Table of contents
- Understanding the Reasons for Bank Account Blocking
- Identifying Blocked Bank Accounts
- Various Types of Bank Account Blocks
- Consequences of Bank Account Blocking
- Steps to Unblock a Bank Account
- The Process of Bank Account Unblocking
- Assistance Options for Bank Account Unblocking
- Frequently Asked Questions about Bank Account Unblocking
Probably, at least once in life each of us faced the problem of blocking an account. And it does not matter whether the account was opened in a bank or EMI. None of us has a 100% guarantee that the account will never be blocked.
Understanding the Reasons for Bank Account Blocking
There may be different reasons for blocking an account:
- Bank error;
- Non-compliance (violation) of the bank’s CCS policies;
- Making suspicious payments;
- Conducting illegal financial transactions;
- _______________ your reason, if you encountered a blocked account.
However, whatever the reasons for blocking a bank account, a business will not be able to operate if there is no active corporate account, and an individual will have to face the fact that paying, for example, for utilities in connection with a “frozen account” will lead to the accumulation of debts and the emergence of a negative credit history.
Identifying Blocked Bank Accounts
Determining whether a bank account is blocked has a further understanding of how to reopen a blocked bank account. The main markers that a bank account is blocked include the following:
- Inability to log in to online banking: if you cannot log in to your account after several attempts, this is the first sign that the account is blocked;
- Inability to use funds: suppose the account owner has gained access to it, but the account owner is not able to use the funds that are deposited in this account. The above situation indicates that the client’s account is blocked;
- Limited access to account functions: a situation when a client has logged into online banking, but was unable to make a payment indicates that the account is blocked;
- Receiving notifications from the bank by email: banks often send an official letter to inform the client about the upcoming blocking. A recent case has become widespread, when one payment system sent electronic notifications to its customers about the upcoming blocking of the account due to the fact that the company’s UBO is a citizen of Ukraine.
- Declined payments: if the customer’s transactions are repeatedly rejected, even if there are funds in the bank account, this may indicate that the owner’s bank account is blocked;
- Notifications about suspicious activity on the account: if the servicing bank records suspicious activity on the customer’s account, this is the bank’s basis for blocking it;
- Constant account monitoring: if unauthorized transactions or unusual withdrawals are recorded on the account, the account is subject to blocking as a precaution.
Blocking an account is a very unpleasant situation, which always carries a negative. Quickly identifying the reasons for the blocked bank account can help you respond to the problem in a timely manner and unblock the account. You won’t have to deal with the reasons for blocking your account – all you need to do is seek legal support from FINTECH HARBOR CONSULTING specialists.
Various Types of Bank Account Blocks
When do banks flag your account? When there are a number of reasons that are “red flags”. Among the most common types of bank account blocking, the following can be distinguished:
- Temporary blocking: a blocking that is applied for a short period of time;
- Partial blocking;
- Debit blocking;
- Credit blocking;
- Blocking a bank account due to regulatory compliance, in particular but not limited to KYC or anti-money laundering (AML) regulations;
- Permanent blocking;
- Blocking an inactive account;
- Blocking international transactions;
- Blocking high-risk accounts
- Blocking due to a technical error by the bank;
- «Frozen» account.
Each of the above types of account blocking indicates that its user is partially or completely unable to use his bank account for a number of reasons. how to know if your bank account is blocked? If you were unable to partially or completely use the account, contact your bank to find out the reasons that are the reasons for bank account blocked.
Consequences of Bank Account Blocking
Blocking a bank account always has negative consequences, among which the following can be highlighted:
- Inability to make regular payments: the inability to make mandatory payments and settlements, including on borrowed funds, leads to the accrual of fines by creditors and / or the application of operational and economic sanctions related to the violation of payment discipline. In addition, violation of the frequency of payments is the basis for receiving claims and lawsuits;
- Negative impact on credit history: late payments may become the basis for refusing to issue a loan agreement or conclude a mortgage agreement in the future;
- Legal consequences: the account may be blocked due to the fact that an arrest was imposed on the use of a bank account, including by a court decision (depending on the jurisdiction). It is important to emphasize that if the blocking is related to legal disputes, in addition to the bank account, other assets of the owner of such an account may also be seized;
- Rehearsal risks: the inability to make timely payments on the account negatively affects further business transactions between partners.
- Difficulties with re-opening a bank account: practice has shown that if a bank has closed a client’s account in a bank once, it is actually impossible to open such an account. And if you ask, can a blocked bank account receive money, the answer will be affirmative, but the client will not be able to withdraw money from the blocked account immediately.
- Enhanced account monitoring: an account blocked at least once is the basis for the bank to strengthen the verification of transactions on the client’s account, as well as subsequent temporary blocking of the account by the bank;
- the need to open a new account: opening a new account in another bank is always associated with time. No bank will give a guarantee that even if a potential client has collected the entire package of documents, the account will be 100% open.
- account termination: the bank can decide to permanently close the account by simply notifying the client that the account is closed. Without prior notice.
All the above consequences are just the most common list of what negative consequences a blocked account brings. Therefore, it is extremely important when opening an account to clarify with a highly qualified lawyer the “red marks” that may entail blocking the account. FINTECH HARBOR CONSULTING lawyers have enormous experience in opening an account and consultations related to blocking such an account.
Steps to Unblock a Bank Account
How to reopen a blocked bank account? Unblocking a bank account, depending on the reason for blocking, includes the following approximate algorithm:
- Finding out the reason for the blocking: the first and most important step. At this stage, it is sufficient to contact the bank in order to understand what was the reason for blocking the account;
- Preparation of the necessary documents and information: if the client understands the reasons for blocking the account, it will become clear what is needed to unblock it. To unlock the account, it is enough to provide the relevant document and/or information: contracts, statements, explanations of transactions, etc. Submission of documents is possible both in person and with the help of online banking;
- Visiting the bank (if necessary): if the bank, having familiarized itself with the scans of previously sent documents, asks the client to provide the originals of the documents, be prepared for a visit to the bank and possible additional questions.
- Engagement of a lawyer to unblock the account: if the client, after clarifying the reasons for blocking the account, providing the requested documents and/or information, has still not gained access to the account, it is necessary to engage a lawyer with experience in opening/closing and unblocking accounts. The owner of a blocked account can apply for legal assistance even at the earliest stage: as soon as the account was blocked.
This algorithm is an example of help for a client whose account is blocked. Understanding the basics of what reasons can become the basis for blocking an account, you will not have to enter the phrase “what is a blocked bank account” or “how to know if your bank account is blocked” into the Google search engine if at some point the client was unable to use the functions bank account.
The Process of Bank Account Unblocking
The process of unblocking a bank account usually includes the following steps:
- Receiving a notification about account blocking. In general, this information is provided by writing to e-mail;
- Finding out the reason for blocking the account. The reasons for blocking the account may be different. Therefore, it is important to clarify with the bank not only the reasons for blocking, but also the details of such blocking: what was the prerequisite for the account to be blocked;
- Establishment of contact with the servicing bank. In this case, the client can find out the details of the blocking both with the help of online banking and with the help of a visit to the branch;
- Providing documentation/information for unblocking the account. If the client found out what led to the blocking of the account, the account owner must provide the documents and/or information that the bank will request to cancel the reasons for blocking the account;
- Preliminary account control. To avoid account blocking, it is necessary to update the data in a timely manner and provide contracts/statements for specific transactions;
- Legal assistance. The involvement of a lawyer is possible both at the beginning of discovering that the account is blocked, and already after the account has not been unblocked, even if the client has fulfilled all the bank’s requirements: provided documentation and/or information.
Each bank may have its own procedure related to account unblocking. If the client does not know how to act correctly when the account is blocked, he should immediately contact a lawyer who understands the intricacies of this process.
Assistance Options for Bank Account Unblocking
If you are faced with the situation of how to reopen blocked bank account and make the account active again, as well as avoid further reasons for blocking the account, it is enough to contact a legal advisor who can help with the following:
- Assessing the situation, as well as the legal grounds on the part of the financial institution that led to the account blocking;
- Analyzing the relevant legal documents;
- Creating potential legal grounds for challenging the account blocking;
- Developing a detailed legal strategy for unblocking the account;
- Participating in negotiations with the bank in order to speed up the unblocking of the account with the subsequent provision of all necessary documents and / or information for such unblocking of the account;
- Litigation (if such a dispute takes place): preparation of a claim, petitions, participation in court hearings, etc.
- Assistance in choosing an alternative account to replace the blocked one.
