Depositing money into our bank account might not be something many people are used to. Over time, the way we perceive cash has changed, mainly because almost everything is done digitally, with transactions or quick money transfers. In any case, the uncertainty about how much cash can be deposited without declaring it is a constant concern for many. The opacity of the regulations and the complexity of the legislation vary from country to country, which only adds to the confusion.
The bank usually applies a temporary hold known as an ‘exception hold’
The fact is that depositing a large sum can trigger bank holds and audits. In many countries, there is no specific legal limit on the amount of cash that can be deposited into a bank account. However, certain aspects must be considered to avoid problems with taxes, the government, and the bank. When a large deposit enters the system, the bank usually applies a temporary hold known as an ‘exception hold’. This is common practice when an amount is deposited that could even be considered ‘suspicious’.
In countries like Spain, for example, banks are required to report any cash transaction exceeding €3,000 to the tax authorities. Above this amount, the tax authorities can initiate an investigation to determine the origin of the funds. In the United States, for example (as explained above), during the review conducted after a cash deposit, the bank verifies the account that issued the check or the source of the funds. If the origin of the money cannot be justified, the bank may face a financial penalty.
It is advisable to do so via bank deposit or wire transfer
Hence the importance of conducting these types of reviews. When this transaction is performed, a portion of the funds is released almost immediately, but the remainder is blocked while the review is completed. The user should know that this is not a bank or transaction error; it is standard protocol for checks or large deposits. For example, experts recommend that if you need to deposit a large amount of cash into your bank account, it is advisable to do so via bank deposit or wire transfer. This leaves a paper trail that facilitates verifying the origin of the funds.
The fact is that after a large deposit, during this review, the bank verifies the account that issued the check or the origin of the funds. Therefore, it is also recommended to keep all documentation that proves the source of the money, such as invoices, receipts, or contracts. Specifically, the review confirms that the account exists, has sufficient funds, and that the document has not been reported as stolen or altered. In countries like Spain, if these types of transactions are not declared, the Tax Agency can initiate an investigation to determine the origin of the money. If the origin of the money cannot be justified, you may face a fine of up to 150% of the undeclared amount.
The fact is that in the United States, if money is held, most institutions release the funds within two to five business days. It’s worth noting that in some countries, in addition to the financial penalty, an interest charge may be applied to the undeclared amount. And after the money is held for review, the processing time can be extended if the check comes from a small bank, from another state, or if the deposit falls near weekends or holidays, when verifications are slower. It’s important to keep this in mind because when making a deposit or transfer of a large amount, it’s crucial to know if it’s done at the beginning of the week, on a holiday, etc., because the timing will affect how quickly the process is handled.