Bank Froze Your Account for Suspicious Activity? Welcome to the Club

Banks are freezing accounts without warning at the fastest rates in history. And, it’s only going to get worse. 

Every year, millions of innocent people have their bank accounts frozen without warning as banks frantically try to keep up with new banking laws and increasingly strict KYC/AML regulations. 

If you haven’t experienced an account freeze yet – get ready. In the coming years, you probably will.

Imagine you wake up one day and discover you can’t log into your bank account. Or use your debit card. 

In a panic, you call the bank and are told that your account has been frozen. 

Staff can’t tell you why (that’s illegal) and they can’t tell when you’ll be able to access your funds. 

In the meantime, you can’t receive payments, make transfers, pay for bills or basic necessities. 

You’re left financially stranded and cut off from your bank account.

As a business owner, having an account frozen is a nightmare. You can’t pay staff, receive customer payments, or pay suppliers. Your business is in operational limbo until the bank decides to unlock your account and release your funds. It’s terrifying.

At GlobalBanks, we see account freezes happen on a regular basis. We know how stressful they can be. We’ve helped hundreds of subscribers who had bank accounts frozen without warning, some for months (others for years) with no explanation. 

So in this article, we’re going to talk about bank account freezes. Why they happen, what to do about it, and how to protect yourself.

Why do banks freeze bank accounts?

The most common reason why banks freeze accounts is because of their internal system, which flag something in your account as “suspicious” or “irregular.” 

What exactly is suspicious activity? It depends. Each bank has its own definitions and rules. And each bank has different sets of predetermined actions that set-off alarm bells and trigger an account freeze. 

Generally speaking though, a bank will freeze your account if there is an activity, behavior, or transaction that the bank’s internal system flags as suspicious.

Why did the bank’s system flag that action, behavior, or transaction? Because that action sometimes indicates fraud, money laundering, terrorist financing, or criminal activity. And, the bank needs to investigate it and make sure nothing illegal (or risky) is happening. 

But, here’s the rub (and what most customers miss): Banks get slapped with massive penalties if they facilitate illegal activity. In other words, if a bank sees something suspicious, doesn’t freeze the account and investigate, and that account is doing something fraudulent or illegal – the bank gets punished. 

For banks, the consequences are real. Think massive penalty fees, angry regulators, pissed off shareholders, more scrutiny from government agencies, a PR disaster, strained correspondent bank relationships, and more. 

So, banks aren’t freezing accounts for no reason – it’s because there are serious legal and financial ramifications for them if they don’t.

Here are some reasons why a bank might freeze your account

• You sent or received money from a country that the bank deems suspicious or high-risk.
• A creditor or debt collector obtained a court judgment against you.
• You owe the tax authority in your country money and they had your account frozen so they could recoup whatever amount they think you owe.
• You had transaction(s) that the bank thinks could be fraudulent or reflect criminal activity.
• Transacting with another party that a bank views as suspicious or high risk.
• Transacting with a third party that the bank can’t identify (e.g. Transferwise, Revolut, fin-techs with intermediary accounts).
• Abnormal behaviors or transaction patterns that are different from your typical, day to day activity.
• Large incoming or outgoing transfer. For instance, if you receive a large incoming transaction that is above average.
• Too many transactions. If your monthly transaction volume is higher than normal or above a certain threshold.
• You logged into your account from too many different countries with a certain time period.
• Someone has logged into your account from a strange location, IP address, or too many countries within a certain timeframe.
• You failed to submit a document that the bank needs for compliance purposes (e.g. identification, proof of your address or tax residency).
• Someone has filed a complaint to the bank about you or your business.
• Your online presence has negative references, questionable content, or shows that you’re in a high-risk industry (e.g. crypto, gambling, cannabis, adult entertainment, etc).
• Your account information is not up to date or your account isn’t fully verified.
• The bank detected fraudulent activity on your account.
• The bank thinks you may be a victim of fraud so they freeze your account to protect you.

How to prevent a bank account freeze?

Here are some ways you can avoid having your bank account frozen in the future.

Don’t surprise your bank

If you’re expecting a large transfer, call your bank and let them know before it arrives. For instance, if your business is planning a big promotion or product launch, tell your bank about it ahead of time. Otherwise, if your bank sees a random 10x spike in daily incoming transactions – without warning and with no supporting documents, they might freeze your account.

Take account opening seriously

When you apply to open your bank account, answer all the questions about your estimated transaction volume and frequency very, very carefully. We talk more about this in our premium reports for GlobalBanks Insiders. 

Know Your Account Limitations

Find out if your account has any limitations or restrictions. Many people aren’t aware these limitations exist and will be surprised when their account is frozen for not adhering to them. For instance, maybe your bank only allows a certain number of transactions per month or requires your transaction volume or frequency to be under a certain threshold. 

Who is Most Vulnerable to Bank Account Freezes?

Having a bank account frozen is catastrophic. And not surprisingly, it’s a scary situation. Especially when you can’t receive money, pay bills, or buy groceries.

But a frozen bank account is far more disastrous and painful for people who only have one bank account. They don’t have a backup bank account or any way to access emergency funds.

Similarly, if you’re heavily reliant on EMIs or fintech solutions like Revolut, Monzo, Monese, N26 – be extra careful. There’s a high chance that you’ll experience an account freeze in the future. Newer fin-techs are heavily reliant on algorithms for compliance and transaction monitoring, so account freezes are more frequent and come without warning.

Worse, the account freeze can last months, even years. 

When a bank freezes your account, you immediately lose access to your money. You can’t log in to online banking. You can’t send or receive money. And you can’t use your debit card. Any automatic bill payments that you previously set up are shut off – which triggers late payments and penalty fees.

And if your account is already frozen, you can’t just call up the bank, ask to close your account and get your money back. Your funds are unavailable until the bank decides to release them.

How to Protect Yourself & Avoid Frozen Bank Accounts

New regulations, increasingly strict banking laws, and KYC/AML requirements are causing a rapid increase in bank account freezes across the world. 

As a result, account freezes are happening faster and more frequently than ever before in history. 

This trend will continue. Especially as banks and fin-techs will rely even more on new technology and algorithms to help them keep up with changing laws. 

Here’s how to protect yourself and make sure that you always have access to your money – no matter what happens next:

Open backup bank accounts

Don’t be dependent on a single bank account. Make sure that you always have multiple bank accounts. If one bank account is frozen or shut down, you always have a backup. Backup bank accounts ensure that you and your business always have options and are never dependent on a single bank. 

Diversify your money across multiple bank accounts

If 100% of your wealth is in a handful of accounts in one country, that’s risky. In seconds, you can lose access to your account without warning. It just takes a judgement from a court, an overreaching government, creditor, or frivolous lawsuit. Spreading money amongst multiple accounts minimizes risk and just makes good financial sense, especially if you live in a litigious country.

Have a bank account outside your home country

Having a bank account outside of your home country makes sense. Having an emergency fund you can always rely on is smart. It’s also a no-brainer risk management strategy. Shield your assets from financial predators, creditors, overreaching governments, frivolous lawsuits and more. 

How to Start Protecting Your Accounts Now

If you’re worried about account freezes (or already had your account frozen) and need help figuring out what to do next, you can get started by using the information in this article.

But if you need more help or want to know which banks will accept you, which countries to target, the best account opening strategies to use, and the best ways to overcome tough paperwork requirements, then we’d be happy to help you on your journey.

When you join GlobalBanks, you’ll also get instant access to our entire archive of Banking Intelligence Reports including proven strategies for opening accounts, contact information for specific banks and bankers, details on bank preferences and sensitivities, customer case studies, and information on what not to do and which banks to avoid.

You will also get access to the GlobalBanks Database which includes easy-to-digest bank profiles, analyst insights, account opening contacts, and unique opportunities for the top banks in 50+ countries. 

Plus, you’ll get real-time analyst support through chat and email, and get answers to your most pressing banking questions.

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