Is It Illegal to Keep Cash in a Safe Deposit Box?
While not illegal, storing cash in a safe deposit box involves crucial distinctions between law, bank policy, and significant financial risk.
No federal law explicitly prohibits storing currency in a safe deposit box. The complexities arise not from the act of storage itself, but from the rules established by financial institutions and the risks individuals assume when choosing to keep physical cash outside of an insured deposit account.
The Legality of Storing Cash
The government does not prohibit you from storing lawfully obtained cash. The primary legal concern for federal authorities is the source of the funds. If cash is derived from illicit activities like tax evasion, storing it in a safe deposit box can be considered money laundering, which can lead to seizure and criminal prosecution.
A legal risk associated with storing large amounts of cash is civil asset forfeiture. This process allows the government to seize cash that it suspects is connected to criminal activity. The government’s burden of proof for seizure is lower than in a criminal case, and a conviction of the owner is not required.
In some cases, law enforcement has seized the entire contents of safe deposit boxes based on a warrant against the company itself for alleged money laundering. The individual box owners, even if not suspected of a crime, were then required to prove their property was legally acquired to get it back. This process can be lengthy and expensive.
Bank Policies and Contractual Agreements
While not against the law, storing cash in a safe deposit box may violate the contractual agreement with your bank. Many financial institutions explicitly prohibit storing cash in their rental agreements. This is a private rule established by the bank to mitigate its liability.
Violating this clause is a breach of contract, not a criminal offense. The most common consequence is the bank’s right to terminate your lease agreement. They may ask you to remove the contents and close the box.
Anyone renting a safe deposit box should carefully read the rental agreement. This document outlines all rules and restrictions, and by signing it, you agree to its terms.
Practical Risks and Lack of Protections
A primary risk of storing cash in a safe deposit box is the lack of insurance. The Federal Deposit Insurance Corporation (FDIC) insures deposits in checking and savings accounts up to $250,000. This protection does not extend to the contents of a safe deposit box, so if a bank is destroyed by a fire or flood, the loss would be entirely your own.
Access to your cash is limited to the bank’s operating hours, which can be a problem in an emergency. Upon the death of the box owner, heirs may face legal and administrative hurdles to gain access. State laws often require a court order to open the box, delaying access to the contents.
Cash stored in a box loses purchasing power over time due to inflation. Money held in a savings or investment account can earn interest, which helps to offset the effects of inflation. The cash in a safe deposit box remains static, so its value will decrease.