Have you ever been notified that your bank account has been frozen? Have you encountered that embarrassing moment in a store when they tell you that your debit card is not working? Banks and other financial institutions block and freeze accounts for many reasons, but in most cases is due to an irregularity in your account or an unpaid debt. The question is what are your rights in such cases?
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Following the events of September 11, banking regulations have become much more stringent to restrain terrorists and criminals using financial institutions as a tool to run their business. Banks have the right, in their sole discretion, to suspend your account if they suspect that its holder is engaged in unlawful or suspicious activity such as money laundering. They are alert when large sums are deposited in the account and then relocated to look as if they came from a legitimate source. Such transaction behaviour is being critically examined.
Here a list of activities that may look suspicious and could entail freezing your account:
Your account can also be frozen even if there are no suspicious activities. Here are some examples:
If you have a bank account and at the same time you owe funds to the same bank, they can automatically deduct the debt. This will pay off the outstanding loans without filing a lawsuit or court decision against you.
If your company is in liquidation, and if the business is viable, the bank account may be frozen. This usually happens after receiving notice of the petition to avoid possible liability for debts accumulated during the bankruptcy.
Accounts can also be suspended due to insufficient funds to make payments. Banks can also put a hold or block your card. In such cases, you need to either transfer funds, if available, into that account or arrange to repay the money.
When a security breach occurs, the freeze on your account stands for your protection.
If your bank detects purchases that don’t align with your normal pattern, it may assume that your account was hacked or your wallet was stolen. They could put a temporary freeze on your account to keep your money safe. You might find out about this freeze while you’re standing at the checkout in a cashier or trying to make a purchase online. A security freeze can usually be unblocked with a phone call to verify you are the one making the purchase.
Finally, let's talk about your rights. If you're not a money launderer, a terrorist financier or fraudster, you have the right to receive adequate information on what's the reasoning behind your account freeze.
Once you’ve received a notification that your account has been frozen - either from a creditor company or from the bank itself. Either way, make sure to call your bank immediately or better go to the nearest bank branch to consult what the next steps are.
At this point, when you start the conversation with your bank, keep in mind two magic words: Cooperation and Transparency. Always be transparent and cooperate. You know your account activity is legitimate, so be transparent. Also cooperate by providing proof of the bank activity.
Remember that just as you need to be open and cooperative, on the other hand, you have the right to receive information on what is happening with your bank account.
If you can prove that there is no reason to freeze, the bank will certainly lift up the restrictions by giving you full access to the account again.
As mentioned above, follow the principles of openness and cooperation. Typically, a conversation and re-verification of your identity by the bank's fraud department would lift the restrictions on your account.
If your identity was stolen, or account account hacked, the bank will guide you on how to report it. Please remember to always check your last bank statements in detail and trace transactions.
NOTE: There is a regulatory framework that imposes restrictions on how much money you can lose when your ID card is stolen. The latter depends on how the thieves gained access and whether you reported on time to the bank. It was estimated that the average cost of identity theft is 1,141.15 EUR for victims who had experienced a momentary loss.
Any bank account seizure is preceded by an effective court decision. A seizure is imposed up to the amount of the claim. In case your debt is greater than the balance on your account, the creditor can freeze it all. The different types of debts could be any kind of loans, judgments or liens from civil lawsuits, divorce settlements, child support, back taxes, among others.
The basic rule when your bank account is frozen due to debt or judgment is to find out who the creditor is. The bank must give you a notice with information about the debt and who is the plaintiff in the civil action against you. In this case, it is advisable to seek legal assistance, thus drawing up an agreement with the creditor to reschedule the debt through instalments.
We have written an extensive article on what to do if your credit card gets stolen and what are some best practices to keep your credit card safe in general. But in case your Payhawk card gets lost or stolen, you can freeze the card immediately from the app. You should contact your administrator and don't hesitate to contact our customer support.
Whether you have tens, hundreds, or thousands of employees, we’re making your business spend work for you, giving you control over spending at scale with a single solution. Say goodbye to tedious finance tasks, schedule a demo with us today.
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