Chase bans some cash deposits to fight money laundering

By
  • Karl Kuntz | Dispatch file photo
    The bank has a branch in the Chase Tower Downtown.

April 4, 2014

JPMorgan Chase & Co. has ended its practice of allowing people to make cash deposits into the accounts of other customers.

Why the change?

“The policy change combats misuse of accounts, including money laundering,” spokesman Jeff Lyttle said.

Lyttle said no one particular event led to the move, which took effect on March 3, but it was part of a comprehensive review of bank policies aimed at keeping customers’ accounts safe.

Chase’s rule makes sense at a time when regulators are demanding that banks know more about their customers and how they’re using their accounts, said Greg McBride, senior financial analyst with Bankrate.com.

“It’s not the smiling face they don’t trust,” McBride said. “It’s the fistful of cash they don’t trust.”

He said he wouldn’t be surprised to see other banks, especially the big banks, implement similar policies. “This is the world we live in, where financial institutions take protections to make sure they can validate where money is going into the account and take steps to protect against money laundering,” he said.

Money laundering involves taking ill-gotten gains — proceeds from illegal activities — and turning them into financial instruments such as money orders and cashier’s checks that can’t be traced to the source of the cash.

The change in policy might mean that parents, for example, who are accustomed to putting cash in their college student’s account at Chase so the child can pay rent will need to come up with a new way to do the same thing.

Lyttle said the bank will work with customers on alternatives that still will be free.

One alternative is to add the name of the depositor — in the example, one of the parents — to the account of the individual benefiting. Another would be to use Chase’s QuickPay, which allows customers to send money to nearly anyone by using their email address or cellphone number, as long as both parties have a U.S. bank account and one of them has a Chase checking account.

“There are lots of cost-free alternatives to accomplish what they want to accomplish,” Lyttle said.

Pittsburgh-based PNC said it, too, has restrictions in place on deposits made by third parties.

“I can tell you that we do place restrictions on cash deposits made by third parties, and we have reporting controls that allow us to monitor these types of transactions effectively,” spokeswoman Marcey Zwiebel said. “Because we typically don’t provide details about our procedures, I won’t be able to be more specific about our process or in describing the restrictions.”

Not all banks are making changes, but they won’t say what other measures they have taken to protect against money laundering.

Huntington Bancshares said it allows deposits of cash and checks by third parties as long as the person making the deposit has a deposit slip for the items.

At Minneapolis-based U.S. Bank, “we’re not limiting cash deposits and, at this point, have no plans to do so,” spokesman Pat Swanson said.

“We have long-standing policies and procedures in place to effectively protect against money laundering.”

mawilliams@dispatch.com