I heard that some agencies deposit stored evidence money into interest bearing accounts. Would you explain why, how and if our PD can do the same? 

The reason why some agencies deposit funds into financial establishments (usually banks) vary. Some want the funds in their custody to make money between the time money is seized and the time a final disposition is reached. In some cases protection available (safes, agency construction, etc) are not adequate to insure against an outside break-in. Finally, reducing the on-hand amount of cash reduces temptation of internal theft. 

In all cases, seized monies should be processed through the normal flow of evidence intake. After the money has been processed, depositing into an account (interest bearing or regular checking) sometimes is an alternative. 

What is an interest bearing account?

An interest bearing account may be a checking account that pays interest on deposits, money market accounts, certificates of deposit, or any other type of account in a financial institution that pays interest on funds deposited. Care should be given to any required time limits imposed on amounts deposited. Normally, interest checking accounts are used due to flexibility and easy retrieval of funds when needed. 

Why would our agency want to use an interest bearing account?

When funds are held in a safe no money is earned. In a bank the interest is compounded daily. In a case where a large sum of cash is held, the interest adds up over time. In some instances the money is never returned to anyone, leaving a tidy sum for the agency to use. 

Is it legal?

Legality varies from state to state. In California the answer is yes, in Alaska the answer is no. Each agency must determine legality based on applicable state laws. 

Are there any inherent concerns with using interest bearing accounts? 

Yes, the amount of interest must be monitored based on each case deposited. One large PD in California decided not to use interest bearing accounts because the amount of paperwork generated out weighed the positive cash income. Other agencies find the paperwork to be inconsequential compared to the interest income. The important consideration is to be able to show, if asked, what interest was made on each case deposited. 

What is a good procedure to use? 

Step 1. Determine Legality

Throughout the United States laws vary. In California, the policy is widely accepted, in Alaska it violates state law. Determine if it is legal in your jurisdiction to use interest bearing accounts for evidence funds.

Step 2. Select the accounting format 

Two possible set-ups are recommended. One is the use of a checking or savings account. The account should be set-up at a local bank requiring a double signature for release of funds. Recommended signatures are the property supervisor and either the Chief/Sheriff or Division Commander. The use of a high ranking officer serves as an internal monitor of the account activities. Once the account is set-up, deposits should be recorded and verified. To retrieve funds normally requires a court order or written explanation submitted by the Property Supervisor to the designated second signature. A check is then issued to the appropriate person. 

The second way is to have an account created within the general fund of the city/county/state your agency is a part of. The envelope is taken to the accounting clerk who opens it, verifies the amount, and provides a receipt. To retrieve money requires either: 

1) a memo from the property supervisor specifying the legal requirements for release (countersigned by the division commander or agency head) or 

2) a court order specifying the funds to be released. 

Step 3. Audit procedures

The property supervisor should verify each deposit receipt has been filed, indicating funds actually have been deposited, immediately after any funds should have been deposited. Audit procedures require a photocopy of the refund check be maintained in a file along with documentation of the release. 

On a yearly basis the account should be audited. An auditor not affiliated with the property function is recommended. The audit should track funds from deposit to withdrawal and be able to verify interest earned. At least once a year each deposit should be researched to determine if the case is cleared. Upon case adjudication and/or the clearance of legal time limits, the funds are released to the general fund of the jurisdiction for governmental use. 

Step 4. Wait until after the case is adjudicated and any time limits are over 

1) The court could order the funds returned to the legal owner. 

2) Courts sometimes order the return of interest to the owner also.

3) In some agencies, if the funds are turned over to the general account sooner than normal, the only source for returning funds is the use of law enforcement budgets normally used for manpower or equipment. 

The decision is individual to the needs of each agency. If depositing money is to be used by your agency, arrange a trial period. Review the system at three to six month intervals. Occasional reviews of the system will help to determine if continued use is appropriate.