Introduction
A reader told me he was just shut down from his Charles Schwab checking account. This may be the first I’ve heard of a Schwab shutdown, so I asked him if I could write about it so we can all learn what the boundaries are for these banks. The reason for shutdown was very easy – the reader told me he was receiving 6 figures of incoming wire transfers into the checking account for the past 8 months or so. My gut tells me this was just too risky for Schwab’s tastes.
Lessons Learned
I think if you want to be receiving that high volume of incoming wires, I would suggest you open up a business checking account so you can easily explain the large volume. The reader could have also spread the love among other banks (no ML issues with that since this isn’t cash.) On the bright side, at least it was Schwab and not Chase. It looks like they are also going to close his brokerage account, but not his retirement account. In hindsight, he should have just used a CU that he has no other relationship with to not even have to worry about the whole brokerage/retirement account issue.
Was this guy moving out the wired money quickly after receiving it? That’s a huge red flag for any bank.
No, paying off his cc.
Isn’t that the same thing? ACH or pay a CC bill is still moving the funds out.
Where were the wires coming from? I’ve never sent or received a wire, and I’d assume most people don’t regularly receive wires either.
I can add another DP here: my Schwab checking was shutdown back in May 2016. I opened it up in November 2015 and ramped up too quickly with the mobile deposits (did about 40-50k the first 3 weeks the account was open). I got a call from an analyst at Schwhab asking about the activity and I explained it thoroughly. She was tentative at first but sounded like it would be okay. I did a bit lower volume but still probably 25k/month in mobile deposits and that lasted for about another 3 months until one day I got an email saying my mobile deposit ability had been suspended. They did leave the account open, however. I pretty much stopped using the account, with the exception of a small monthly ACH push into it to show some activity (I still wanted to keep it for the great ATM reimbursements). Then another 2 1/2 months later in May 2016 I found the debit card didn’t work at an ATM. Called up and transferred to loss prevention to find out it had been closed due to a “business decision” with no further explanation.
Fast forward to fall of 2016 and my wife applied for a Schwab checking for ATM reimbursement purposes. Approved (with an Equifax pull), everything seemed fine, debit card arrived in mail quickly. Then maybe a week after debit card arrived she gets the exact same letter as shown above (except it was closed effective immediately), also in extremely urgent UPS mailer. SO, seems as though Schwab will extend to family members when it comes to shutdowns.
Now I’m wondering if I could get the Schwab Platinum or if that would be approved and soon after cancelled….
Sounds like your household is perma-banned or banned for a looooong time.
Schwab wouldn’t even let me open a checking/brokerage and then wouldn’t tell me why. Clean Chex just a ton of inquiries. Sad!
I would be surprised if large wire transfers on their own is the reason. I’ve had 7 figures wired over to Schwab, fidelity, you name it. and plenty of six figure wires as well. Never a problem. Usually because I need to buy some foreign equity or something that is for whatever reason hard to buy at other brokerages. Maybe the reader doesn’t keep large balances in his Schwab accounts?
I used to use my Schwab account as a hub account for all of the bank bonuses until around Feb of this year when I got a random hard pull on Experian that originated from the fraud/loss department. Spoke to them and they couldn’t figure it out. I always had balances over $20k in that account because I also used it to pay CC bills for my reselling business. I opened an Alliant account that I use for my hub account going forward, but I always keep large amounts in both savings and checking. They pay 1.1% so no big deal.
Sooooo, I don’t hope for anything other than a yes/no answer, but is there actually some legit play in this space that involves wire transfers?
Colombian drug lords getting cash at a foreign ATM for freeeeeeee?
I had to wire 6 figures to my mother in law when she was buying a house once. You just have to go to the bank ahead of time to to let them know where the money came from and what it is for before such a high sum hits your account so they are prepared.
Right, but that is a normal use for wires! As Joe suggests above … there is probably more to this story.
It’s part of a play that I can not write about since I didn’t come up with it. Plus it’s not dead yet either. If you think it’s some kind of Western Union, stop there; you’re wasting your time.
Is this the one where you need a business acct?