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As branches close, some banks are saying they don't want people's money

As branches close, some banks are saying they don't want people's money
Wells Fargo is the latest major bank to say it won’t accept cash deposits from anyone but account holders. (Getty Images)

Edward Manley, 91, asked his son to deposit $38.50 in coins into his Wells Fargo account. Wells refused to accept them.

Manley and his son are now suspected money launderers.

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Welcome to banking in the 21st century, with a growing number of financial institutions saying they won’t accept cash deposits from anyone but account holders. Wells Fargo is the latest to announce such a policy.

Bank of America has been limiting cash deposits since the beginning of the year. Chase has been doing it since 2014.

“We take the privacy and security of our customers’ accounts very seriously, and to better protect those accounts, we have put in place a policy that will prevent non-account owners from making cash deposits into consumer accounts,” said Paul Gomez, a Wells spokesman.

“We made this change in an effort to reduce criminal activity, including money laundering, and to ensure the privacy and security of our customers’ accounts,” he said.

Checks can still be deposited by non-account holders on someone else’s behalf. But actual currency? Nope.

“It helps us to reduce risk from cash transactions involving persons who aren’t authorized on an account,” explained Betty Riess, a BofA spokeswoman.

To be sure, banks have a responsibility to fight crime. And I doubt anyone would be troubled by a teller raising his or her eyebrows at a briefcase full of $100 bills.

But Manley’s experience shows that even well-intended policies can look foolish in the sunlight of real life.

The Temple City resident doesn’t get around as well as he used to. Manley has knee problems and is hard of hearing. His 77-year-old wife is more mobile but isn’t always free to run errands.

So the couple recently asked their 34-year-old son to help out with a bank deposit at the local Wells Fargo branch. They had a stock-dividend check for $85.71 and several rolls of coins. Like many seniors, the Manleys for years have made a practice of depositing spare change in the bank once it accumulates to deposit-worthy levels.

In this case, once again, we’re talking $38.50, nicely rolled.

Manley told me there’s little reason to think his son was trying to pull a fiscal fast one. “He had a deposit slip that I filled out in advance,” he said. “He’s got the same last name. He’s got the same address.”

Even so, the bank teller accepted the dividend check but nixed the rolls of coins. Manley said the teller suggested converting the coins into a cashier’s check or money order.

That might sound like a racket, considering Wells charges $5 for money orders and $10 for cashier’s checks. But Wells’ Gomez told me the bank will only sell money orders and cashier’s checks to customers, so Manley’s son couldn’t have bought one there.

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However, this highlights a gaping loophole in banks’ crime-fighting efforts. A money order can be easily obtained at most post offices, Walmarts, supermarkets, Western Union branches or those ubiquitous, no-questions-asked check-cashing stores dotting the urban landscape.

If the banks’ goal is to prevent money laundering, how does it fix things if a crook can just get around the no-cash rule by converting that briefcase full of $100 bills into a money order and then depositing the full amount into any account he or she pleases?

“We’re trying to figure that out still,” Gomez admitted.

Moreover, in most cases these cash bans only apply to personal accounts. Non-account holders can still make cash deposits into business accounts.

The Bank Secrecy Act requires institutions to report any suspicious activity and any transaction involving more than $10,000. Policies for deposits involving smaller amounts are up to each bank.

Manley said he called the bank branch after his son returned home with the rolls of coins.

“They were adamant,” Manley recalled. “They wouldn’t take our money.”

Like me, Manley recognizes a need to be vigilant for money laundering and other financial crimes.

“But you can see situations where that’s not the case,” he said. “What if a person is disabled and has some cash they want to deposit, and wants a friend or relative to do it? It’s weird that you couldn’t do that.”

One way to deal with the problem is to add authorized users to your account, but I don’t recommend this. As the primary account holder, you’re on the hook for anything an authorized user does.

In any case, I suspect there’s more to this than just a heightened concern about money laundering. I’m guessing this is part of an ongoing trend among big banks to close branches and automate transactions as much as possible.

Getting cash — and especially coins — out of the equation makes it much easier to steer customers to ATMs or online banking, which eliminate costly humans from the proceedings.

Thousands of bank branches have been shuttered over the last decade. The total number of branches nationwide fell below 90,000 last year for the first time since 2005, according to the Federal Deposit Insurance Corp.

Wells Fargo closed more than 200 branches last year. The company said in January it expects to close another 800 over the next couple of years.

Bank of America said this week that deposits made via mobile devices are outpacing those at branches for the first time. The company now has 28% fewer branches than it did a decade ago.

It seems like a joke that banks wouldn’t want people’s money, which is why the one-size-fits-all rules at Wells and elsewhere clearly need tweaking.

If you don’t want to deal with the annoyance of customers (or customers’ friends and family) bringing in rolls of coins, just say so. If, on the other hand, you’re sincerely guided by a desire to reduce money laundering, then adopt a more reasonable policy of dealing with transactions on a case-by-case basis.

My hunch is that a drug cartel isn’t going to launder millions of dollars in illicit proceeds by depositing three rolls of coins at a time. I’ll give bank tellers the benefit of the doubt and assume most can figure out which transactions are legit and which ones require greater scrutiny.

Also, considering all the other things on Wells Fargo’s plate at the moment — opening unauthorized accounts, selling unneeded insurance, etc. — do they really want to be known as a bank that won’t take a few rolls of coins?

“From Day One, we always came through for our customers,” the company declared in a recent ad campaign. “Today, we're renewing our commitment to you — and working to earn back your trust.”

Really?

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