What should I do if my bank account is frozen?

Have you ever tried to make a simple payment but found that your card was declined? A frozen account can cause real financial chaos in your life. But what can you do when your bank account is frozen?

Do you need legal advice?

Our law firm will help you understand the reasons for the freeze, restore access to funds, and avoid further risks. We will evaluate all legal aspects of the situation, negotiate with banks and regulators, and develop a strategy to protect your rights. Trust our experience – contact us now to take back control of your finances!

Why is my bank account blocked?

Blocking a bank account is an unpleasant and stressful situation that can arise for a number of reasons. 

One of the most common reasons is the identification of suspected illegal activity or transactions which, in the bank’s opinion, may be related to money laundering. Such cases include:

  • Unusually large transfers that clearly do not correspond to the client’s usual profile;
  • Receipts from offshore or sanctioned territories;
  • Frequent transfers to the accounts of financially restricted individuals.

bank account blocked

In such cases, the bank suspends all operations to conduct an internal investigation and may require additional documents from the client confirming the sources of origin of funds.

If a decision has been made against your judgment to collect a debt (for taxes, alimony or other obligations), the bank may freeze the account at the request of the court or the executive service. This is necessary to ensure repayment of the unpaid debts.

Subject to the availability of large tax debts or fees, government authorities like the Internal Revenue Service (IRS) may freeze bank accounts to ensure the repayment of any outstanding debt.

Each credit institution sets its own rules and conditions of service, including limits on withdrawals and transfers of funds, prohibitions on using the account in illegal schemes, etc. If the bank discovers a discrepancy between the activities of the account holder and the stated purposes of using the account, your bank account is frozen temporarily.

In cases where account transactions look fraudulent (phishing, identity theft, use of stolen cards), the bank can freeze the account to protect the client and protect its interests.

If you or your company is included in sanctions lists (OFAC, EU, UN), the bank is obliged to stop transactions related to your accounts immediately. Even without being personally listed, your account may be blocked if you regularly interact (receive or send funds) with sanctioned jurisdictions or persons.

Sometimes the reason for blocking is not related to suspicious transactions or debts. The bank can also temporarily freeze your savings accounts if there are technical glitches or processing errors, until they are resolved. If the bank notices strange activity (suspicion of a hacker attack, data leakage), access to the account may be suspended to protect the client until the circumstances are clarified.

What happens if your account is frozen?

A frozen account is a serious measure that a financial institution or government agency can take to prevent potentially illegal transactions or as part of certain legal procedures. 

Freezing (blocking) a bank account is a serious measure that a bank or government authorities can take to prevent potentially illegal transactions or as part of certain legal procedures. Below we will look at what exactly happens when your account is blocked and how it affects your financial transactions.

Suspension of all account transactions. When a savings or checking account is frozen, the owner loses the ability to make any transactions. You will not be able to transfer money or pay bills. ATMs and cash desks will refuse to dispense funds. Even a direct deposit to your account will be difficult or impossible since the bank blocks the movement of funds. In some cases, limited operations are possible with the permission of a bank or court order for utility repayment, debt repayment, and more.

Inspections and investigations. After freezing an account, the bank conducts a detailed audit of the transaction or series of transactions that aroused suspicion. Bank employees may request additional documents (agreements, invoices, confirmation of the origin of funds). If the block is related to AML compliance, it may be due to unusually large receipts, transactions that do not match the client’s profile, or transfers to “problem” jurisdictions.

If the account is blocked at the request of a government agency (tax office, court, law enforcement agencies), an investigation or audit is carried out by the relevant department. The goal is to find out whether laws have been violated (tax evasion, money laundering, fraud, etc.). The length of the block may depend on the pace of the trial or investigation.

Possible consequences for the account holder

If an account is frozen, the owner may face delays in payments to counterparties, delayed employees’ wages, and other negative consequences.

Account blocking raises doubts among counterparties and partners since such a measure is usually used in cases of serious suspicion. This may affect business relationships with most creditors and negatively impact future financial prospects.

In the event of a prolonged blocking, you may be faced with the accrual of penalties, penalties for unfulfilled contracts, costs for lawyers, and consultations related to the settlement of the legal action.

How to unfreeze a bank account?

Freezing a bank account can happen suddenly and lead to significant inconvenience: from delays in payments to a complete suspension of business. It is important to clearly understand what steps need to be taken to remove the block and protect your rights.

 The first step is to contact your bank. Request an explanation of the reasons for blocking: suspicious transactions, legal requirements, debt, or internal compliance procedures.

If the blocking occurred at the initiative of government authorities (tax inspectorate, bailiffs), you must be provided with an official letter or a court order indicating the grounds for the freezing. Study the agreement with the bank and any documents received – they contain information about what actions need to be taken to resolve the problems.

If the blocking is related to suspicions of the illegal origin of money, the bank may request contracts, invoices, receipts, and other documents indicating the legality of the transactions. If there are unpaid taxes, alimony, fines, and debts, the banking institution needs to pay off the debt or agree on restructuring, if this is what caused the blockage.

We strongly recommend seeking professional guidance from an experienced legal specialist as quickly as possible. A legal expert will help you understand the reasons for the blocking, determine how legal it is, and explore options to remedy your situation. Timely consultation will help you avoid wasting time and money by taking immediate action.

If the account freeze is related to litigation or suspicion of illegal transactions, a lawyer will represent your interests in the bank, court, or before government agencies. Professional support will help you substantiate your position, collect the necessary documents, and avoid unnecessary delays when unfreezing your account.

The next stage is to initiate the process of unfreezing the bank account. Write a formal letter detailing the steps taken and the reason why the account should be unfrozen. Attach all supporting documents and links to legal regulations. Check with the bank how long it will take to verify your documents. If the time frame exceeds reasonable limits, contact managers again or seek support from a lawyer.

If you believe that the account has been frozen illegally, the bank/government agency is not communicating, and the demands clearly exceed what is reasonable, you can file a lawsuit. If the court of first instance does not take your side, you can appeal the decision on appeal. However, this will require additional time and resources. If the blocking causes disproportionate damage in the absence of serious grounds, it can be canceled.

Another way to deal with a frozen bank account is to apply for a temporary restraining order to stay the judgment. With a temporary restraining order, you will be able to use frozen funds to pay off the debt or enter into a new payment agreement with the creditor.

Filing for bankruptcy automatically stops all debt collectors’ efforts and lawsuits, which unfreezes your bank accounts. This can give your business and your attorney the time they need to develop a plan to move forward.

Your lawyer for frozen bank accounts

A bank account freeze is a sudden and extremely unpleasant situation that can jeopardize day-to-day payments, employee payments, or the execution of contracts. For many people and companies, blocking an account means stopping business and increasing reputational risks. However, there is a solution: timely legal support can significantly speed up unfreezing and minimize financial losses.

Our lawyers conduct a detailed study of the grounds for blocking in order to determine what documents and arguments can be used to refute accusations of illegal operations or inconsistency of internal procedures.

To remove the blocking, confirmation of the legal origin of funds, contracts, invoices, statements, and accompanying explanations is often required. We will help you collect and present these materials in the most convincing form. Qualified lawyers know how to negotiate with a bank or government agency competently, while clearly explaining the legal position and requirements of the client.

Our staff includes experienced lawyers specializing in international financial law and AML. Among them is a lawyer Iryna Berenstein, who has many years of experience in supporting cases related to blocking of accounts in various jurisdictions. He is well versed in the intricacies of bank compliance procedures and knows how to protect the rights of a client facing a frozen account.

If your bank account is frozen and you don’t know where to start, contact us. Our law firm is ready to provide comprehensive support: from the first consultation to full legal support. Lawyer Dmytro Konovalenko and our team of specialists will do everything possible to help you quickly and effectively solve the problem of account blocking and avoid serious financial and reputational losses.

Can I access my frozen bank account?

It is important to understand that freezing a bank account does not always mean a complete loss of access to funds. The ability to access depends on the reasons for blocking, the status of the investigation, decisions of the bank or government authorities. 

In some cases, the bank may allow part of the funds to be used for certain operations:

  • Payments for utilities;
  • Repayment of tax obligations;
  • Covers minimal personal expenses (rent, medical expenses).

If the blocking of the account was initiated by a judicial authority, you can apply for permission to use the funds for specific purposes. For example, paying salaries to employees or paying off debts.

Can a joint bank account get frozen?

frozen bank account

Yes, the bank can free a joint account if one of the users loses their mental faculty or if a debt collector or creditor obtains a court order. That way, banks can protect the funds of mentally challenged account holders and creditors can pressure people and companies to meet their financial obligations.

Banks can also freeze joint bank accounts when there are disputes among the account holders. For example, if you have a joint account with your spouse, they can request the bank to freeze it when going through a divorce or separation.

Can Child Support access money from a joint account?

Generally, the concept of child support can lead to wage garnishment, it doesn’t transfer the financial obligation of raising the children to other people besides the parents. However, there are special circumstances that allow child support to freeze or garnish funds in a joint account. For example, if the primary payer (normally the non-custodial parent) is obligated to make the payments, child support can freeze the account.

Why does your frozen account have a large negative balance?

Your frozen account might have a large negative balance when a judgment creditor obtains a court judgment against the account holder. Judgment creditors normally put a hold for twice the judgment account against your bank account. While you don’t owe all that money to the judgment creditor, it can negatively impact your financial health since they don’t have to give you advance notice before freezing your account.

Can your ban account be protected from freezing with exempt money?

If your bank account features only exempt income like social security benefits, it can be frozen or garnished to pay debt judgments or federal student loans. You can also protect your account from being frozen by negotiating a payment plan with your creditors before they take legal action against you.

How long will my account remain frozen?

The duration of freezing depends on the reasons for its use and the speed of your actions to eliminate the grounds for blocking. 

If an account is blocked due to suspicions of money laundering or terrorist financing, the bank conducts an internal investigation. This usually takes from several days to several weeks, depending on the volume of transactions being audited.

If the freeze was initiated by the tax service, court or law enforcement agencies, the duration of the freeze will depend on the duration of the investigation or enforcement of the court decision.

Temporary freezing is used to clarify details of operations. Usually, the period does not exceed 30 days. Long-term blocking is used in legal and tax proceedings. The account may remain frozen until a court decision is made or enforcement proceedings are completed.

An internal audit of a bank can last from 7 to 30 days. If necessary, the financial institution may request additional documents, extending the verification for several more weeks. 

Professional legal assistance in case of account freezing

Unfreezing an account requires cooperation with the bank, regulators, or law enforcement agencies. We will organize competent representation of your interests and provide legal support at all stages of negotiations and documentation.

We will study your situation in detail, determine the reason for freezing your account, and offer the most effective ways to eliminate it. Our specialists will help you collect and correctly execute all required documentation, including evidence of the legality of transactions, contracts, and statements.

If the blocking is unlawful, we will prepare a claim and represent your interests in court to achieve the restoration of your rights. Our team provides full legal support until restrictions are completely lifted and access to your funds is restored.

Contact us right now to receive an initial consultation and further comprehensive legal support. We will help you quickly and effectively restore access to funds, minimize risks, and regain full control over your finances.

Interpol Lawyer Iryna Berenstein
Iryna Berenstein
Associated Partner
Mrs. Berenstein is a distinguished and outstanding lawyer with profound experience and exceptional legal knowledge in the field of International Private Law, Financial Law, Corporate Law, investment regulation, Compliance, Data Protection, and Reputation Management.