How Withdrawing $10,000 From Your Bank Could Cause You a Headache

Withdrawing money from your checking account may not seem like a major ordeal. After all, it's your money. Even if it's a large amount -- say $10,000 -- who's to say withdrawing it would call for an investigation?

Well, as it turns out, withdrawing $10,000 or more from your bank could create suspicion, especially if you're doing it frequently. While it won't automatically cause the FBI to bang on your door and rope swing through the windows, it could create a headache if you're not careful. So, if you're frequently withdrawing large amounts of cash, here's what you should know.

If you withdraw $10,000 or more, your bank will file a CTR

Ever since the Bank Secrecy Act of 1970, banks are required to report any transaction involving $10,000 or more to the federal government, whether it's a cash deposit or a withdrawal. Often, a bank's software will automatically file a Currency Transaction Report (CTR) electronically for transactions that exceed that amount, even if you're not aware of it.

Though it might seem like a violation of your privacy, the Bank Secrecy Act helps the federal government track and prevent financial crimes, like money laundering. When banks fail to report large cash transactions, criminal and suspicious activities can fly under the radar. For example, the bank Wachovia -- now a part of Wells Fargo -- once let billions of drug cartel money flow through its vaults simply because it wasn't reporting large transactions to the federal government.

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To be sure, a $10,000 withdrawal isn't a criminal activity in itself. In fact, the Financial Crimes Enforcement Unit (FinCEN, the unit that investigates financial crimes) receives so many uninteresting CTRs a day, you won't trigger suspicion through a large withdrawal alone. But there are some activities that will put greater vigilance on your bank account. The most common is called structuring.

How a series of small withdrawals could make your life more difficult

Structuring involves breaking up a large cash withdrawal into smaller parts with the intent to evade the Bank Secrecy Act's reporting requirements. For instance, if you withdraw $15,000 in total from your high-yield savings account, but break it into three $5,000 withdrawals, the transaction might be seen as structuring.

Of course, you could have good reasons for making a series of withdrawals totaling $10,000 or more. Your bank may only let you withdraw a certain amount of money per day, thereby forcing you to break large withdrawals into smaller ones. Or it could just be a coincidence that you withdraw $5,000 today, $2,500 tomorrow, and $3,000 in two days.

If you do it frequently, however, your bank could report it as suspicious activity. Once flagged, structuring could embroil you in a legal investigation. At that point, if you're caught intentionally evading a bank's reporting requirements, you could face criminal or financial charges. Yes, even if you're just a private citizen who doesn't want the government tracking your life.

Most people have nothing to worry about

Truthfully, unless you are engaging in something illegal, you have nothing to worry about. FinCEN knows large withdrawals and deposits happen everyday. It's not concerned with legal cash flows. Only when you behave suspiciously will you find yourself under investigation.

The best way to withdraw $10,000 or more, then, is to simply do it. Don't try to break it into smaller installments or spread out your withdrawals over multiple days. Just keep withdrawing as you normally would, and you won't run into any serious financial headaches.