We have customers making multiple deposits at ATM's throughout the day and our system makes the first $100 of each deposit available. In one instance a customer made 50 in one day, and you can imagine what happened next.

We want to limit the # of deposits per day. Do we have to give advance notice or can we use the reasoning that advance notice would compromise the security of the eft system?

Any advice?

Close the loophole, and then give them a minimal amount of information after the fact. This is a security issue.

Based on whether the deposits were genuine or not (I'm assuming from the tone of your post that they are not) I would strongly consider closing this account - does not sound to me like the kind of customer you want. If I'm reading your post correctly, it sounds like someone who is attempting, or actually is, perpetrating fradulent transactions - if that's the case, you may also have grounds to file a SAR (50 x 100 = 5,000)
Interesting - these folks are always thinking of ways around the system aren't they - and folks wonder why bankers are so jaded!!!