That is my understanding of how it works. When the cheque is generated the funds are transferred from the purchaser of the cheque into an account of the bank and the cheque is drawn against that account not the purchaser’s. Unless the cheque is cancelled the purchaser cannot access those funds.
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No.
The funds were gone from our account before the bank cheque was issued. The same as withdrawing cash over the counter.
The transaction which I have done with several of the big banks, and their lesser cousins commences with a standard over the counter withdrawal. The issue of the bank cheque then proceeded as a separate behind the counter transaction.
Perhaps there is something more to how in your example the system failed?
Do all banks service bank cheques the same way, with some leaving a backdoor open?
Personal cheques are very different, and easy to scam, which is why they are now a rare item.
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I too don’t understand how this could happen.
Did you make any sort of formal complaint?
Maybe Choice would like to know the details.
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Make that three.
A bank cheque is a check drawn by the bank and not against an individuals account. At the time the bank cheque is drafted, the funds from an individuals account is immediately transferred to the bank to cover the bank cheque. The bank would earn interest on the amount of the bank cheque until the cheque is cashed/honoured and the banks funds are transferred to the cheque’s payee.
There are gounds that a bank cheque will not be honoured (or cashed), these are explained in the post from @mark_m above.
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It may be the start of that - I don’t know - but this only forces the transaction to go through the bank. This does not force you to hold any other cash in the bank and hence you could largely or wholly avoid the negative interest rates.
So let’s say that you have $5,000 in total cash assets, and that is under the mattress at home and you want to buy a TV for $1,000. You take $1,000 cash to the bank, you deposit it, you then immediately go to the TV store, and buy the TV using EFTPOS. Your end-of-day balance should be $0, so you accrue negative interest on $0 i.e. $0 penalty. [Figures assumed to apply to the future when inflation has eroded the $10,000 cash limit back to $1,000 in today’s dollars, there being no indexation of the $10,000 cash limit.]
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@person & @phb … It happened some years ago. We didn’t know this could happen until it was done to us.
We went to the bank when we got a dishonour fee in our account to ask what that was about. That is when we found out the bank cheque bounced, and had been charged for that fact. It was then a bank staff member gave the explanation I have iterated earlier. We were told that the bank accepted no responsibility for the customer withdrawing their funds and the only thing we could do was take the person who passed the bum cheque to court. We figured that if they were already such a shonk, then even if we won we wouldn’t be getting any money. So reluctantly we wrote it off as a salutary lesson not to trust bank cheques again.
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You are probably right about that. With the cost of lawyers, it would be good money after bad.
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It sounds to me like the bank procedures messed up and they cancelled the cheque, and refunded to their account, at the request of the person who drew it contrary to their own stated policy and then gave you a weak excuse for their failure. I agree that pursuing the drawer in a civil action would have been a waste of money but you may well have got some action from the bank outside of going to court if you had pursued them.
The times that I have bought a bank cheque my account balance was debited immediately. As mentioned above, banks give an explanation the limited circumstances under which they will not honour a bank cheque and insufficient funds is not one of them.
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The NAB link above suggests that in limited circumstances it could be.
In the specific case here, possibly asking the state government to intervene would have been an option - since all vehicle transfers have to be registered - and this is effectively a stolen vehicle. (I would guess that the thief on-sold the vehicle ASAP.)
Every day any number of Australians buy and sell real estate using bank cheques. I wonder whether there are any differences between how that is approached, as compared with buying and selling a car. Admittedly, you can’t disappear off to Rio with fraudulently obtained real estate. (However you can borrow against it and disappear off to Rio with the borrowed money.)
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This is currently the case in the US. If you are ‘suspected’ of holding cash related to the committing of a crime (an exact instance of that crime is not required) it can be ‘confiscated’.
Surprisingly, the main target appears to be people of colour. /s
Here is a more extensive list of examples of asset forfeiture in the US.
Of course, it is not just a US problem - I think the case of the divorced woman in WA has been mentioned here before, but I cannot find a link either here or through a DDG search. Effectively, her husband was being charged with something long after the divorce, and she was going to lose her home because of it. (And in searching for a link I learned about ‘cuckoo smurfing’.) This paper (PDF) provides some interesting examples of how the law ‘works’ in WA.
One wonders how political parties will cope with this new limit.
Can you say that with a straight face? ‘Economic efficiency’ applies in an infinite market of buyers and sellers in which each has perfect knowledge. That is not Australia’s banking system.
Of course, this whole idea totally ignores grandma who barely speaks English and keeps her life savings under the mattress - along with a lot of migrant communities that are almost entirely outside of the (formal) banking system.
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I’d suggest this is not unique to migrants. Any close community has an amount of sharing and good will between trusted members. Genuine mates rates or materials only and a BBQ with beers at the end of the day. Cash only as required?
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Some detail on the proposal to outlaw cash transactions:
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The Reserve Bank of Australia has responded to some of the conspiracies associated with the Cash Ban Bill…
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I read that ABC article this morning, and have a couple of takes from it.
Business lobbies including CPA Australia and the Australian Chamber of Commerce and Industry (ACCI) have previously said there is no legitimate evidence that the proposed law will stop black economy activity, and in fact, it may actually result in more sophisticated cash economy activity.
So another law that claims to do something without the evidentiary basis. Of course India tried removing bills from circulation to stop the black economy, but that appears to have failed.
The ABC article goes on to state:
The law establishes a criminal offence of strict liability for anyone who gives or receives a cash payment that equals or exceeds the cash payment limit of $10,000.
That is, guilty unless proven innocent (and no, you cannot present an argument of innocence once the fact is established). These kinds of laws are becoming more and more common, and destroying the lives of people they affect - whether it’s trying to recover ‘drug money’ or trying to ban large cash payments.
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What is interesting is like any crime, one needs to be caught. If the cash was being passed through members of the organised gang, unless there was a insider who dobbed in an associate, it is unlikely that the cash handover would ever be detected.
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Those fine men and women who make the related laws might want to comment 
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From the SMH article:
Mr Sukkar said the laws were a recommendation from the government’s Black Economy Taskforce as a way to stop criminal gangs using large cash purchases of cars, houses and jewellery to launder their gains from illegal activities.
“The key focus of the bill is reducing the ease with which organised crime gangs can operate throughout the country,” Mr Sukkar said.
then later:
While the Australian Tax Office wants to stamp out the “black economy” by curbing large cash payments, critics said the cost would be far greater than the benefits if Australians were banned from using more than $10,000 in cash.
It’s always been about tax, not about crime - but claiming it will reduce crime and downplaying the beneficial (to the government) tax implications is a great sell … isn’t it?
One wonders if they will just force the cash to stay out of the system more …
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It is just one more nail in the coffin regarding public perceptions about political decision-making in this country. It would seem that the law enforcement and national security agencies are actually running this country. We should disband the parliament and save ourselves the salary bill and save ourselves from their hot air.
Even Government and Opposition politicians who have legitimate concerns about the bill are still prepared to wave it through.
Not sure precisely what you mean but what is the point of being a criminal and raking in the dollars if you can never spend the proceeds? It is certainly true that you will be completely unaffected by this legislation if you deal in cash but never spend the proceeds. You can stockpile as many millions of dollars as you want.
My expectation is that actual criminals will just find more sophisticated ways of working around the legislation e.g. better ways to launder cash. In the meantime non-criminals are at risk of getting a criminal record and getting jail time.
Every cynic and his dog expects that the $10,000 limit will be lowered in the foreseeable future.
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I didn’t word that well 
- I mean’t money to stay out of the banking system, ie more of a cash economy or some other medium, which you expanded on … agreed.
I’m a dog-less cynic, but I’m not sure one even has to be a cynic to expect the limit will be lowered - 10k$ just gets the law through the starting gate … but the limit does appear as 10k$ in the Act …
Progress of this through parliament:
Some more information from our friends at Treasury, including all the publishable submissions, some redacted … (not sure what happened to the separation of church and state? were they ever? 
)
There seems to be some confusion (myself included) about the extent to which this Act applies. From the second reading in Parliament:
Importantly, the cash payment limit does not apply to private transactions (excluding real property transactions)—for example, the sale of a private car to another person.
All Australians will continue to be able to deposit and withdraw cash in excess of $10,000 into and from their accounts, and to store more than $10,000 of their money outside a bank.
I don’t see where buying or selling a car/etc for more than 10k$ is excluded from the reach of this legislation - the act is fairly short, but maybe I missed it?
I’d imagine depositing and withdrawing large amounts still attracts interest as a reportable transaction, so no surprises there.
Anyone interested in the Black Economy Task Force can read the report here:
… and lets not forget the primary objective (quoting the Act):
The principal object of this Act is to protect the integrity of the Commonwealth taxation system, by preventing the use of cash in order to avoid scrutiny by the Commissioner of Taxation seeking to enforce the taxation law.
Once we have succeeded in turning the black economy white, perhaps we can look at getting the big end of town paying appropriate tax as well …
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