Bank Deposit not "YOUR" money

R

Robert Moore

Registered User
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Hi folks, apologies if this has been addressed elsewhere.

I am increasingly becoming aware that - in other territories at least - once you deposit money in a financial institution, it ceases to become "your" money and you become a creditor of said institution. Hence the anecdotal evidence of questions to depositors who want to make sizeable withdrawals of "their" money. As a creditor, I would imagine you would stand pretty much in line behind Revenue, liquidators et al should a bank get into difficulties.

Is anyone aware if this is the situation in Ireland also?
 
Are you aware of this scheme?

Deposit Guarantee Scheme | Central Bank of Ireland

The Deposit Guarantee Scheme (DGS) is part of the Central Bank’s strategy to ensure that the best interests of consumers of financial services are protected. The DGS is administered by the Central Bank and is funded by the credit institutions covered by the scheme.
www.centralbank.ie

Deposit Guarantee Scheme Ireland

The Deposit Guarantee Scheme (DGS) protects depositors in the event of a bank,building society or credit union authorised by the Central Bank of Ireland being unable to repay deposits
www.depositguarantee.ie
 
Robert Moore said:
the anecdotal evidence of questions to depositors who want to make sizeable withdrawals of "their" money.
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The two issues are not related.

Of course it is your money. But if the bank becomes insolvent, they can't pay it back to you and the deposit guarantee scheme kicks in.

I am not aware of the "anecdotal evidence" that banks are asking people about their withdrawals other than asking vulnerable customers where they suspect that they might be the subject of a scam or a fraud.

In fact, banks have been criticised for not asking people why they were withdrawing money when the elderly customer subsequently handed it to fraudsters.

Brendan
 
Robert Moore said:
Hence the anecdotal evidence of questions to depositors who want to make sizeable withdrawals of "their" money.
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There is the concept of "destination of funds" under AML but it should only really be relevant for very large, complex transactions and not typical withdrawals.
 
Yes.
However, like the USA FDIC, this would be a limited pot. The FDIC contains barely enough to cover less than 2% of all deposits so unless your bank is one of the first to get into difficulty, tough luck. I would assume something similar here.
But the Deposit Guarantee Scheme was not the subject of my question
 
Brendan Burgess said:
I am not aware of the "anecdotal evidence" that banks are asking people about their withdrawals other than asking vulnerable customers where they suspect that they might be the subject of a scam or a fraud.
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They may also ask about withdrawals under anti money laundering (AML) regulations. In fact, they are obliged to in certain cases.
 
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That's where we will differ, Brendan, because I do know of questions being raised when withdrawal made.
Akin to asking for Solpadine in a pharmacy here
 
Robert Moore said:
That's where we will differ, Brendan, because I do know of questions being raised when withdrawal made.
Akin to asking for Solpadine in a pharmacy here
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Under AML regulations they are entitled and possibly obliged to ask questions. Especially about the "sizeable withdrawals" that you originally mentioned.
 
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ClubMan said:
No, but it's still relevant to this point:

A customer would not be standing in that line for deposits covered by the DGS.
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That's fine. You have more faith in the size of the entire DGS funding than I do. And I would be a very modest depositor, well under the 100k criterion. Not like some of the Silicon Valley guys.

However, nobody has answered the fundamental question yet about when you deposit money in an Irish bank. Do you become a creditor?
 
ClubMan said:
Under AML regulations they are entitled and possibly obliged to ask questions. Especially about the "sizeable withdrawals" that you originally mentioned.
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This really depends. The threshold & risk factors for asking for destination of funds is significantly higher than source of funds.
 
For safely reasons I'm assuming they now have limited cash in branches and prefer people to transfer money electronically. The only restrictions on electronic transfer might be a 20k per day limit, but no questions. Or if you want to take out a bank draft to buy a car or whatever - also no questioning. To the bank balance sheet that's essentially the same as handing you out physical cash.

While I currently have no concern for deposits in the main Irish banks I saw it pointed it somewhere that the problem with the DSG isn't so much that it won't be paid out quickly. The problem is in the days,weeks, months leading up to it being called on that the bank involved may try to introduce restrictions on withdrawals. So the DSG will probably work well - but it won't make it a stress free experience.

If you've more than 100k in a bank - you should not assume that at the first hint of trouble you can get that down to 100k by a bank transfer. The first hint of trouble could be them limiting withdrawals.
 
24601 said:
This really depends. The threshold & risk factors for asking for destination of funds is significantly higher than source of funds.
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AML legislation deals with "transactions" and does not distinguish between lodgements and withdrawals.

Criminal Justice (Money Laundering and Terrorist Financing) Act 2010

The electronic Irish Statute Book (eISB) comprises the Acts of the Oireachtas (Parliament), Statutory Instruments, Legislation Directory, Constitution and a limited number of pre-1922 Acts.
www.irishstatutebook.ie
 
ClubMan said:
AML legislation deals with "transactions" and does not distinguish between lodgements and withdrawals.
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In addition there is a layer of opertional guidelines from the EBA and the Central Bank. And banks themeselves need to take a risk-based approach.

Perfectly possible to have different thresholds for both.
 
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