Here's What Happens When You Withdraw $10,000 From Your Bank Account

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You thought it was going to be easy, didn't you? You'd just walk into the bank, ask for your money, and the teller would count it out in little paper-wrapped stacks -- or better yet, put it into a briefcase that you would lock to your wrist like in the movies. (Or, you know, maybe you'd be normal and get a cashier's check. I'm not your mom.)

But when you went up to the teller and asked to take $10,000 out of your account, suddenly everything slowed down a little bit. You could see the pain in the teller's eyes. And you wondered -- wait, what's happening?

Money laundering, banks, and $10,000

Money laundering is a tradition almost as old as time itself, but it's never been particularly popular with the federal government. That's why, in 1970, the Bank Secrecy Act was passed. This law established requirements for recordkeeping and reporting of transactions of more than $10,000, using a form called the Currency Transaction Report (CTR).

It's meant to flag all large transactions when they come into checking and savings accounts, as well as investment accounts, and to track those same large amounts as they move about the system to help prevent money laundering and fraud. Say you deposited $10,000, bought a certificate of deposit (CD) with it, let the CD mature, then cashed the $10,000 back out -- a paper trail of all of that activity would be sent to the U.S. government.

This law has grown and expanded several times since 1970, with seven additional major pieces of legislation to support it, and yet the $10,000 threshold has never changed. According to the Bureau of Labor Statistics' CPI Inflation Calculator, that same $10,000 in January 1970 is worth an equivalent of $82,949.21 as of April 2024 -- which explains a bit why it was such a significant number at the time. I'd definitely raise an eyebrow at that amount of money just appearing out of thin air, where I might not think twice about $10,000 today.

The problem with $10,000

The law creates extra hurdles for people. Often, cash must be seasoned before it can be used, even if it's only $10,000. This means longer wait times for you to get your money that you earned from the bank, even though you're just doing legal stuff like going to work or liquidating your grandmother's home (with her permission) while she goes off to live in Boca Raton, or having to wait longer for large checks to clear, even though they're completely legit.

Banks no longer do CTRs by hand, instead having computer algorithms trigger automatically when they're applicable, but that doesn't mean they don't catch suspicious activity. For example, if you make many large transactions in the same day that add up to $10,000 or several in a short period that are significant, even if they're under $10,000, this all could trigger another level of anti–money laundering reporting called a Suspicious Transaction Report (STR). That can then cause the bank to look more deeply into your personal business and generate a Suspicious Activity Report (SAR).

If it goes this far, it can end up being a very bad thing, and for such a relatively small amount of money these days. You could even be fined or imprisoned if the situation gets far enough out of hand.

How to withdraw $10,000 without getting the Feds involved

There is literally no way to withdraw or move $10,000 without a CTR being generated, but there are ways to avoid possible problems. Before you begin to perform a large transaction online or walk into your bank with your briefcase, do this:

• Call the bank to explain why you're making a large transaction. Documentation is key here, and the more, the better.
• Have a paper trail that explains where your money came from if it's a deposit. A bill of sale for your old Caddy or paperwork from your home's closing are great options.
• Make it a habit to deposit regularly into your account. Don't save up and do a big cash deposit randomly. Your deposit habits matter.
• Perform the transaction you need. Some people try a trick called "structuring" that is basically taking out several smaller withdrawals or putting in small deposits to try to avoid the $10,000 threshold, but this only triggers more suspicion. Structuring is definitely illegal, and you could go to prison for purposefully trying to evade the $10,000 cap.

There's nothing illegal about using your own money, but you can look incredibly suspicious if you try to avoid the Bank Secrecy Act with a lot of weird and dodgy tactics. Just be honest with people you're encountering, tell them what's going on, and if that fails, do what I do every day -- just walk around like you know what's going on and everything is bound to work out OK in the end.

So many real estate transactions require the movement of this paltry amount (relatively speaking) of money that the bank won't think twice about it as long as you don't act like it's a big deal. Because it's not. Again, you're not actually moving around the equivalent of $83,000 in the 1970s -- you're just moving $10,000 in 2024, which is just a month's worth of income for an increasing number of people these days.

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