Banking practice for larger withdrawls

[Subjection]

What is the name of your state (only U.S. law)? WI

I'm asking this question for my Dad because of some unusual treatment he's been getting lately from his bank.

He's been taking money out for purchases he's been making for home remodeling. Sometimes those amounts are in the area of $5,000 or so. Sometimes, he gets it from a simple withdrawl, or maybe a cashier's check. He doesn't have a checking account at this bank and sometimes gets a cashier's check so he can deposit the money into his checking acct. at another bank.

First time he did this, he was asked about his occupation. He told them he was retired, but then they asked what he used to do. Seemed odd. Another time, he was getting some money from a CD that had matured and only wanted to renew part of it and withdrawl the rest. They told him they needed the number from the check they gave him in order to "start a paper trail". What the heck does that mean??? Why do they need to start a paper trail to track money that is obviously his? He got the impression that the teller was giving him some kind of friendly warning that the bank was keeping tabs on his activities.

He would like to just withdrawl the rest of his money from that bank, but we've learned that he'd then have to fill out paperwork because anything over $10,000 needs to be reported to the government, and if it's suspected that he is making multiple withdrawls under $10,000 to keep the government out of it, then it would be reported by the bank to the government as "suspicious activity" that he could be investigated for. So now he's becoming fearful of accessing his own money from that bank.

Are any of these things even true? Or is the bank just trying to scare my dad into keeping more money in his account? I know the banking industry has been fragile lately, so I don't know if what they're doing is a desperate attempt by them to stay afloat or whatever. I'm not that knowledgable about the banking industry.

Any ideas about what they're doing and the reasons behind it?

 

[Zigner]

What is the name of your state (only U.S. law)? WI

I'm asking this question for my Dad because of some unusual treatment he's been getting lately from his bank.

He's been taking money out for purchases he's been making for home remodeling. Sometimes those amounts are in the area of $5,000 or so. Sometimes, he gets it from a simple withdrawl, or maybe a cashier's check. He doesn't have a checking account at this bank and sometimes gets a cashier's check so he can deposit the money into his checking acct. at another bank.

First time he did this, he was asked about his occupation. He told them he was retired, but then they asked what he used to do. Seemed odd. Another time, he was getting some money from a CD that had matured and only wanted to renew part of it and withdrawl the rest. They told him they needed the number from the check they gave him in order to "start a paper trail". What the heck does that mean??? Why do they need to start a paper trail to track money that is obviously his? He got the impression that the teller was giving him some kind of friendly warning that the bank was keeping tabs on his activities.

He would like to just withdrawl the rest of his money from that bank, but we've learned that he'd then have to fill out paperwork because anything over $10,000 needs to be reported to the government, and if it's suspected that he is making multiple withdrawls under $10,000 to keep the government out of it, then it would be reported by the bank to the government as "suspicious activity" that he could be investigated for. So now he's becoming fearful of accessing his own money from that bank.

Are any of these things even true? Or is the bank just trying to scare my dad into keeping more money in his account? I know the banking industry has been fragile lately, so I don't know if what they're doing is a desperate attempt by them to stay afloat or whatever. I'm not that knowledgable about the banking industry.

Any ideas about what they're doing and the reasons behind it?

Yes, the bank must report certain activities. If your dad is doing nothing illegal, then he has nothing to worry about, even if he withdraws all of his money.

 

[justalayman]

Actually, due to several lawsuits involving the confiscation of money based on mere allegations of illegal acts, I disagree with Zigner on this.


Your father can eliminate the concern though by either electronically transferring the money from the one bank to the other or by accepting the withdrawal in the form of a bank check. It is cash withdrawals AND deposits the bank is concerned with. Money transferred via checks is traceable to its origin and that is the concern with cash transactions; they are difficult to trace and equally difficult to prove they are not derived from illicit activities.

 

[Zigner]

Actually, due to several lawsuits involving the confiscation of money based on mere allegations of illegal acts, I disagree with Zigner on this.


Your father can eliminate the concern though by either electronically transferring the money from the one bank to the other or by accepting the withdrawal in the form of a bank check. It is cash withdrawals AND deposits the bank is concerned with. Money transferred via checks is traceable to its origin and that is the concern with cash transactions; they are difficult to trace and equally difficult to prove they are not derived from illicit activities.

I'm not sure that I said anything that differs from what you said...

 

[justalayman]

I'm not sure that I said anything that differs from what you said...

it was this:

If your dad is doing nothing illegal, then he has nothing to worry about.

 

[OHRoadwarrior]

I think Uncle Sugar is more concerned with money coming into accounts than going out.

 

[Zigner]

it was this:

If he's doing nothing illegal, then what does he have to worry about? Not being snarky- just confused on what you're saying.

 

[justalayman]

I think Uncle Sugar is more concerned with money coming into accounts than going out.

more concerned; maybe

only concern; absolutely not.

 

[justalayman]

If he's doing nothing illegal, then what does he have to worry about? Not being snarky- just confused on what you're saying.

give me a few to find the cases. It seems every time I try to look these up I cannot remember the amount of money involved


One was something like state or US v $128,000 and another was state or US v. $88,000.


in fact, just recently there was a ruling where the gov tried to confiscate a large sum of cash arguing it had drug residue on it and therefore it had to have come about due to involvement in the drug trade. the court ruled against the state in this most recent case, unlike the results in both of the other cases.

 

[Zigner]

give me a few to find the cases. It seems every time I try to look these up I cannot remember the amount of money involved


One was something like state or US v $128,000 and another was state or US v. $88,000.


in fact, just recently there was a ruling where the gov tried to confiscate a large sum of cash arguing it had drug residue on it and therefore it had to have come about due to involvement in the drug trade. the court ruled against the state in this most recent case, unlike the results in both of the other cases.

Oh I see the angle you're looking at this from.

Ok, that makes sense.

 

[single317dad]

I was getting this same treatment at Chase bank in 2008. I had just partnered up with another small company. My company handled all online sales, and was well established in that area. The other company was to procure product and handle retail and local wholesale, and was somewhat newly established.

I started a new Chase Business account, and all proceeds of online sales after expenses were eventually diverted to that account. Partner started a new Chase Business account as well. We also started a third, joint business account at another bank in the name of the joint LLC. This was done because we had been approved for a fantastic rewards program: 4% cash back on all credit purchases, and really good points system on debit purchases.

In the beginning, it was understood that my side would be funding operations for a while until inventory was established, improvements made to a new location, etc. All payroll, purchases, and renovations needed to be paid by the joint LLC, which was to initially be funded by my operations. After dealing with a ton of hassle at the branch trying to transfer funds, and coming up against our first payroll deadline, I determined the easiest way to manage this was to simply withdraw cash from Chase and deposit it in the other bank. Chase wanted a $10 fee to write a check, and the funds wouldn't even be available that day. They wanted $20 to do a wire transfer, and it wasn't even instant. In the scheme of things, those were small amounts, but I'm a penny pincher and I wasn't about to pay them that kind of fee just to get my money.

You should have seen the looks on their faces when I filled out a withdrawal slip for $5,500. They ended up giving it to me after checking ID and verifying with the manager who set our accounts up, who knew my partner personally. I had no problem with this; it told me that if someone else ever tried to withdraw my money they would fail. What I had a problem with was the general attitude of everyone in the bank - that I must be up to something shady if I'm withdrawing cash. I was approached by three different employees, all of whom explained that asking for that much cash was extraordinary, and would I rather have a check? Or transfer funds some other way?

I went to that bank weekly or bi-weekly for about 8 months, and each time I pulled out between $2k and $10k in cash. After a while, I was just doing it to irritate them. Every time, I got the third degree, but every time, they dispensed the cash and I was on my way. I felt like the bank was missing the point, that their job should be:

- Verify that I am me.
- Verify that the funds are available.
- Dispense the funds as requested.

The rest was unnecessary. Everything got properly reported to the IRS, everyone got paid properly via payroll check, and there were no drugs or stolen property purchased. I just needed to move money from one place to another.

 

[justalayman]

I went to that bank weekly or bi-weekly for about 8 months, and each time I pulled out between $2k and $10k in cash. After a while, I was just doing it to irritate them. Every time, I got the third degree, but every time, they dispensed the cash and I was on my way. I felt like the bank was missing the point, that their job should be:

- Verify that I am me.
- Verify that the funds are available.
- Dispense the funds as requested.

The rest was unnecessary. Everything got properly reported to the IRS, everyone got paid properly via payroll check, and there were no drugs or stolen property purchased. I just needed to move money from one place to another.

You are missing the point. The bank is obligated to report certain transactions. Their obligation to you were the 3 steps you listed. Their obligation to others were quite different:


http://www.ffiec.gov/bsa_aml_infobase/pages_manual/olm_017.htm

 

[single317dad]

You are missing the point. The bank is obligated to report certain transactions. Their obligation to you were the 3 steps you listed. Their obligation to others were quite different:


http://www.ffiec.gov/bsa_aml_infobase/pages_manual/olm_017.htm

Rarely, if ever, did I exceed that limit.

Even if I did, I don't see anything in that document about making it a pain in the backside to withdraw my money.

Regardless, they had all my pertinent info at hand, and could have easily filed the necessary paperwork, which would have amounted to nothing, as all monies were reported properly.

There are also new(ish) rules regarding reporting of online payment accounts which accrue over $20k in payments over the course of a year. I've dealt with that at both Paypal and Amazon, and haven't had one bit of trouble handling the paperwork or accessing my money due to the limitations. I made one significant cash withdrawal this summer, from a personal account at a local bank, to buy a vehicle off Craigslist. The teller checked my ID, counted out the money, said "Thank you, Mr. xx, is there anything else?" and I was on my way. It doesn't have to be a hassle.

 

[justalayman]

single317dad;3223775]Rarely, if ever, did I exceed that limit.

actually, there is no true limit. There is the $10k trigger but there is also a suspicious activity statement as well. I do not think the suspicious activity is mandatory like the hard limit activity statement is.

Even if I did, I don't see anything in that document about making it a pain in the backside to withdraw my money.

it doesn't make it a pain. It doesn't change much of anything, for the person withdrawing the money. The bank has to file the paperwork, not the account holder. The account holder doesn't even know it is being filed.

Regardless, they had all my pertinent info at hand, and could have easily filed the necessary paperwork, which would have amounted to nothing, as all monies were reported properly.

You are still misunderstanding the requirement. Regardless of anything else, if you breach the dollar limit or take what the bank determines to be suspicious activity, the bank files these reports.

There are also new(ish) rules regarding reporting of online payment accounts which accrue over $20k in payments over the course of a year. I've dealt with that at both Paypal and Amazon, and haven't had one bit of trouble handling the paperwork or accessing my money due to the limitations

is that not for tax purposes? If so, it has nothing to do with what I am speaking of.

. I made one significant cash withdrawal this summer, from a personal account at a local bank, to buy a vehicle off Craigslist. The teller checked my ID, counted out the money, said "Thank you, Mr. xx, is there anything else?" and I was on my way. It doesn't have to be a hassle.

and if it exceeded the threshold, they filled out the report and filed it as they are required to...after you left.

 

[justalayman]

Oh, and if you intentionally deal with amounts just under the limit regularly (that is what is called suspicious activity), this comes into play:

http://www.ffiec.gov/bsa_aml_infobase/pages_manual/olm_107.htm

and you can see here it is a serious felony:

http://www.ffiec.gov/bsa_aml_infobase/pages_manual/regulations/31USC5324.htm

(d) Criminal Penalty.--
(1) In general.--Whoever violates this section shall be fined in
accordance with title 18, United States Code, imprisoned for not
more than 5 years, or both.
(2) Enhanced penalty for aggravated cases.--Whoever violates
this section while violating another law of the United States or as
part of a pattern of any illegal activity involving more than
$100,000 in a 12-month period shall be fined twice the amount
provided in subsection (b)(3) or (c)(3) (as the case may be) of
section 3571 of title 18, United States Code, imprisoned for not
more than 10 years, or both.