Many people assume that they can withdraw any amount of their own money from their bank account without worrying about being reported to the authorities. This is not always the case, so be sure to know the guidelines before making a large transaction at the bank which could result in a federal investigation.
A 1970 anti-money-laundering law known as the Bank Secrecy Act requires banks to report certain transactions to the Internal Revenue Service. Reporting some other transactions is at the discretion of the bank teller.
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) collects and uses financial transaction information in search of people laundering money, financing terrorism, or committing other financial crimes.
FinCEN Reporting Requirements
The milestones used by banks are $2,000 and $10,000. Anything under $2,000 is typically considered safe and private. If the withdrawal is over $2000 but under $10,000, then it is up to the bank employee’s discretion as to whether or not someone is acting “suspicious”. The bank is required to report the withdrawal if suspicious activity is observed. If everything goes normally, then there should be no problems and no reporting, especially if the transaction is a normal activity for the account’s history.
How much cash can you withdraw from a bank before a red flag? Withdrawals of $10,000 cash or more in the same day raise a red flag and must legally be reported by the bank. Multiple withdrawals in the same day are considered to be the same transaction, so withdrawing $5,000 in the morning and $5,000 later in the day would satisfy the $10,000 required for the bank to report it. U.S. law also requires bank customers to report all transactions over $10,000. Failure to do so could trigger a federal investigation.
FinCEN also requires banks to look for signs of structuring. What is structuring? Structuring is using multiple smaller transactions to avoid normal reporting guidelines, especially if those transactions are done at separate bank branches. An example would be withdrawing $9,995 to avoid reporting. One could also be considered to be structuring if they make several large withdrawals over the course of a few days or a week.
Structuring is considered a key component in money laundering. Although it is not illegal by itself, it does become problematic if a bank customer lies to a federal agent about the purpose of the money being withdrawn.
Under the Racketeer Influence and Corrupt Organizations Act, convictions on structuring charges can carry 5-year prison sentences or fines up to three times the amount withdrawn.
Bank Reporting of Cash Withdrawals
There are two different types of reports banks file related to cash withdrawals. The first is a suspicious activity report, which is for the $2000-limit transactions that involve what the bank teller perceives as suspicious activity. The bank is allowed 30 days to file the paperwork, and they are not allowed to tell the customer they filed a report. The second is the currency transaction report for withdrawals over the $10,000 limit, and the bank has 15 days to file it.
There are a few exceptions to the reporting guidelines. Banks are not required to report large cash transactions with other banks or government agencies. Businesses are also allowed to apply for exemptions because of the regular large deposits and withdrawals they do as part of normal business.