In this section we refer to Non-Regulated Trusts.
All of the operating benefits and PTT’s service delivery standards ascribed to ATOL and Package travel Trust accounts apply to these non-regulated trusts.
PTT operates these Trusts for organisations such as Merchant Acquirers who require that the funds they collect for Merchants are held in a secure environment in accordance with a set of obligations agreed upon by the Merchant Acquirer and its Merchant.
Such trust arrangements involve three parties including PTT, the Beneficiary and the Merchant. PTT's role is to ensure performance has taken place in accordance with the trust deed before funds are released.
Other business sectors that use such trusts include providers of concierge services, gift card & vouchers and event management.
What is an Escrow arrangement?
An escrow agreement is a contract that defines a financial arrangement between two parties where one party (“Buyer”) deposits funds with PTT in a specified client account. The funds are held in “trust” for the second party (“Seller”) for a given transaction or series of transactions between the two parties. PTT then holds and regulates payment of the funds or delivery of the asset to the Seller when the contract conditions are met.
The use of PTT’s services helps ensure the security of transactions by ensuring the funds are kept in a secure escrow account which are only released when all of the terms of an agreement are met as overseen by the escrow company.
PTT would work with both the Buyer and the Seller to hold the funds under a set of rules and conditions set out in the Escrow agreement which the three parties would sign. Escrows are very useful in the case of a transaction where a large amount money is involved in single and multiple transactions and a certain number of obligations need to be fulfilled before a payment is released.
PTT would ensure the funds are held safe until the transaction has been completed without risk of losing money or merchandise due to fraud. Such a process eliminates complicated legal undertakings and allows for secure transactions and confident buyers and sellers.
How does Escrow Work?
Operating and Escrow arrangement should ensure the risk of fraud or non-performance is reduced with PTT acting as a trusted intermediary that would work with both parties to the transaction to ensure funds are collected and held in a safe bank account. The funds would then only be disbursed once the conditions prescribed in the escrow agreement have been accomplished. Both Buyer and Seller would need to agree that delivery or performance has occurred.
The conditions documented in the Escrow agreement would:
- Define and specify the terms agreed between the Buyer and Seller and all parties agree to the terms of the transaction(s).
- The Buyer would deposit the funds into the escrow account and provide information pertaining to the deposit to PTT. PTT would notify the receipt of funds to the Seller.
- The Seller then completes its responsibilities as agreed between the Buyer and the Seller. Upon performance the Buyer would advise PTT to release the relevant funds to the Seller. PTT would conduct its own appropriate due diligence as specified in the escrow agreement before releasing the funds.
- Such an escrow arrangement can involve multiple transactions over a period.
- PTT may engage the services of other experts and legal and professional advisors where it needs specialist advise to confirm performance. The use of such experts and their fees would be agreed in advance and form part of the overall cost of providing the service.
Escrow accounts will be held with recognised reputable mainstream banks who would be notified of the arrangements and the escrow funds are held in those secure Escrow Accounts until the transaction is completed. This ensures that escrow funds are held in a ring-fenced structure free of encumbrances.