Tuesday, November 19, 2019

Why Some Banks Ask for ID for a Cash Deposit

The other day, I made a quick cash deposit via my bank’s drive-through lane and was immediately asked for my driver’s license.

The deposit I was making contained a personal check and $60 in cash. I didn’t want cash back: the entire amount was going into my checking account.

No big deal.

So since when does your bank need to see a driver’s license when you’re making a cash deposit?

Apparently, more and more banking customers are being asked to show ID when they’re just adding cash to their account.

It’d be one thing if they were trying to cash a check. Anytime you fill out the “less cash received” blank of a deposit slip and then sign the line indicating you want cash, it’s understandable you’d have to show your ID then. The bank needs to make sure you’re you so that if that check bounces and you don’t have enough money in your account to cover the cash-back total, they know who to contact.

But when you’re depositing cash — legal tender — in your own account, what’s the problem? You’ve already filled out the deposit slip with your account number. They key in the number and see that the deposit slip info matches what you’ve filled out.

So what’s with the ID? Are there random people going around putting suspicious amounts of cash in the accounts of complete strangers?

If so, I wish someone would do that for me!

Befuddled by this curious practice that seems to have come out of nowhere, I called my bank and asked about it.

The answer I got made zero sense.

I finally reached a customer service representative at my bank’s customer hotline. I was told that the bank’s policy changed in August 2018, and that it didn’t accept cash any longer. 

I asked whether there had been a string of counterfeit bills that might have prompted suspicion of printed money. But I also asked if the bank might have a legal team who was aware that it’s almost certainly illegal for a federally-licensed financial institution to refuse to accept federal tender.

She didn’t know.

I then asked how a bank could honestly expect to get away without accepting cash.

“If I have $50 in cash and your bank doesn’t accept it, how am I supposed to get that money in my account?” I asked.

“You can use the ATM,” she said.

I pointed out that I don’t use the ATM for cash deposits. To do so means you’re at the mercy of the person who opens the envelope; if they claim the cash amount was wrong, guess who the bank will believe. When I make a cash deposit, I deal with a teller who has seen me hand them the money and who I see as she counts it. If there’s a discrepancy, we both know it at the same time.

“Well, you could get a MoneyGram or money order,” she said.

What? This bank — potentially about to become my former bank — expects me to go buy a money order so I can make a deposit? 

I don’t suppose the rogue bank is going to reimburse me the cost of the money order, will it?

The fact that an employee of a bank honestly believes that it somehow makes sense that said bank would no longer accept U.S. currency is disturbing beyond words. The fact that she’d then suggest an acceptable solution would be the customer purchasing a money order to deposit into the bank is even worse.

I called the FDIC to try to get clarification on whether a bank actually can refuse all cash, but their agent couldn’t immediately answer. He suggested I fill out an online form asking that question and then submit it so FDIC staffers could research it and get back to me.

He then asked if I needed anything else or if I wanted to lodge a complaint.

I pointed out what should have been obvious: I can’t lodge a complaint until I know for sure whether the bank is breaking federal law. And I can’t know that, according to his own words, until I fill out their stupid online form and wait for their staff to get around to “researching” it, can I?

The FDIC, as you may have guessed, was of little immediate help. 

So I decided to call the individual branch and ask for the manager.

The real explanation does make some sense.

The policy did begin in August, she said. It was designed to prevent money laundering by requiring confirmation that any cash deposits are going into the accounts that belong specifically to the depositor. 

The bank obviously will accept cash as it always has. Tellers just have to verify that the money is going into the right person’s account. If you attempt to deposit cash into someone else’s account, you won’t be able to do that.

Granted, I don’t know a lot about money laundering.

But if I were to consider the advice of the crazy customer service rep, I’d have to wonder what would stop someone wanting to launder cash from buying their own money order and then just depositing that. And if Mr. Jones wanted to launder cash, couldn’t he give Mr. Smith $5,000 that Mr. Smith deposits in his own account, then have Smith write a check to Jones so Jones can deposit it? 

If the transactions were small enough, wouldn’t that accomplish what this policy that now requires me to show an ID for the deposit of a whopping $60 is designed to prevent?

They may have the best of intentions…but with a policy the bank itself can’t adequately explain, I’m not sure how effective it could be.

1 Comment

  1. What if I have checks that are out and needed to make a cash deposit and I am disabled or just out of the hospital and my daughter, who is not on my account, is willing to make that deposit but can’t because of this absurdity. My bank SunTrust told me that under those circumstances I WAS S.O.L.

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Patrick is a Christian with more than 28 years experience in professional writing, producing and marketing. His professional background also includes social media, reporting for broadcast television and the web, directing, videography and photography. He enjoys getting to know people over coffee and spending time with his dog.