Money we place into banks accounts are ours. However, can we really take it whenever we want? That is something that not many people realize. There is a limit to how much an individual can withdraw from their bank account and how their money can be accessed.
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The Laws Governing Deposits and Withdrawals
It is frequently noted that the maximum amount of cash you can withdraw at any given time is $10,000. However, it is not necessarily prohibited, but rather it would trigger federal government reporting requirements.
Bank Secrecy Act
The reason for these federal reporting requirements come from the Bank Secrecy Act (BSA). The BSA requires financial institutions to report any activity of withdrawals of $10,000 by a depositor in a single day to the federal government.
The BSA strives primarily to aid the government in monitoring financial transactions that may be an illegal activity like money laundering, purchases of illegal goods, or terrorism. This documentation also helps the Internal Revenue Service to catch those who illegally shelter income and assets from taxes.
FinCEN Reporting Requirements
Any time a bank files a report under the BSA, they must send it to the Financial Crimes Enforcement Unit (FinCen), a bureau within the U.S. Treasury Department.
FinCen acts as a central place to take in all the suspicious activity reports, making it easier for the government to investigate these reports. It also allows FinCen to look for patterns that may signify criminal activity.
Withdrawals of $10,000
Although it is specifically cited by the BSA that a withdrawal of $10,000 must be reported to the federal government, there are other instances that may raise a red flag.
For example, if someone were to go to a bank and withdraw $4,000 out and then withdraw another $6,000 out the same day at either the same bank or another branch, they would not be able to avoid the limit threshold. The limit applies to all withdrawals in a single day.
Additionally, the BSA requires banks to report any kind of suspicious activity that may occur. A withdrawal of $9,999 would be deemed as worthy to file a report, because it can be seen as a way to be right below the $10,000 limit. The same thing applies to a series of cash withdrawals over consecutive days, totaling $10,000 or more.
Alternatives to Large Transactions
To clarify, the BSA is meant to alert reporting requirements, and does not actually limit any access to your money. It also mainly applies to cash withdrawals, so therefore this does not limit checks or bank transfers. This is because these types of transactions leave a record, whereas cash is not kept track of.
Adding on, even if you need to withdraw more than $10,000 in cash, the BSA reporting requirement should not stop you from doing so as long as you have an explanation on how the money will be used. Note, it must be legitimate purposes of course. It is important to document how that money was used in case questions are raised.
Other Limitations on Withdrawals
There are also other limitations on withdrawals beside the BSA reporting requirement. Depending on how you use and try to access your account, you may run into limits such as:
- CD terms
- If your money is in a certificate of deposit (CD), you may have to wait until the end of the CD’s term in order to access it. Otherwise, it is likely you will have to pay an early withdrawal penalty.
- Certain money market accounts
- Some money market accounts may require you to give advance notice before making a large withdrawal. In any event, you are entitled access to your money within seven days. Although, it is important to know and understand a bank’s procedures and requirements before you rely on being able to make an immediate large withdrawal.
- ATM limits
- Most ATMs limit withdrawals to a few hundred dollars.
Don’t Blame Your Bank …
When you first sign up, your bank most likely made you fill out some paperwork regarding BSA and withdrawals over $10,000. All banks are governed by the BSA, at all U.S. financial institutions, so don’t try to go to a credit union or a brokerage firm to get around the limit.
This actually shows how cautious your bank is with your money, and is important they are aware of those things.
… But Find a Bank That Works With You
BSA is a thing you will have to deal with at all U.S. financial institutions, but it may help you have a retrospective outlook on your relationship with your bank for these following reasons:
- A bank should be able to handle BSA reporting requirements efficiently.
- When someone makes a withdrawal of $10,000 or more, extra paperwork must be done. This shouldn’t be a problem, because your bank should be used to doing it. If they seem unprepared to handle the transaction efficiently, it could be a sign of poor service in general.
- A good banker should be able to help you find alternatives to large cash withdrawals.
- As the world becomes increasingly cashless, it may seem odd to withdraw a large amount of money. It also is not the most secure or efficient way to go about financial affairs. A good representative should be able to converse with you on the alternative ways to handle your business in case of future events.
- A large withdrawal may drop you below certain balance thresholds.
- Many banks require a minimum balance and withdrawing a large sum of money may place you below that minimum. Those types of minimum balance requirements may be to keep the account open or to receive special treatments. If your withdrawal drops you below, you may want to reevaluate your banking relationship.
- Fees become a larger factor with smaller balances.
- When you make a large withdrawal, you may face fees due to a smaller balance in your account. It would be best to find a bank that has no fees rather than paying high fees on a relatively small balance.
There is not necessarily a limit on how much you can withdraw from your account at a time, but there is a threshold of $10,000 that will raise red flags. It is best to be smart about how much you withdraw and why you would need to withdraw a large amount.
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