07/08/2014 06:45 pm ET Updated Sep 07, 2014

Chase Stops Cash Deposits Into Accounts That Aren't Your Own (and It Still Doesn't Make Sense)


"When making a cash deposit, please be ready to show a valid ID and deposit only into accounts that list your name," states a letter received recently by a JPMorgan Chase bank customer.

A new policy move by Chase -- America's largest bank by assets -- will change the way customers can make cash deposits. Not only will Chase customers have to show their ID, but they will also have to be a signer on the account in which they hope to make a deposit.

"We are making this policy change for cash deposits only to combat misuse of accounts, including money laundering," said Suzanne Ryan, a spokeswoman for Chase.

The new policy, which went into effect March 3, only impacts customers who want to make cash deposits into consumer accounts. Customers wishing to make cash deposits into business banking accounts can still get by with providing just an ID.

Does the policy make sense? Will it really safeguard more accounts? For everyday Americans, the policy seems to be nothing more than a huge inconvenience. What should a mother do if she wants to deposit money into her child's account while he or she studies abroad? What about a relative who wants to help out a family member located halfway across the country? What if I wanted to deposit money into my brother's account for his birthday? Do these actions constitute as "misuse of accounts?" I think not.

Customers who are unhappy with the policy change can log a complaint with the bank or use alternative methods to deposit money into an account.

"Customers can deposit personal checks, cashier's checks and money orders. They can use Chase QuickPay online. They can add an authorized user to their account," said Ryan.

Each of the suggested alternatives is limiting and inconvenient in some way. Critics say personal checks are becoming obsolete and funds aren't always immediately available upon deposit. Cashier's checks are only available at banks or credit unions and some institutions might issue these types of checks just for customers. Money orders cost money and typically have a $1,000 limit. Chase's QuickPay service allows customers to use a mobile app (or use the service online) to transfer money from their account into another one, but not everyone is technically proficient. And with data breaches routinely making the news, some customers might not want to rely on mobile banking to make important transactions.

How is it I can't use my good, hard-earned cash to deposit in someone else's legitimate account? Look, I'm all for stopping money laundering. But this new policy is disruptive for millions of families across the U.S. Not only is it disruptive -- but it's also silly.

Without getting too deep into the details, money laundering in its simplest form is the act of making money that comes from one source seem like it comes from another. Crooks attempt to disguise the illegal means through which the money was obtained, so that it appears to have been obtained from a legal source.

To combat this crime, Congress passed the Bank Secrecy Act in 1970, one of the first laws to fight money laundering in the U.S. One of the rules established by the act was requiring financial institutions to report cash transactions of more than $10,000 made through or to the bank. That threshold was established because anything less would be a waste of time to report. No one launders, say, $100. A criminal would have to make 100 trips to the bank to reach the $10,000 level. And even if it did happen, banks are supposed to watch out for and report any suspicious patterns or activities. So a criminal trying to launder money should conceivably be caught due to their suspicious behaviors. At my own, non-Chase bank, I can't make a purchase over $500 without getting an activity alert! Plus, if Chase is so worried about money laundering occurring at such a miniscule level, shouldn't they do something about being able to make deposits at an ATM where an ID isn't required?

You'll have to excuse me if I sound a little dubious about Chase's reasoning behind the policy change. Chase, of course, is under a microscope. It is one of several big banks that's being targeted by U.S. regulators for lax money laundering controls. And the bank has agreed to pay $1.7 billion -- the largest bank forfeiture in history -- to victims of Bernard Madoff's Ponzi scheme. Madoff kept the bank account at the center of the fraud at Chase. The bank will be criminally charged with two violations of the Bank Secrecy Act.

Despite customer uproar, Ryan says Chase does not currently plan to change the policy. If you're upset about Chase's new deposit policy, check out our bank reviews to see how others feel about our nation's banks.

@DarylParanada is a writer for MyBankTracker.