The bank blocked an account or transfer: what to do in the first 72 hours

The blocking of a bank account or an international transfer almost always comes as a surprise to the client. Yesterday the company operated normally, but today payments are not going through, access to funds is restricted, and the bank sends a request for additional documents or provides no explanation at all.

The biggest mistake clients make in such a situation is to panic or try to "pressure" the bank. In fact, the first 72 hours after the block often determine how quickly the problem will be resolved. It is during this period that the bank conducts its initial risk assessment, and the client has the opportunity to prove the legality of their operations.

Why might the bank block an account or transfer?

A block does not always mean a suspicion of illegal activity. In most cases, the bank is simply fulfilling the legal requirements for financial monitoring (AML), counter-terrorist financing (CTF), and KYC procedures.

The most common reasons are:

• an unusually large transfer amount;
• transactions with new or high-risk counterparties;
• transfers to or from high-risk jurisdictions;
• operations related to cryptocurrencies;
• the lack of clear economic substance for the payment;
• an automatic trigger of the bank's monitoring system.

In many cases, the block is temporary and is related only to the need to obtain further explanations.

The first 24 hours: do not panic and gather information

After receiving a notification about a block, the first thing to do is to determine its nature. Find out:

• whether only one transfer is blocked or the entire account;
• whether the bank can provide the number of the compliance request;
• exactly what documents the financial institution expects;
• whether there are deadlines set for providing a response.

You should not call different bank managers or send several contradictory explanations. All comments must be coordinated and supported by documents.

The second 24 hours: start preparing the document package

Upon receiving the request, you must prepare evidence of the transaction's legality as quickly as possible. Depending on the situation, the bank may request:

The documents must logically explain not only the transfer itself but also the economic substance of the transaction.

The third 24 hours: communicate correctly with the bank

Most often, the quality of the client's response determines the further decision of the compliance department. The explanation must:

• match all the documents;
• be concise and professional;
• contain a clear description of the purpose of the transaction;
• explain the source of funds;
• confirm the economic substance of the payment.

It is not recommended to hide information or send documents in parts unnecessarily. This only increases the review time.

What mistakes should be avoided?

When an account is blocked, clients often make the same mistakes. The most dangerous among them are:

• ignoring the bank's request;
• aggressive correspondence with the compliance department;
• providing an incomplete package of documents;
• attempts to urgently transfer funds through other banks;
• contradictory explanations to different bank employees;
• lack of confirmation of Source of Funds or Source of Wealth.

Such actions can not only drag out the verification but also lead to account closure or the client being placed on internal high-risk lists.

Does blocking mean the account will be closed?

No. In most cases, the account or transfer is unblocked after the check is completed. However, if the bank concludes that the risk is unacceptable or the client has not provided sufficient evidence, it may:

• refuse to process the specific transaction;
• terminate services for the client;
• close the account according to the terms of the agreement;
• notify the competent authorities in cases prescribed by law.

That is why a timely and professional response is crucial.

How to prepare to avoid blocking in the future?

It is impossible to completely eliminate the risk, but it can be significantly reduced. It is recommended to:

• prepare documents for large payments in advance;
• keep the KYC profile up to date;
• notify the bank about unusual transactions before they occur;
• document the source of funds;
• regularly screen counterparties for sanctions risks.

This approach demonstrates the transparency of the business to the bank and significantly reduces the likelihood of blocking.

Why should you contact "Prikhodko & Partners"?

The international corporate law and FinTech practice of the "Prikhodko & Partners" law firm represents clients in disputes with banks, helps them pass AML/KYC checks, prepares responses to compliance department requests, creates Source of Funds and Source of Wealth packages, and supports international transfers for business, FinTech companies, CASPs/VASPs, and private investors.

Thanks to our practical experience working with international banks, we help minimize the risks of account blocking and respond to requests from financial institutions as quickly as possible.

Has an account or transfer been blocked, and you don't know how to properly respond to the compliance request? Do not waste precious time! The lawyers of the "Prikhodko & Partners" firm will help draw up a professional explanation, prepare a document package, and unblock your funds as soon as possible. Leave a request on the website for a prompt consultation!