Notice of Withdrawal
A written statement that the bank requires its customers to submit as a Bank Member. A depositor gives a notice to a bank expressing his intent to withdraw money from his bank account; the statement usually becomes effective at the end of a specified withdrawal period.
How a Notice of Withdrawal Works
A notice of withdrawal usually applies to negotiable orders of withdrawal accounts (NOWS) and time deposits. However, banks may demand notice of withdrawal for savings accounts. A withdrawal notice typically exists in the nature the bank may prescribe; this can change from time to time. Unless you cancel it, a withdrawal notice generally becomes effective at the lapse of the specified period.
A notice of withdrawal usually applies to interest-earning funds; however, they are beneficial for products like time deposits that renew at maturity. Banks will commonly require a notice of withdrawal if a customer wishes to make large amounts of cash withdrawals rather than process-specific financial products. As a time-deposit account holder, you risk incurring a penalty if you want to withdraw funds from your account before it reaches maturity; you can forestall this by providing early notice of withdrawal.
Different banks have different requirements regarding products that would need a notice of withdrawal and the number of mandatory days required to make the notice. However, you can learn about this and other related legal details when you open a new account. Many banks need customers to write the notice seven days before making the withdrawal, but the institutions usually waive this rule when small cash withdrawals from savings accounts or NOW deposits are involved.
Real-World Example of Notice of Withdrawal
As noted, many banks require customers to give more than seven days’ notice when the withdrawal amount is substantial. Interestingly, in 2012, a seemingly ordinary customer of the Dollar Bank (an institution which serves the entire Cleveland and Pittsburg areas) strode to the bank building and requested to withdraw a whopping $600,000 in cash! Unfortunately, the bank could not grant or process the relatively large withdrawal request without a notice of withdrawal. Consequently, the bank asked the customer to allow it a period exceeding seven weeks before processing the tremendous amount of cash and arranging a withdrawal.
Why did the bank ask for such a long time to process the request? The lengthy period allowed the Dollar Bank enough time to investigate any fraud element in the customer’s request. Moreover, the bank had the opportunity to offer the customer a prudent and secure means of collecting his money; it could put in place measures to protect everyone, including the bank itself, the staff, and the customer, on the day of withdrawal. Ultimately, there was time to brief the tellers on precisely how to dispense the cash before several security officers escorted the customer and his money to the car.
Notice of Withdrawal vs. Withdrawal
A notice of withdrawal is distinguishable from the act of “withdrawal” (in criminal law). The latter implies the act of renouncing a conspiracy to commit a crime well before the crime is actualized or committed. It implies an act of repudiation. If this withdrawal precedes the commission of any overt criminal act, the law may spare the subject of the withdrawal from suffering a legal backlash.