Account freeze

What it means

An account freeze means the bank stops the account holder from using the money in the account, either entirely or up to a certain amount. The company cannot pay suppliers, wages or taxes until the freeze is lifted.

The most common causes are enforcement by attachment of the account, tax enforcement by the tax or customs office, a court interim measure, or a bank or the financial intelligence unit delaying an unusual transaction.

A bank may also restrict an account on its own, for example if the client does not document the source of funds or fraud is suspected. In enforcement the bank must block the account from the moment it is served notice that proceedings have begun.

How it works in practice

A company usually learns of a freeze when a payment fails. The first step is to find out the reason and case number from the bank and contact the enforcement officer or authority that ordered it.

In enforcement the debt can be paid or an instalment plan agreed and the freeze lifted. If the enforcement is unjustified, objections must be filed within short statutory deadlines.

To keep operating, the law in some cases allows money to be released for employees' wages. It is wise to have a second account at another bank and a cash reserve for such situations.

What to watch out for

A freeze can quickly turn into inability to pay, as the company cannot pay suppliers or contributions. The director must watch whether a duty to file for bankruptcy arises.

Debts leading to enforcement often stem from overlooked letters. Companies should check their electronic mailbox regularly, because delivery counts even if the message is never opened.