IB ACH Deposit initiated by Bank

[GoogTgt]

I am looking into this option to avoid the 4 day holding period. This goes via an account IB has at Citi Bank. Most banks need to verify the receiving ACH account by doing micro deposits. So can I use this option to verify the IB account from my bank (Can I see the micro deposits in my IB account?)? I would give the citi routing number 021000089 and for account number,IB's account number followed by my account number.

What is the holding period on ACH initiated by my bank?

 

[rmorse]

You should check with your bank and IB. Some institutions have limits on the size and frequency of ACHs.

 

[Sig]

I am looking into this option to avoid the 4 day holding period. This goes via an account IB has at Citi Bank. Most banks need to verify the receiving ACH account by doing micro deposits. So can I use this option to verify the IB account from my bank (Can I see the micro deposits in my IB account?)? I would give the citi routing number 021000089 and for account number,IB's account number followed by my account number.

What is the holding period on ACH initiated by my bank?

Also keep in mind that IB doesn't allow you to withdraw the money you ACH in for 40 days, regardless of if they initiate the ACH or your bank does. You can't even move it from one of your IB accounts to another in that 40 day period. You can make equal and opposite transactions in something like weekly cash settled options between your IB account and another account (even another IB account) and within a couple weeks ensure you "lose" all the money you ACH deposited in your original account and withdraw the money you "made" from the other account, if you're desperate enough to pay the commissions and spread to get your money back, so as usual it's a compliance measure that makes life difficult for honest customers while doing absolutely nothing to stop someone dishonest who was setting out to cheat them out of the ACH.

 

[IB-AN]

Also keep in mind that IB doesn't allow you to withdraw the money you ACH in for 40 days, regardless of if they initiate the ACH or your bank does. You can't even move it from one of your IB accounts to another in that 40 day period. You can make equal and opposite transactions in something like weekly cash settled options between your IB account and another account (even another IB account) and within a couple weeks ensure you "lose" all the money you ACH deposited in your original account and withdraw the money you "made" from the other account, if you're desperate enough to pay the commissions and spread to get your money back, so as usual it's a compliance measure that makes life difficult for honest customers while doing absolutely nothing to stop someone dishonest who was setting out to cheat them out of the ACH.

The statement that "...IB doesn't allow you to withdraw the money you ACH in for 40 days, regardless of if they initiate the ACH or your bank does." is inaccurate.

There are two forms of ACH deposits offered by IB, one in which the client instructs their bank to "push" the funds to IB and another where the client instructs IB to "pull" the funds from their bank. If you're depositing funds via the ACH "push" method, they are free to withdraw once credited to your account for trading purposes (4 business days after receipt). If you are depositing funds via the "pull" method, they are free to withdraw once credited to your account for trading purposes (again 4 business days) but only to the bank account from which the deposit originated. You can move them elsewhere after 44 business days.

The reason for the more restrictive withdraw period on ACH deposits initiated via the "pull" method is that banks maintain the right to claw back such funds should they later determine fraud or error. Restricting the withdrawal back to the originating bank who then controls the subsequent movement of funds effectively eliminates this risk. It's a prudent restriction given the volume of fraud taking place via the ACH network as a result of identity theft.

 

[Sig]

The statement that "...IB doesn't allow you to withdraw the money you ACH in for 40 days, regardless of if they initiate the ACH or your bank does." is inaccurate.

There are two forms of ACH deposits offered by IB, one in which the client instructs their bank to "push" the funds to IB and another where the client instructs IB to "pull" the funds from their bank. If you're depositing funds via the ACH "push" method, they are free to withdraw once credited to your account for trading purposes (4 business days after receipt). If you are depositing funds via the "pull" method, they are free to withdraw once credited to your account for trading purposes (again 4 business days) but only to the bank account from which the deposit originated. You can move them elsewhere after 44 business days.

The reason for the more restrictive withdraw period on ACH deposits initiated via the "pull" method is that banks maintain the right to claw back such funds should they later determine fraud or error. Restricting the withdrawal back to the originating bank who then controls the subsequent movement of funds effectively eliminates this risk. It's a prudent restriction given the volume of fraud taking place via the ACH network as a result of identity theft.

Sorry, could have sworn my funds were locked both ways when I was a customer 2 years ago. Of course as I described, your "prudent restriction" is absolutely worthless in practice, isn't it?

 

[IB-AN]

Sorry, could have sworn my funds were locked both ways when I was a customer 2 years ago. Of course as I described, your "prudent restriction" is absolutely worthless in practice, isn't it?

The policy has been in place for more than 2 years.

As to it being worthless, it depends on one's viewpoint. IB finds it a very worthwhile practice to minimize exposure to fraud. In the case of current clients, the majority of whom transfer funds via ACH using a single bank account, the impact is minimal as there's nothing preventing them from transferring the funds back to that account during that 44 day period. As for those who are not an IB client, then yes, it's worthless.

 

[Sig]

The policy has been in place for more than 2 years.

As to it being worthless, it depends on one's viewpoint. IB finds it a very worthwhile practice to minimize exposure to fraud. In the case of current clients, the majority of whom transfer funds via ACH using a single bank account, the impact is minimal as there's nothing preventing them from transferring the funds back to that account during that 44 day period. As for those who are not an IB client, then yes, it's worthless.

I'll spell this out for you, it's worthless in it's stated goal of preventing exposure to fraud because it can be easily circumvented by anyone with half a brain and criminal intent. Again, thank you for demonstrating the typical IB representative attitude of willfully "misunderstanding" a point that is inconvenient for you to address. You're doing a great job letting potential customers know what they're in for.

 

[IB-AN]

I'll spell this out for you, it's worthless in it's stated goal of preventing exposure to fraud because it can be easily circumvented by anyone with half a brain and criminal intent. Again, thank you for demonstrating the typical IB representative attitude of willfully "misunderstanding" a point that is inconvenient for you to address. You're doing a great job letting potential customers know what they're in for.

What's worthless is the commentary of one who believes that IB's fraud prevention with respect to ACH transactions rests on this single policy or that they are even aware of the framework of controls in place that we choose not to disclose for obvious reasons.

 

[Sig]

What's worthless is the commentary of one who believes that IB's fraud prevention with respect to ACH transactions rests on this single policy or that they are even aware of the framework of controls in place that we choose not to disclose for obvious reasons.

Well I can tell you that I inadvertently moved the entire contents of my account out of my IB account and into another brokerage account within 2 days of ACHing the money in trading two closely related pairs. None of your "framework of controls" did anything about that, and I was able to wire that money out of the other account the next business day, a total of 7 days from initiating the ACH. In other words it's trivial to circumvent this policy and you have nothing in place to prevent it, secret or otherwise. Most company's would take input like this seriously and correct the obvious deficiency, but if you want to ignore that with a condescending attitude thrown it, then more power to you. Again, thanks for exposing the entire Interactive Brokers customer service experience to everyone on a public forum without them having to actually live through it. I've accomplished exactly what I set out to do!

 

[GoogTgt]

The statement that "...IB doesn't allow you to withdraw the money you ACH in for 40 days, regardless of if they initiate the ACH or your bank does." is inaccurate.

There are two forms of ACH deposits offered by IB, one in which the client instructs their bank to "push" the funds to IB and another where the client instructs IB to "pull" the funds from their bank. If you're depositing funds via the ACH "push" method, they are free to withdraw once credited to your account for trading purposes (4 business days after receipt). If you are depositing funds via the "pull" method, they are free to withdraw once credited to your account for trading purposes (again 4 business days) but only to the bank account from which the deposit originated. You can move them elsewhere after 44 business days.

The reason for the more restrictive withdraw period on ACH deposits initiated via the "pull" method is that banks maintain the right to claw back such funds should they later determine fraud or error. Restricting the withdrawal back to the originating bank who then controls the subsequent movement of funds effectively eliminates this risk. It's a prudent restriction given the volume of fraud taking place via the ACH network as a result of identity theft.

How do I initiate a push from my bank account? My bank does micro ACH deposits to verify that I own the account. But IB doesn't have a personal checking account I can give to my bank for the micro deposits. Should I give IB's account at Citi Bank and somehow IB would credit those to my account?