Frozen Bank Account [Free Guide]

Frozen bank accounts can cause serious issues for account holders, delay important payments, and even cause credit issues for years to come.

And, while most people have backup bank accounts to avoid these problems, a frozen bank account can still wreak havoc on personal and business banking.

Fortunately, it’s possible to avoid having your accounts frozen if you understand why they get shut down in the first place.

A frozen bank account can be a major financial setback that can happen for a wide range of reasons. For instance, banks can freeze accounts due to unusual activity, unexpected transactions, engaging high-risk jurisdictions, and much more. That said, you can avoid a frozen bank account altogether if you know which steps to take and how to communicate with your bank effectively. 

On the other hand, if you don’t notify the bank, submit supporting documents, or provide proof the bank has wrongfully frozen your account, the bank will likely shut down your account permanently.

Fortunately, if the account has not yet been closed, a frozen bank account can be unfrozen. And, with the right information and strategies, you can completely avoid frozen bank accounts, to begin with.

In this article, we’ll share helpful tips on how you can possibly avoid an unexpected frozen bank account. We’ll also uncover the multiple reasons why a frozen bank account happens. And, of course, we’ll share what your next step should be if you’re faced with a frozen bank account.

But, before diving in, if this is your first time visiting GlobalBanks, don’t forget to download your free Non-Resident Banking Starter Guide. It’s designed to help non-residents open accounts in top banking hubs around the world.

Reasons for a Frozen Bank Account

It’s not in the bank’s interest to freeze customer accounts. Whether it’s charging fees, earning interest on credit products, or lending out customer deposits, banks earn money by keeping customer accounts open.

So, if a bank decides to move forward with a frozen bank account, they must believe that there’s a very good reason for the decision.

In most cases, that means acting early to avoid penalties from regulators related to any (potentially) illegal activity. That’s why, if a bank notices any red flags, they won’t hesitate to freeze an account.

Let’s take a look at some of the most common reasons why this happens…

Reasons for a Frozen Bank Account

  • Suspicious activity that resembles money laundering
  • Unable to provide documents to support transactions
  • Transfers to and from high-risk jurisdictions
  • Transacting with a third party the bank can’t identify
  • Court judgment has been filed against you
  • Transactions that are different from your typical activity
  • Didn’t notify the bank of a change in company details
  • And more

Of course, rules and regulations differ from country to country. So, the reasons why your account may be frozen can differ depending on where you bank. But generally speaking, these are some of the most common reasons why you may have a frozen bank account.

Now, as mentioned above, there are ways to avoid having your bank account frozen. However, sometimes a frozen bank account can’t be avoided. And, unfortunately, your bank is not going to warn you before they freeze the account.

So, you’re going to want to understand the possible reasons for a frozen bank account and prepare yourself on what to do next if your account becomes frozen.

What Happens Next?

Frozen Bank Account Next Steps
If you have a frozen bank account, there’s probably one question above all that you care about:

“How can I get access to my frozen bank account and start banking again?”

Well, not all situations are the same. So, what you do next will likely differ from someone else.

But, there are a few general steps that most people can follow.

Step 1: Contact Your Bank

Obviously, it’s going to be important to contact your bank to ask why you have a frozen bank account. This will help determine whether or not their reason is valid or not. And, whatever reason they provide, will help you determine what to do next.

At this point, you should request information on why the account was frozen, what specific activity flagged the account and led to the bank making this decision, and what steps can be taken to unfreeze the account.

Step 2: Submit Supporting Documents

If your bank can pinpoint a reason (like a specific transaction), and you’re able to submit documents supporting this transfer, the bank should unfreeze your account without any further problems.

But, if you’re unable to provide such documents, you’re going to run into more serious issues. In most cases, this means that the frozen bank account will be closed completely.

Of course, if your account is closed, you will then need to open a new bank account where any funds can be deposited. Though the process and timeline for this to take place will be uncertain and vary from bank to bank, and country to country.

Step 3: Visit the Bank

If after submitting supporting documents your frozen bank account still isn’t accessible, it might be time to visit the bank in person.

Of course, if you’re dealing with an international bank, visiting the branch can be a costly endeavor — that’s why bank selection is so important upfront.

An in-person visit actually accomplishes a few things…

First, it allows the bank to verify your identity in person, which may be important if the bank thinks your account is high-risk.

Secondly, it allows you to explain the reason for the action that flagged the account in the first place — such as a specific transfer or payment.

And lastly, you will be able to communicate directly with your banker face-to-face. This is very different than dealing with customer support or being on hold for hours.

In other words, sometimes an in-person visit can be the most effective way to resolve a frozen bank account.

Of course, the best-case scenario is that you don’t have to deal with a frozen bank account in the first place. To this end, we share some tips on how to protect yourself from a frozen bank account below.

Protect Yourself From a Frozen Bank Account

Frozen Bank Account Protection
Many people end up with a frozen bank account for invalid and completely avoidable reasons.

And, while that might sound scary, it’s actually good news. It means, with the right information you can avoid the mistakes that lead to an account being frozen.

With this in mind, here’s a list of the ways you can protect yourself from a frozen bank account…

Ways to Protect Yourself From a Frozen Bank Account

  1. Choose banks that don’t have a history of issues
  2. Diversify your assets across multiple banks (and countries)
  3. Don’t surprise banks with unusual or unexpected activity
  4. Choose to bank in safer banking jurisdictions

Let’s dive into each of these topics further…

1. Choose banks that don’t have a history of issues

Before you open an account at a bank, it’s worth knowing a bit about the bank’s history. For instance, has the bank had issues with regulators, faced major penalties or fines or lost correspondent accounts in the past?

Banks that match the above description tend to be under the careful watch of regulators, which means their compliance teams can be a bit trigger-happy when it comes to freezing accounts. So, unless you have a very good reason for banking at this kind of bank, they’re better off avoided.

2. Diversify your assets across multiple banks (and countries)

As we’ve discussed in past articles, not having a backup bank account can lead to many challenges. Not the least of which is losing access to your funds when you have a frozen bank account.

So, diversifying your assets across multiple accounts can provide an extra layer of safety.

In fact, with a backup bank account, you will be able to access funds to continue paying day-to-day expenses, pay suppliers and receive payments if you have a business, and even hire and pay legal support if needed to unfreeze your other account.

Importantly, you shouldn’t be dependent on one single bank account. Instead, diversify your assets between multiple accounts. That way, you will always have options if one of your accounts is ever frozen.

3. Don’t surprise banks with unusual or unexpected activity

If you don’t want a frozen bank account, don’t surprise your bank with unusual or unexpected transactions.

In other words, if you or your business is expecting a larger transfer that’s different from your typical day-to-day transactions, let your bank know in advance and provide supporting documents for proof. That way, when this transaction does go through, the bank will already have all of the information required to process and rationalize the transfer internally.

If you don’t take this step, an unexpected incoming or outgoing transfer can result in an account freeze.

4. Choose to bank in safer banking jurisdictions

Another possible way to protect yourself from a frozen bank account is by opening an account (or multiple accounts) in a safer banking jurisdiction.

By doing so, you can usually access more sophisticated banks, more educated bankers, and less scrutiny over each transfer once you have an established relationship with a bank.

Of course, not all banking jurisdictions accept non-resident foreigners. And, the top banking jurisdictions are often very difficult for non-resident foreigners to access.

But, if you know which banks (and bankers) to contact, which account opening strategies to use, and which countries best align with your client profile and banking objectives, the process for account opening can be more streamlined.

How to Start Protecting Your Accounts Now

If you need help figuring out what to do next with your frozen account, you can obviously start by using the information in this article.

Or, you can choose to access GlobalBanks IQ, our dedicated international banking intelligence platform.

GlobalBanks IQ gives you everything you need to start figuring out where you should (and shouldn’t) open accounts. 

When you join GlobalBanks IQ, you immediately unlock the GlobalBanks Database of international banks – home to 250+ banks in 50+ countries.

And, you get access to our library of premium (members-only) reports. These include proven account opening strategies, country-specific banking options, and lists of banks for specific client types.

Plus, you unlock our account opening checklists, dedicated account opening alerts, and much more.

To get started, click here to see if GlobalBanks IQ is the right choice for you to start accessing the benefits of international banking today. 

You can also view all of the account opening solutions offered by GlobalBanks on our products page.

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