transaction and accommodate the specifics of the requirements at hand.

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Why CSC?

CSC provides tailored administration and strategic outsourcing solutions to support the complex operations of alternative asset managers across jurisdictions and asset types while adhering to global regulations and compliance. A market leader working with funds of all sizes, we’re the trusted partner of choice for 90% of the Fortune 500® and 70% of the PEI 300. Privately held since 1899, CSC is a global company with capabilities in more than 140 jurisdictions. We’re capable of doing business wherever our clients are by employing experts in every business we serve. We are the business behind business®. Learn more at