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The Most Cash You Can Withdraw At Once

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stacks-of-cashDo you assume money in your bank accounts will be there for you whenever you need it? While that's true in general, laws regarding the most cash you can withdraw and other withdrawal limits may attach some strings to how you access your money.

The Laws Governing Deposits and Withdrawals

A frequently cited limit on the most cash you can withdraw at any one time is $10,000. However, the reality is that withdrawals of $10,000 or greater are not prohibited, but they will trigger federal government reporting requirements.

Bank Secrecy Act

These federal reporting requirements stem primarily from the Bank Secrecy Act (BSA). This requires financial institutions to report to the federal government any withdrawals of $10,000 by a depositor in a single day.

The purpose of the BSA is to help the government monitor financial transactions that may be a signal of illegal activity like money laundering, purchases of illegal goods or terrorism. The reporting requirement can also help the Internal Revenue Service spot attempts to illegally shelter income and assets from taxes.

FinCEN Reporting Requirements

When banks file a report under the BSA, the information is channeled to the Financial Crimes Enforcement Unit (FinCen), a bureau within the U.S. Treasury Department.

Having a central place for a bank to report activity deemed as potentially suspicious under the BSA allows the government to investigate these reports. In addition to reacting to individual reports, creating a centralized database of such banking activity allows the FinCEN to look for patterns that point toward criminal activity.

Withdrawals of $10,000

Note that while $10,000 is the figure specifically cited by the BSA, this is not a single magic number that forces banks to file a report with the government.

For one thing, this restriction applies to all withdrawals from a bank in a single day. So, for example, you could not avoid this limit by taking $5,000 out from one branch of your bank and another $5,000 from a different branch or an ATM.

More broadly, the BSA requires banks to report any suspicious activity, so making a withdrawal of $9,999 might raise some red flags as being clearly designed to duck under the $10,000 threshold. So might a series of cash withdrawals over consecutive days that exceed $10,000 in total.

Alternatives to Large Transactions

Again, the BSA triggers reporting requirements, not actual limits on access to your money. Most notably, it applies to cash withdrawals and so leaves you plenty of latitude to use other payment methods for legitimate purchases.

For example, if you are making a large purchase, you can always write a check or arrange for a bank transfer. Unlike cash, these transactions leave a specific record; but if they are for legitimate purposes, that shouldn't be a concern.

Similarly, even if you need to withdraw over $10,000 in cash, the BSA reporting requirement should not deter you as long as you are prepared to explain how that cash is being used for legitimate purposes. In such cases, though, you would be wise to document how that money was used in case questions are raised.

Other Limitations on Withdrawals

The BSA reporting requirement may not be the only thing that affects your ability to take a large sum of money out of your bank account. Depending on the nature of your account and how you try to access it, you may run into limits such as:

  • CD terms

    If your money is in a certificate of deposit (CD), you will generally have to wait until the end of the CD's term in order to access it. Otherwise it is likely that you will have to pay an early withdrawal penalty.

  • Certain money market accounts

    The terms of some money market accounts may require you to give advance notice of large withdrawals. In any event, you are entitled to access your money within seven days. But you should know a bank's procedures and requirements before you count on being able to make an immediate large withdrawal.

  • ATM limits

    Even in this day and age, making a large cash withdrawal generally depends on being able to visit a branch of your bank. If you count on accessing your money via an ATM, be aware that most ATMs limit withdrawals to a few hundred dollars.

Don't Blame Your Bank…

Your bank is almost certain to make you fill out some extra paperwork pertaining to the BSA for withdrawals of $10,000 or more. This may slow down the process of making your withdrawal; but if so, don't blame your bank.

All banks are governed by the BSA, so you should actually be more concerned about a bank that doesn't treat a large withdrawal as anything special than about one that does. Also, don't think you can get around the BSA by keeping your money at a credit union or a brokerage firm - the BSA applies to all U.S. financial institutions.

..But Find a Bank that Works with You

The BSA may be a fact of life when dealing with all U.S. financial institutions, but making a large withdrawal can be a good time to reconsider your relationship with your bank, for the following reasons:

  • A bank should be able to handle BSA reporting requirements efficiently.

    As mentioned earlier, a withdrawal of $10,000 or greater may trigger some extra paperwork, but this shouldn't be anything your bank isn't used to doing. 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.

    In an increasingly cashless society, withdrawing a large sum of money is not only unusual - but nor is it the most secure and efficient way to conduct your financial affairs. A representative from your bank should be able to talk you through alternative ways of handling your business, especially if you expect to need this type of withdrawal again in the future.

  • A large withdrawal may drop you below certain balance thresholds.

    Many bank accounts require you to maintain a certain minimum balance. There are two kinds of minimum balance requirements - those that are necessary to keep the account open, and those that qualify you for special treatment such as a fee waiver or a better interest rate.

    If your large withdrawal takes your account below either type of minimum balance requirement, it might be a good time to reevaluate your banking relationship.

  • Fees become a larger factor with smaller balances.

    Even if your withdrawal does not drop you below a minimum balance threshold, it may make fees a more critical factor. The smaller your balance, the greater a percentage of that balance fees will represent. Rather than pay high fees on a relatively small balance, you would be better off looking for a bank account with no fees.

Large cash transactions raise a red flag with regulators, and they should raise a red flag for you too. Chances are there is a more efficient way to conduct your business than making cash withdrawals of $10,000 or more.

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