Custody
| Custody is the process through which financial institutions hold and safeguard the financial assets of their clients in order to prevent asset fraud or loss. Financial institutions have a duty to their clients to ensure that their assets are safe and secure. One of the ways in which they do this is through the use of custody services. Custody services involve the financial institution holding onto the assets of their clients, rather than the clients themselves. This can be done for a variety of reasons, such as to prevent the assets from being stolen or lost, or to prevent fraud. Financial institutions will often use custody services to protect the assets of their clients from third parties, such as creditors or bankruptcy courts. Custody services can be used for a variety of assets, including cash, stocks, bonds, and other securities. Financial institutions will often use custody services to safeguard the assets of their clients who are not able to do so themselves. For example, if a client is in a hospital and is unable to take care of their own finances, the financial institution may use custody services to hold onto the client's assets. Custody services are not without risk, however. If the financial institution holding the assets of the client goes bankrupt, the assets may be at risk. Additionally, if the financial institution is unable to properly safeguard the assets, they may be stolen or lost. For this reason, it is important for clients to carefully consider whether or not they want to use custody services. |
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