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Home >> My Bank Said ...
Bank Questions Source of Funds: Legal?
My father passed away January 2009; about one month later, my mother mortgaged their property for $10,000.00. My mother loaned my brother half of that with the agreement that he would split the cost of the payments. He had only made half a payment twice during this time (almost eighteen months). My mother, who is on a fixed income and legally blind, had to make the payments regardless. My brother won a lump sum of money at a casino, so he picked my mom up and took her to the bank to pay $3500 on the principle of the loan. Of course, my mother was very appreciative of this. The next time my mother went to the bank, the VP questioned her as to whether the money came from some type of insurance. She said no and offered no more information about the payment. Was the bank out of line for questioning her about the payment since the amount was not a "red flag" number? I feel they should have questioned her at the time the payment was made, if at all. Please let me know if this is usual policy for an amount under $10,000, and if the timing of the question was appropriate.
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 Banks are required to know their customers, and have to understand the transactions that are happening, especially if they seem unusual. It isn't uncommon, and could have been deliberate or just chit-chat.
Sometimes this also opens opportunities. Say your mother says yes, that it was an insurance proceeds payment and she has another $100,000 to invest. The bank may offer some financial planning or high-rate deposit account where the funds could be placed. If they didn't ask, they wouldn't know. Also, if the bank has the mortgage and thought there may have been a claim on the home, say for a new roof, as lienholder they would want to know.
Published on BankingQuestions.com 11/03/10
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