For some fortuitous reason, you’ve got $10,000 just sitting there, burning a hole in your pocket. Do you spend it, or save it?
You decide to take the sensible option by picking the latter choice, so you go to the bank to deposit the entire amount, either by cash or check.
Unfortunately, it’s not quite that simple. Now your money’s on hold, and you’ve been reported to the IRS.
If that sounds very intimidating, don’t get scared away. It doesn’t mean you’re committing some financial crime. You’re just trying to put money in the bank (and you are allowed to deposit as much as you want).
Banks are simply on the lookout for possible bank fraud or suspicious activity -- and $10,000 is a key number.
Sometimes the concern is warranted, sometimes not, because there are ways that depositors can get themselves in trouble inadvertently if they don’t go about making large deposits the right way.
Learn more about the Bank Secrecy Act and other rules if you’re planning on making a deposit more than $10,000 via cash.
And, find out if there's any difference if you deposit the same amount in the form of a check.
The Law Behind Bank Deposits Over $10,000
It’s called the Bank Secrecy Act (aka. The $10,000 Rule), and while that might seem like a big secret to you right now, it’s important to know about this law if you’re looking to make a large bank deposit over five figures.
The Bank Secrecy Act is officially called the Currency and Foreign Transactions Reporting Act, started in 1970.
It states that banks must report any deposits (and withdrawals, for that matter) that they receive over $10,000 to the Internal Revenue Service. For this, they’ll fill out IRS Form 8300. This begins the process of Currency Transaction Reporting (CTR).
Essentially, any transaction you make exceeding $10,000 requires your bank or credit union to report it to the government within 15 days of receiving it -- not because they’re necessarily wary of you, but because large amounts of money changing hands could indicate possible illegal activity.
This includes theft, money laundering, or helping to fund criminal organizations or even terrorists.
Your bank needs to cover its bases for any large “reportable transaction” that passes through.
Note: Private businesses need to go through a similar reporting process if a customer makes a large, big-ticket purchase, cash only, like a car, a house or other major amenity.
What Happens When You Deposit Over $10,000 in Cash
It could be with one $10,000 bill, or 10,000 $1 bills. Once you make a $10,000 cash deposit and the bank files its report, the IRS will then share it with officials from your local and state jurisdictions, up to the national level, to monitor where the money ends up.
If you were a potential counterfeiter, authorities would want to first see if the serial numbers on each bill are genuine. (If it was fake cash, they’d remove it from circulation.)
If the money you’re depositing is stolen, either because you stole it or acquired stolen cash, they need to double check those numbers against any reports of cash robberies for their investigations.
Generally, a cash deposit of $10,000 will go without incident. If it’s at your bank walk-in branch, your teller banking representative will verify your account information and ask for identification. You’ll fill out a deposit slip as usual, and the money is deposited into your account.
Their reporting to the IRS happens after you make the deposit. Depending on the banking institution, you should have immediate access to your funds.
You won’t be kept in the dark about it. Your bank will notify you that your cash deposit has been reported for the above reasons, and provide you with contact information (phone, email) to follow up with any questions.
Note: It doesn't matter who makes the deposit into the account. Many banks have caught onto suspicious activity where a person deposits a large amount of cash into another person's account. In the case of Chase Bank, for example, you can’t make cash deposits into someone else’s account anymore -- the bank’s customary way of reducing illegal activity.
Exceptions to the $10,000+ rule that could spell trouble
The only time you should worry about depositing more than $10,000 in cash is not in how much you deposit -- but how you deposit it. Two scenarios:
- Deposit $10,000 as a lump sum
- Split up the money into several smaller deposits, say one for $5,000, one for $3,000 and one for $2,000
Splitting up your large cash deposits could spell trouble. Why? It’s the same amount, only in smaller denominations and more frequent deposits. In the end, it’s the same money. But, the bank might not look at it that way.
They may assume, rightfully or wrongfully, that by breaking down and “structuring” your deposits this way, you’re deliberately and knowingly trying to circumvent the Bank Secrecy Act and the bank’s CTR process.
In fact, it’s a problem that can make one $10,000 deposit look like mere pennies. Not only does it implicate them in possible illegal activity, but the act of structuring itself is illegal; it tells the government that you’re trying to get around and evade their reporting laws.
Fact: According to the IRS, in 2016, $43 million was seized from 600 depositors under suspicion of structuring large deposits.
It’s not just large deposits over $10,000 structured into small amounts that count.
If you made, say, a single $9,999 deposit, it wouldn’t fall under the reporting criteria, but if you made a $9,999 deposit every day for the next two weeks, it’s going to raise some red flags for your bank.
They’ll want to know where this sudden windfall of money is coming from. Or, you have several bank accounts set up at several banks.
You make several deposits under $10,000 at each of them over the course of a few weeks, totaling $10,000 or thereabouts. This can seem out of the ordinary to your bank, triggering their investigative process.
The same goes for frequent large deposits totaling $10,000 or more; even if you don’t structure them, the reporting process is meant to keep tabs on the authenticity of the cash, and your deposit activity.
Check Deposits of More Than $10,000
Writing a $10,000 check to yourself (or getting one from someone else) follows the same process as cash, albeit a bit more inconveniently.
Your deposit will still be reported by your bank to the IRS as usual, only your bank may apply a temporary hold on your money.
Again, depending on the bank, you may not be allowed to deposit your $10,000 check via mobile deposit on your phone, or at an ATM.
Most checks deposited in person at the teller window are usually available in your checking or savings account immediately.
But funds in large, 5-digit amounts may need to clear first through the bank’s processing center before being added to your balance, plus, there’s the reporting process which needs to confirm if any forgery or sketchy activity is taking place.
Reviews on a case-by-case basis
Banks may also take into consideration what kind of check it is that’s being deposited.
Is it a personal or business check? If you don’t usually have a large checking account balance, a random $10,000 transaction may seem out of the ordinary.
But, a business with frequent moderate-to-large-sized transactions may not seem unlikely to receive or pay $10,000 in check, even if the amount is still reported to the IRS.
It’s the same principle as a cash deposit; if you normally don’t carry a large balance or make large deposits, the bank wants to see what’s up.
Think of it like you would if your checking account or credit card was compromised. The bank may take notice if a series of purchases or charges you wouldn’t normally make start showing up on your activity.
It could mean your card was stolen and someone went on a spree; or, you might just be on vacation and spending more than usual. The bank will sometimes put a temporary freeze on your account until the activity can be verified.
If not, you and your money are good to go. But if having a hold placed on your account is a total inconvenience, contact your bank to see if they can free up or advance some of the funds before they clear.
The Same Goes for Cash Withdrawals of $10,000+
The same rules apply for bank cash withdrawals as they do for cash deposits. If you withdraw more than $10,000 in cash at a time, the transaction will be reported to the IRS.
Likewise, if you make a series of smaller withdrawals within a small period of time -- $1,000 here, $5,000 there, $2,000 there again, in the span of a week -- and it falls shy of $10,000, it could be believed that you’re attempting to work around the federal reporting act.
Don't Worry If You Have Nothing to Hide
Remember that account holds, IRS reporting and the like aren’t there to criminalize you or make your life more difficult.
They’re there to ensure your financial safety, that your money is yours, that a $10,000 transaction is legitimate, and that no fraud is taking place -- most importantly, fraudulent activity you may be unaware of.
So now that you’re aware of what to do when making large deposits, the next time you’re lucky enough to have $10,000 to deposit (or $10,000 already in your account to withdraw), ask your bank rep about the process at the teller window.
When will the IRS be notified? Is there going to be a hold on my check, and for how long? Can I provide any more information to expedite the process? Demonstrating awareness and cooperation goes a long way in encouraging transparency.
And if you’re intending on making smaller cash or check deposits on a regular basis, it’s helpful to let your bank know, and to foster a good relationship with them as a frequent customer.
Businesses with regular moderate-to-large deposit amounts should let their bank know that their deposits aren’t an attempt at structuring, but business as usual.