Is Moving Money Between Multiple Accounts Likely to Get Flagged/Investigated?

[Fotheringay-Phipps]

Suppose you move an amount of money - over $10K - from Account A to Account B and then to Account C (accounts are at 3 different financial institutions) within a few days. Your reasons are entirely benign (having to do with the ease/cost of online transactions - you want to transfer from A to C but B is the only account which has free incoming and outgoing transfers) but you’re not interested in having to explain this to law enforcement fraud investigators. So the question is: how likely is it that something of this sort will trigger anyone taking a closer look and deciding to pay you a visit? How about if you do this 1-3 times a year?

[Riemann]

No, it’s not an issue at all for electronic transfers. The concerns that gave rise to the 10k restriction are only relevant to physical banknotes, because you can’t trace where they are coming from / going to.

[PastTense]

Check kiting or cheque kiting is a form of check fraud, involving taking advantage of the float to make use of non-existent funds in a checking or other bank account. In this way, instead of being used as a negotiable instrument, checks are misused as a form of unauthorized credit.

Kiting is commonly defined as intentionally writing a check for a value greater than the account balance from an account in one bank, then writing a check from another account in another bank, also with non-sufficient funds, with the second check serving to cover the non-existent funds from the first account. The purpose of check kiting is to falsely inflate the balance of a checking account in order to allow written checks to clear that would otherwise bounce.

Check kiting

This is difficult to do anymore since there is very little float anymore.

But I don’t see an issue which what you are doing electronically. The only issue is the limits they set on the size/frequencies of the transfers. For example a bank may not let you to transfer out more than $5,000 in a day…

[Machine_Elf]

@Fotheringay-Phipps

Suppose you move an amount of money - over $10K - from Account A to Account B and then to Account C (accounts are at 3 different financial institutions) within a few days. Your reasons are entirely benign (having to do with the ease/cost of online transactions - you want to transfer from A to C but B is the only account which has free incoming and outgoing transfers) but you’re not interested in having to explain this to law enforcement fraud investigators. So the question is: how likely is it that something of this sort will trigger anyone taking a closer look and deciding to pay you a visit? How about if you do this 1-3 times a year?

As it happens, I do something like this pretty regularly. I have a small business with maybe half my customers paying me via PayPal. Every now and then I want to withdraw the accumulated funds from PayPal, but I don’t want to send it directly to my primary checking account; I just don’t trust PayPal to never screw things up, and the consequences for me if they screw things up with my primary checking account would be large. So I move funds through an intermediary account at a nearby credit union: PayPal transfer to the CU account, and then walk into the CU to request an ACH transfer to my primary checking account. I keep the CU account balance very close to zero most of the time so if PayPal screws up, there’s not much money for them to take; they can’t reach all the way through the chain to my primary checking account (which is at a different institution).

Anyway, I’ve been doing this for years, maybe once every six weeks, with transactions ranging from a few thousand dollars up to $15K or so. Since the transactions are all electronic (i.e. no hard currency involved), there will be no currency transaction report. Any involved institution may still choose to file a suspicious activity report, but this is pretty unlikely. Even if an SAR is generated, it’s not a guarantee that investigators will come knocking on your door.

[wguy123]

I’ve moved $10K+ between accounts many times and I’ve never raised any flags that I know of. Sometimes it is between accounts within the same bank and sometimes it’s across accounts in different banks. Typically, I’m only moving from A -> B. However, I’ve done the account A -> B -> C when I selected the wrong account. Yes, I’ve done that a couple times :smack:

[Driver8]

I do this all the time. I try to reduce the “surface area” of access to my long term savings account bank, so the only way to transfer money there is from my checking account at a difference bank. So whenever I liquidate stocks or sell ESPP shares or put money in investments there is a flow from a cash account at the investment firm to the checking account bank to the long term savings bank (or the other way round).

It hasn’t caused any major issues for me yet, although when I refinanced my mortgage a couple of years back the underwriters wanted a detailed explanation about the flow of money … that was relatively easy to give though. I’m pretty diligent about transferring the exact same amount of money all the way through, so it’s easy to explain. Not that I do that to make it easy to explain, I’m just a little OCD that way …

[chappachula]

@Riemann

No, it’s not an issue at all for electronic transfers. The concerns that gave rise to the 10k restriction are only relevant to physical banknotes.

I don’t think this is correct. Electronic transfers can be just as suspicious as cash.

New York Governor Elliot Spitzer’s career was ruined because he made frequent electronic transfers of $5000.
This caused the bank to label the transfers as worthy of further inspection (for possible money laundering.) The FBI got involved, and discovered that the transfers were going to a prostitution ring.

from my link:

Federal law requires … banks to report to the IRS ANY transactions totaling $5,000 or more if the transactions "involve potential money laundering or a violation of the Bank Secrecy Act

[Saint_Cad]

@chappachula

I don’t think this is correct. Electronic transfers can be just as suspicious as cash.

New York Governor Elliot Spitzer’s career was ruined because he made frequent electronic transfers of $5000.
This caused the bank to label the transfers as worthy of further inspection (for possible money laundering.) The FBI got involved, and discovered that the transfers were going to a prostitution ring.

from my link:

Machine Elf covered this earlier

Since the transactions are all electronic (i.e. no hard currency involved), there will be no currency transaction report. Any involved institution may still choose to file a suspicious activity report,

In other words, the bank may choose to report it but since it’s not currency they don’t have to.