How Much Money Can You Withdraw From Savings at Once?

It's your money sitting in the bank, but have you ever wondered if someone might be watching what you do with those funds? If so, the answer is yes. There are eyes on your bank account and, more specifically, folks looking out for signs of illegal activity. Here's what you need to know about your savings account and when a withdrawal is large enough to raise a red flag.

The Bank Secrecy Act

Some banks limit the number of times you can withdraw money from your savings account, while others do not. That decision is totally up to the bank. However, a decision that's not left up to individual banks is what happens when a customer withdraws $10,000 or more from either their savings account or checking account.

In 1970, Richard Nixon was in the White House, and Congress sought a way to fight crimes like tax evasion and money laundering. One of the solutions Congress came up with was the Bank Secrecy Act (BSA), a law that established how banks must conduct record keeping and when a financial institution was obligated to report unusual withdrawals to the federal government.

The BSA was amended after the attacks of 9/11, but the goal remains the same: Make it tougher for people to finance terrorist activities, launder money, or hide money from the IRS.

What happens

Imagine that you've been saving money to landscape your backyard and add a new stone patio. You withdraw $25,000 from your savings account to pay the contractors. Since you're withdrawing more than $10,000, your bank automatically files a report under the BSA that's sent to the Financial Crimes Enforcement Unit (FinCen) within the U.S. Treasury Department.

FinCen knows that most reports received each year represent legitimate withdrawals, and no one believes you're doing anything illegal. In fact, an isolated $25,000 withdrawal won't raise eyebrows at all. What FinCen is more interested in are patterns of suspicious withdrawals.

Let's say your neighbor Sam owns a small print shop. It seems legit enough. However, every few months, Sam withdraws thousands of dollars from either their savings or checking account. Sometimes Sam withdraws more than $10,000, and sometimes they make a series of smaller withdrawals. In either case, a pattern begins to emerge.

When a report like Sam's hits a FinCen desk, it's enough to warrant a closer look. Is Sam laundering illegal gains for a criminal enterprise, funding domestic terrorism, or just really bad with money?

FinCen knows all the tricks

No matter how Sam tries to make withdrawals, their pattern of activity brings unwanted attention from FinCen. For example, Sam may withdraw $9,900 in an attempt to stay under the $10,000 threshold. They may withdraw $7,500 from one bank branch and then drive to another to withdraw an additional $2,500.

Sam is not fooling anyone. Banks look at the total amount an account holder withdraws rather than individual transactions. Any time funds are taken out on the same day, a report is generated.

Sam's best bet (as long as they're not up to something shady) is to keep a careful record of their withdrawals and save receipts showing how the money was spent. That way, if FinCen has questions, Sam can explain their interesting banking behavior.

Let's say Sam has regularly withdrawn large amounts of cash to cover the cost of their mother's nursing home care. Sam certainly did it the hard way. While they could simply save receipts from the nursing home, three easier (and less suspicious) options would have been to:

• Write a check for their mother's care rather than pay in cash.
• Use a credit card to pay for care, then pay the card off before the end of the billing cycle to avoid interest charges.
• Arrange a wire transfer from the bank to the nursing home.

Funds in your checking or savings account are yours to spend, and the chances of hearing from the U.S. Treasury Department are slim. Still, there's no harm in understanding what triggers a report from the bank and being prepared to answer questions if asked.