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CAN THE BANK STOP ME FROM TAKING OUT ALL MY SAVINGS?

PANIC: Northern Rock savers queue to withdraw their cash last year

Wednesday August 20,2008

By Annie Shaw

Q Ever since I saw the queues of savers attempting to withdraw their money from Northern Rock I have wondered if there is a legal limit to the amount of cash one can withdraw from a bank at any one time.

My local bank branch could tell me but I have no wish to raise eyebrows unnecessarily.

A Although you can, in theory, take out as much as you like as long as you have the funds in your account to cover the transaction, in practice how much you can take out will depend on a number of factors — mainly the terms and conditions of your account and custom and practice of the bank or building society.

Many smaller organisations, such as local building societies, will simply not keep large amounts of cash on their premises and if you wanted to make a large cash withdrawal you would need to make an arrangement for them to have it ready for you.

Bigger banks will also impose terms and conditions, and larger withdrawals will also require notice and extra proof of identity.

Certain checks on the account are also likely to be made. Finally, if a bank sees unusually large withdrawals, for instance in a “run” on the institution such as happened with Northern Rock, it may restrict the amount of a withdrawal, or even close its doors altogether, to protect the interests of other customers.

Interestingly, if you did take out an enormous sum of money in cash, you might have more trouble than you think if you want to reinvest it. Banks now require an explanation from new customers about where large sums of money have come from as part of the crackdown on money laundering.

So, if you decided to take a suitcase full of notes out of one bank and heave it round to the bank next door, you may well find yourself faced with a series of intensive checks to prove to the new bank that you are not a drug baron or an arms smuggler.

*** If you have a financial problem or query, we can help. Every week, Money Matters will answer your questions with help from website CashQuestions.com.

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