Is there a specific federal or state regulation that requires banks to ask clients what they plan on doing with all the cash they just received in either a withdrawal from their account or by cashing a check that is drawn on us?
In some cases, yes. This is particularly true when the amounts are large or the transactions are uncommon for the account. Banking regulators require this and it can sometimes avoid a loss for the customer as well as the bank.
More than once a customer has stated that he won a lottery and needs to pay taxes before he can collect the winnings, or that he has a work at home job, and he transfers money for the business in and out of their account. These are both common scams. Each of these sends up red flags and are more often than not a scam on the customer.
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In some cases, yes. This is particularly true when the amounts are large or the transactions are uncommon for the account. Banking regulators require this and it can sometimes avoid a loss for the customer as well as the bank. 