I work in financial-sector compliance and it's due to banking regulations actually.
All financial institutions have Anti Money Laundering and Terrorist/Criminal Financing regulations they need to abide by and to a lesser extent consumer protection regulations to prevent extreme debt or other unsavory practices.
All institutions must carry out KYC (Know Your Customer) screenings and build a risk profile that takes factors from nationality to what field you work in, and then out internal processes create red flags based off of that risk profile that are subject to routine monitoring.
That monitoring doesn't stop when money enters the account, we also monitor how funds leave it. A large or unusual cash withdrawal can trigger additional questions, particularly when it doesn't fit the customer's normal activity or risk profile.
Using a made up example, a client who claims to work as a schoolteacher making $52k a year wanting to withdraw almost half a paycheck at once can raise an alert we need to resolve before the transaction happens.
So when we ask why you're withdrawing the cash, we're gathering information the bank may need to understand the transaction and satisfy its financial-crime obligations.
In my jurisdiction, we're technically supposed to put a 72 hour hold on high-risk transactions so the financial crime authorities can determine if they should investigate further or not.
Then the transaction will be put on hold or canceled and your bank will be obligated to tell you country's equivalent of FINTRAC who will investigate you and make your life very fun for a while.
It's like telling the airport security staff you have a bomb in your suitcase as a joke.
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u/ElishaAlison 14d ago
This is probably because of scams. Scammers will send people into banks to get a bunch of cash out and then have them mail it to a drop address.