When do you need a third-party managed account?

Here's a scenario that plays out far too often in law firms, trust companies and financial advisory practices around the world: the legal work gets done, commercial terms are agreed, everyone's ready to close – and then the conversation turns to actually moving the money. 

Suddenly, what seemed like a straightforward transaction becomes a complex puzzle of regulatory requirements, banking relationships and liability concerns. The deal that looked simple on paper now involves multiple jurisdictions, unfamiliar compliance requirements and enough financial exposure to make even senior partners nervous. 

This is exactly when the conversation about third-party managed accounts (TPMAs) usually begins – often much later than it should have. But here's the thing: not every deal requires one. The key is knowing when the complexity, value or risk profile of your transaction tips the scales from "manageable" to "you'd be very unwise not to use a TPMA." 

Here, we’ll explore when to use a third-party managed account, what legal and regulatory factors you need to consider, why TPMAs are beneficial and how they help you deliver a better service to your clients. 

Important: The information in this guide is general in nature, not legally binding, and should not be considered financial or investment advice.   

Key takeaways: 

• Cross-border complexity, high-value deals, milestone payments or fiduciary duties are strong indicators that a third-party managed account is the right choice. 

• With rules like SRA Accounts Rules 3.3 and 11, plus rising AML, CTF and KYC demands, TPMAs offer a compliant and efficient way to manage client funds without increasing liability. 

• From real estate and M&A to family offices and dispute resolution, TPMAs streamline transactions, reduce risk, and provide trusted infrastructure where traditional setups fall short. 

• Professional fund-holding arrangements reduce liability, improve transparency and help firms meet the high expectations of today’s clients while unlocking more complex and profitable work. 

  
  

Signs you definitely need a third-party managed account 

Some transactions naturally call for the safeguards a TPMA provides – and these scenarios signal the need to consider a TPMA right from the start. 

Cross-border deals involving multiple legal systems 

When your transaction spans different countries, currencies and regulatory frameworks, a TPMA becomes your neutral ground. Consider deals involving parties in Singapore, investors in Germany and assets in the UAE – try coordinating banking relationships across that web without professional TPMA infrastructure. 

High-value transactions with milestone payments 

Acquisitions above £10 million, private equity deals or major real estate purchases often involve staged payments, escrow holdbacks and performance conditions. One wrong move with these funds can expose you to professional liability claims that dwarf your insurance coverage. 

Situations where you're holding client funds under fiduciary duty 

If you're a trustee managing a distribution, a solicitor handling settlement funds or a corporate service provider managing client money, the regulatory scrutiny is intense. TPMAs let you fulfil your obligations without the sleepless nights about compliance breaches. 

The numbers back this up. A 2023 Thomson Reuters survey found that 61% of organisations expect compliance costs to increase, with 77% citing the demand for skilled compliance staff as a primary driver. For many firms, outsourcing complex fund holding to specialists is becoming an economic necessity, not just a risk management choice. 

Rules and regulations that drive decision-making 

In the UK, numerous rules and regulations stipulate how law firms should handle client funds and compliance matters – for example, anti-money laundering and counter-terrorist financing checks. 

SRA client account restrictions 

If you’re a solicitor in the UK, you already know that rule 3.3 of the SRA Accounts Rules severely limits how you can use client accounts. You’ll also be familiar with the newer rule 11, which clarifies how law firms should use TPMAs. Rules 11.1 and 11.2 specifically recognise TPMAs as a compliant alternative for holding client funds – especially in complex or high-risk situations.  

Escalating AML and compliance requirements 

Compliance standards have tightened significantly in recent years. Industry surveys show that 50% of compliance professionals now describe their programs as having reached maturity levels requiring sophisticated management or optimisation. For many firms, trying to handle AML, KYC and CTF obligations across multiple jurisdictions has become very expensive and difficult to do well. 

TPMAs centralise these compliance functions, giving you access to specialist expertise and systems that would cost a fortune to build in-house. When a single compliance mistake can result in six-figure fines, the mathematics of outsourcing become very compelling. 

TPMAs solve practical problems across different sectors 

Beyond compliance, TPMAs solve real-world coordination problems that can make or break deals.  

• International real estate: Cross-border property deals are notoriously complex. Buyers need confidence their deposits are safe while sellers navigate local title and tax requirements. Too many deals collapse because nobody wants to be the first to wire money to an unfamiliar jurisdiction. 

• M&A and private equity: These deals live and die on escrow mechanics. Purchase price adjustments, indemnity funds, earnout payments – all of these require sophisticated holding arrangements that can adapt to changing deal terms and regulatory requirements. 

• Trust and family office operations: When you're managing ongoing distributions across multiple beneficiaries and jurisdictions, TPMAs provide the operational infrastructure and audit trail that family offices demand. The governance and reporting capabilities alone can justify the cost. 

• Complex settlements and dispute resolution: When litigation spans multiple countries or involves complex asset distributions, TPMAs provide neutral ground that all parties can trust, regardless of their local legal systems. 

  
  

Meeting client expectations while managing professional risk 

Modern clients are more sophisticated – and so are their expectations. They want transparency, they want to understand where their money is (at all times), and they want assurance that you're managing their affairs according to global best practices. Thankfully, TPMAs deliver on all three fronts. 

Enhanced credibility through transparent processes 

When you can show clients that their funds are held by a regulated, independent third party with clear reporting and disbursement procedures, it signals professionalism and reduces their anxiety about the transaction. 

Reduced personal and firm liability 

With funds held externally by specialists, you avoid the exposure that comes with holding large sums in your own accounts. Professional liability insurers are taking notice: some are beginning to offer premium discounts for firms that use TPMA services for complex transactions. 

Better risk management equals better business 

As compliance requirements tighten and client expectations rise, firms that can demonstrate sophisticated risk management are winning more business. As well as protecting existing clients, TPMAs allow your firm to compete for the kind of sophisticated, high-value work that drives profitability. 

Closing perspective: The case for TPMAs 

The decision to use a TPMA ultimately comes down to a simple risk-reward calculation. If the transaction is complex enough that coordinating fund movements keeps you awake at night, if the regulatory requirements span multiple jurisdictions, or if the financial exposure exceeds what you're comfortable managing internally, then a TPMA is essential. 

Many skilled professionals turn down lucrative opportunities because they can't work out how to safely manage the fund-holding aspects. Others take on work they shouldn't have and live to regret it when compliance issues arise, or client relationships suffer because of operational problems. 

The firms that consistently win in today's market are the ones that recognise when a transaction has moved beyond their internal capabilities and have the wisdom to partner with specialists who can handle the complex operational and regulatory requirements of modern cross-border finance. 

The right TPMA partner gives you the infrastructure and expertise to focus on what you do best while ensuring your clients' interests are protected every step of the way. Get in touch to learn how Interpolitan’s comprehensive TPMA solutions can make your professional life easier.