As stated by the Bank Secrecy Act (BSA) of 1970, all financial institutions legally have to report any cash transaction of $10,000 or more to the Financial Crimes Enforcement Network (FinCEN). Whether the transactions are deposits and withdrawals or a number of smaller withdrawal transactions made within a short space of time, a total deposit or withdrawal of $10,000 could raise red flags.
When are red flags raised?
Citizens who wish to withdraw $10,000 or more in cash from their bank accounts will have to fill out a Currency Transaction Report (CTR). The CTR reports get sent to government, not because a citizen becomes suspicious, but due to the fact that several large transactions often indicate money laundering, drug trafficking, and other financial crimes. The reporting process is necessary but should not stop citizens from withdrawing large sums of money that they may need for legal purposes.
Citizens withdrawing to pay for larger assets won’t raise any red flags when they withdraw money. In rare cases, however, citizens could receive a call from the bank asking for further information.
Why would the bank call?
The minute the bank notices a large withdrawal, especially one in cash, the bank calls the customer directly to verify the purpose of the transaction. While it may seem like an interrogation, the call is due diligence on the part of the bank who needs to clarify that:
- A citizen is authorized for the withdrawal.
- The money is not being used for illegal activities.
- Citizens are informed about the risk of carrying large amounts of cash.
While the bank calls to clarify information, citizens must not mistake the questions being asked as being interrogative. The bank may ask a citizen:
- What is the reason behind the withdrawal?
- Does the withdrawal need to be paid out in cash or is a cashier’s check or wire transfer preferred?
- If the citizen is clued up on reporting requirements and security concerns?
All the questions get asked in an effort to ensure the bank follows compliance purposes. The questioning process will be quick and easy for citizens who have nothing to hide.
When should citizens panic when the bank calls?
The only time citizens should panic when the bank calls are when they have avoided the reporting process as it is illegal to withdraw $10, 000 and not report it. Citizens who sound evasive and try to avoid the bank’s questions or get frustrated by the questions could have their bank account flagged, experience delayed transactions, or may have their accounts undergo a government review.
Like the IRS who watches your bank account, the bank also keeps track of bank transactions made by citizens, especially when they indicate possible fraud or shadiness.
What to keep in mind when withdrawing?
While some citizens may need to withdraw a relatively large sum at some time or the other, the process can go smoothly without raising any unnecessary red flags:
- Stay transparent: Be willing to tell the bank why you are withdrawing the money without being vague.
- Report large withdrawals: Don’t get caught trying to avoid reporting larger withdrawals by making several smaller withdrawals to avoid reporting the large withdrawal.
- Plan before time: Since banks won’t have the cash on hand, prepare to order the cash in advance.
- Be vigilant and aware of security issues: Carrying big sums of money is always a risk so think about safety first if you wish to carry cash.
- Stay in the loop of international consideration: When withdrawing money for travel abroad or for paying internation citizens, check all the requirements in terms of reporting foreign income or how U.S. residents can receive money abroad.
According to the USA Government’s official website, withdrawing huge amounts of money is not illegal, however, this withdrawal does not remain undisclosed. While citizens will certainly receive a bank call for big withdrawals, citizens should not worry if the money comes from a legitimate source and if the citizens intentions behind the withdrawal are legal. Nevertheless, with so many banks closing down, it is interesting to think of what processes will be in place for large withdrawals as more banks close down.
