Federal law allows you to withdraw as much cash as you want from your bank accounts. It's your money, after all. Take out more than a certain amount, however, and the bank must report the withdrawal to the Internal Revenue Service, which might come around to inquire about why you need all that cash.
A 1970 anti-money-laundering law known as the Bank Secrecy Act spells out the rules for large cash withdrawals. In general, banks must report any transaction exceeding $10,000 in cash. That includes not only withdrawals but also deposits, currency exchanges (such as swapping dollars for euros or Japanese yen) and the purchase of traveler's checks. The law also requires banks to check identification on any transaction that would trigger a report. In other words, even if your bank doesn't usually ask for ID with withdrawals, it must do so for withdrawals over $10,000.
Under the law, all transactions carried out at an institution within a single day count as a single transaction, and all branches of a bank count as a single institution. So if you went to your bank in the morning and withdrew $5,000, then went to a different branch in the afternoon and took out another $5,000, the combined transactions would trigger a report to the IRS. In addition, if the bank has reason to believe a series of transactions are related, even if they're not on the same day, the bank is obligated to file a report. If you come into the bank every day for a week and withdraw $8,000, you could expect the bank to file a report.
Banks must also report transactions that are less than $10,000 when they believe that the dollar amount of those transactions was specifically chosen to avoid triggering the Bank Secrecy Act. Federal regulations refer to these as "structured" transactions. Withdrawing $9,990 will probably raise a red flag as a potentially structured transaction. In fact, any transaction, regardless of the amount, that the bank deems suspicious can trigger a report.
Exceptions to the Rule
The law makes a few exceptions. A bank doesn't have to file a report on large cash transactions involving other banks or government agencies. It also allows banks to apply for exemptions for regular business customers. If a bank has a department store as a customer, and that store's manager withdraws $20,000 in cash for the store safe or the registers, the bank doesn't have to make a report each time it happens. Instead, the bank can file a form with the IRS identifying the store as a regular business customer. This exemption must be renewed every year.
Cam Merritt is a writer and editor specializing in business, personal finance and home design. He has contributed to USA Today, The Des Moines Register and Better Homes and Gardens"publications. Merritt has a journalism degree from Drake University and is pursuing an MBA from the University of Iowa.