In some extreme cases, an individual may have a criminal background. #4 – Illegal actions performed by the individual In such cases, the government orders the account to be frozen. Sometimes, the individual might default on paying government fines or taxes to the IRS. #3 – Non-payment of money owed to the government Also, account holders can request the banks to freeze their account in case of lost credit/debit cards or some fraudulent third-party using the account. Again, this is done by considering the best interest of the customer. For example, suppose a bank notices a large amount of money being transacted to a previously unrelated party the bank freezes the account until the account holder confirms that they acted. This is another reason to freeze accounts. For example, when a person owes a large amount of money to a creditor, the account is blocked, and the person will not be able to use the money in the account. This is one of the main reasons why banks freeze people’s accounts. The following are the reasons why banks can freeze accounts: #1 – Failure to repay debt Sometimes, it is legally enforced, and at other times, it is imposed by the bank. Usually, banks resort to freezing accounts due to the non-performance of legal obligations by the account holder. This is a classic example of bank accounts frozen by government intervention. This led to widespread protests in the city. When the people demanded their money, there was a clash between the authorities and the people. The people had deposited in these banks owing to the high-interest rates. Example #2įollowing a financial scandal and allegations of fraud in Zhengzhou city of China, many people’s bank accounts in the city’s four rural banks were frozen by the government. As soon as the bank froze the account, it informed him that he would be able to unfreeze his account once he paid the total sum of $3000 plus the interest on two months which was overdue. Consequently, John was unable to use the money in his accounting statement. The bank froze his account as he failed to make timely payments. Suppose John owes $3000 to the bank and the payment of the interest on loan was overdue for two months. ExamplesĬonsider the following frozen bank account examples to understand it better: Example #1 For example, suppose if an investor commits any fraudulent or forbidden activity as specified by the United States Securities and Exchange Commission (SEC), or if the person is freeriding, that is, buying and selling stocks before paying the money, the investment account is likely to be frozen. Also, unfreezing accounts can be a very simple process, other than in extreme situations involving the government or the court.įurther, it is important to note that the bank can freeze investment accounts too. Similarly, if the bank freezes the account due to suspicious transactions or activity, it is done to secure the account holder’s interests. Thus, freezing the account and pushing the account holder to make the payment towards the creditor is justified. Nevertheless, freezing accounts is mostly done by considering the best interests of everyone, i.e., if a person doesn’t pay the money they owe to a creditor, justice should be served.
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