If you still like making cash deposits, there’s bad news. Depending on where you bank, you may no longer be able to put money into someone else’s checking account, unless you become a joint owner.
That’s the case at several of the country’s biggest banks. Bank of America implemented this policy in early December. Wells Fargo is adopting it in a few states first before the rule takes effect in its other branches.
Here’s why banks are making policy changes and what your options are if you’re used to depositing cash to pay back a family member or friend.
The reason for the ban
Security reasons prompted Bank of America and Wells Fargo to prohibit customers from depositing cash into others’ accounts.
“The security and safety of our customers’ accounts is our top priority, and this change helps us to reduce risks from cash transactions involving persons who aren’t authorized on the account,” Bank of America spokesperson Betty Riess noted.
Kristopher Dahl, a Wells Fargo spokesperson, says the change reflects concerns about various forms of criminal activity, including money laundering. In 2014, Chase became the first big bank to declare that it wouldn’t accept cash deposits from unauthorized individuals. The move was meant to prevent money laundering and fraud.
Under the Bank Secrecy Act, financial institutions must take certain steps to detect and combat money laundering, like reporting suspicious activity and transactions involving more than $10,000. But adopting certain policies–like stopping consumers from depositing cash into others’ accounts–is at the discretion of each bank, says Steve Hudak, a spokesman for the Financial Crimes Enforcement Network.
“It’s up to the bank to have policies and procedures in place to be able to file these reports and this is also based on risk,” Hudak says. There’s not a rule that says precisely what transactions banks can accept but they have to base their policies on risk.”
Cash deposit bans at Bank of America, Wells Fargo and Chase only affect personal accounts. Customers can still have others deposit cash into their business accounts.
Alternatives to cash deposits
Prohibiting customers from making certain cash deposits could be another indication of how the role of bank branches in the financial industry is changing.
“Fewer customers going into bank branches makes it easier to close bank branches, which I think is something the banking industry is increasingly trying to do, trying to move their customers toward electronic payments,” says John Breyault, vice president of public policy, telecommunications and fraud at the National Consumers League.
Still, there are some consumers who want to deposit cash in person from time to time. If you fall into that category, there are ways to bypass the new policies keeping you from putting money into someone else’s checking account.
Make an electronic transfer. You can easily transfer money into a friend or relative’s account for free through PayPal or Venmo. Zelle is also a good option. It’s a new payment system backed by 50 banks and credit unions. Funds sent through Zelle are usually available almost instantly.
Write a check. While depositing cash into your child’s account may no longer be possible, you can still deposit a personal check. Though check fraud is increasingly becoming an issue for many organizations, checks pose less of a threat to banks than cash deposits.
“The check comes with some accountability to it and a way to trace it back through the systems. Cash doesn’t have that assurance or accountability,” says Jeff Spivey, president of Security Risk Management.
If you’re concerned about fraud, consider getting a money order or a cashier’s check.
Add an owner to your account. Giving someone direct access to your bank account is perhaps one of the easiest ways to transfer money between your accounts. But like a joint credit card, joint bank account ownership can cause problems, especially if the other owner drains your account or misuses your money.
See what other banks offer. According to a recent Bankrate survey, the idea that switching banks is a hassle is one of the main reasons why consumers avoid leaving their financial institutions behind. But there are plenty of big banks that still allow customers to put cash into others’ personal accounts. Two examples are Capital One and PNC and neither bank says it has plans to change its policies.