Cross-Border Escrow

Can I withdraw money from an escrow account?

Typically, no. An escrow arrangement is a three-party agreement between the depositor (principal), the escrow agent, and the recipient. Only the escrow agent has legal control over the funds and may release them only in accordance with the terms of the escrow agreement.

Why the escrow agent can’t release funds casually

The escrow agent cannot pay out funds unless the agreement explicitly allows it. Doing so could expose the agent to legal claims from the recipient (or other parties), who could sue for breach of contract or improper release.

Handling ambiguous situations

If there’s any uncertainty - such as unclear wording or disputed instructions - the escrow agent typically reserves the right to seek legal advice before releasing funds. This ensures compliance and protects all parties involved.

Why this structure matters

• Prevents unilateral or unauthorised access to funds.
• Maintains the neutrality and integrity of the escrow process.
• Shields the escrow agent from legal liability in case of disputes.

The official line

There isn't really one. If you ask a lawyer, they'll tell you to seek confirmation from the Financial Conduct Authority (the 'FCA'). If you ask the FCA, they'll tell you they don't give legal advice and that you should consult a lawyer.

The unofficial line

The differences between escrow services and payment services are many; they include legal differences, structural differences and regulatory differences. In the absence of any particularly clear guidance, different providers interpret the regulations differently.

The legal difference

The legal difference between escrow and payment services is difficult to define. Both involve two parties (a payer and a payee) and an intermediary (either a payment service provider or an escrow agent) who effects the transfer according to the parties' wishes. It might be considered that payment services are 'simpler' or happen 'faster', but these are not legal distinctions and are unhelpful when trying to ascertain the difference.

The structural difference

Escrow transactions are usually (but not always) negotiated separately on specific (as opposed to general or standard) terms and conditions, and those terms are usually only valid for one transaction at a time.  Payment services, however, tend to be more 'routine' and take place on standard terms and conditions. This is, of course, a generalisation and, again, not decisive as a way of ascertaining the difference.

The regulatory difference

Perhaps unhelpfully, the regulatory difference is significant in the United Kingdom. Escrow services are not regulated, where as payment services are. In order to carry out a payment service, a person (natural or legal) must be registered with the Financial Conduct Authority, whereas an escrow agent does not need to be registered with the FCA.

Which one is dospay?

dospay carries out both types of services.  It is regulated by the Financial Conduct Authority for the provision of payment services and it also carries out (unregulated) escrow services.

How does dospay distinguish between escrow and payment services?

We'd be delighted to tell you how we've ascertained the difference - feel free to contact us for more information.

A three-way agreement

An escrow arrangement is simply a payment arrangement (someone paying someone else), but with a trusted third party inserted in the middle - the escrow agent.

In this way, money goes from the paying party to the escrow agent.  The escrow agent only releases the money to the receiving party once certain conditions are met.

The cornerstone of the payment arrangements

The escrow agreement governs the legal arrangements between those three parties.  It sets out how much money the paying party must deposit with the escrow agent, what the escrow agent can and can't do with the money, what the conditions are to release money to the receiving party, and under what circumstances the transaction 'fails', allowing the escrow agent to repay the money to the paying party.

Interest on escrow accounts in the United Kingdom

Interest is not usually paid on escrow accounts operated by independent escrow agents because the compliance overheads and ongoing costs are generally very high and many safeguarding/segregated account facilities come at a high cost.

Interest used to subsidise escrow fees

Most escrow agents (including us) will, instead, apply any interest towards the fee for the service in order to keep the fees down - in this way, the third-party bank contributes to the fees, rather than one of the parties.

Who owns the money in an escrow account?

‍When funds go into an escrow account, the depositor (or principal) retains ownership. The escrow agent holds the funds neutrally, managing them in trust until release conditions are met. The agent does not own the funds.

Why this matters

• Protects the depositor from misuse or insolvency risk of the agent.
• Ensures funds are released only as per the escrow agreement.

Common scenarios

• Real estate: A buyer deposits funds via conveyancer - the buyer still owns them.
• M&A or construction: Conditional deposits are made to fund releases upon milestone completion.

Regulatory and safety features

• Agents must be FCA-authorised, and funds are held in safeguarded accounts - we hold all of our funds via our banking tech partners liquid and unencumbered at the Bank of England.
• If the escrow agent becomes insolvent, deposited funds remain protected and segregated.

Further reading

Learn more about how a trusted Escrow Agent, Escrow Agreement, or Project Bank Account ensures fund protection.

How much does an escrow account cost?

‍The cost of an escrow account depends on the complexity, duration, value, and structure of your arrangement. Almost all of our escrow and third-party managed accounts are bespoke, so we provide a tailored quote once we understand your requirements.

How our escrow pricing is built

Compliance Fee

Covers all anti-money laundering and regulatory checks we are required to perform, including:

• Know-Your-Client (KYC) verification;
• Establishing source of funds and source of wealth; and
• Ongoing transaction monitoring.

Escrow Agreement Fee

Includes drafting our standard escrow agreement to govern how funds are held and released.

If you provide your own agreement, the fee covers a detailed review and any necessary amendments to ensure compliance and sustainability.

Monthly Management Fee

Provides access to your escrow agent or account manager for the life of the arrangement. Includes use of our secure account portal, available 24/7 for transaction tracking and document storage.

Additional Party Fee

Applies if extra parties (e.g. subcontractors in a Project Bank Account) need to join the arrangement.

Covers administration, documentation, and portal access setup.

Escrow Agent Fee

A value-based fee for operating the arrangement, generally a percentage of the funds handled. For the largest transactions, this is typically around 1% of the funds held.

‍Example‍

A high-value construction escrow might incur:

• Compliance fee for all contracting parties;
• Agreement drafting fee;
• Monthly management fee over a 12-month term; and
• Escrow agent fee based on the deposit value.

Why we quote individually‍

Every transaction is different in scope, duration, and complexity. Bespoke pricing ensures that costs are proportionate and reflect the regulatory and operational safeguards needed to protect all parties.

Next Steps

See our full Pricing page for details of how these elements work in practice, or explore our Escrow Accounts, Project Bank Accounts, and TPMA's for sector-specific examples.

You can also request a quote or book a video call to speak to an escrow agent to discuss your requirements.

Who pays escrow fees in a typical escrow transaction?

In most cases, the buyer covers the escrow fees. Escrow is often seen as a measure to protect the buyer’s interests, especially where funds are being held pending delivery, completion, or satisfaction of contractual conditions.

However, when both parties benefit equally from the arrangement - such as in construction contracts, M&A transactions, or luxury yacht or jet sales - it is common to agree on a shared cost split. This approach is similar to how legal or notarial fees may be divided in some transactions.

Why it matters

• Clarifies expectations upfront and simplifies negotiations.
• Prevents cost disputes during or after the escrow process.
• Promotes fairness in transactions where multiple parties benefit from escrow protections.

Are escrow agents regulated in the UK?

Being an escrow agent in the UK is not itself a regulated activity. However, most providers are regulated because they perform related activities - such as legal, trustee, banking, or payment services - and thus fall under regulatory oversight through those roles.

Why that matters

• Regulation ensures client funds are properly safeguarded and handled in compliance with legal standards.
• Many escrow providers are FCA-authorised payment service providers or are regulated as solicitors handling client money under the SRA Accounts Rules.
• At dospay, all GBP escrow and TPMA funds are segregated and held at the Bank of England, adding an extra layer of security.

Examples of regulated providers

• Law firms handling escrow as part of legal services.
• Trustees managing funds for structured deals.
• FCA-authorised fintech or banks offering escrow or TPMA services.

How dospay ensures trust and compliance

• Licensed by the Financial Conduct Authority under the Payment Services Regulations 2017.
• Funds are held in safeguarded, segregated accounts at the Bank of England.
• Offers transparent, regulated, and secure escrow services across sectors such as construction, M&A, marine, and more.