What Is a Frozen Bank Account? The Ultimate Guide

Losing access to your only source of cash would be a nightmare for almost anyone. However, you could find yourself in this predicament if your bank suddenly freezes your account, leaving you unable to withdraw money and pay bills.

Banks and legal authorities typically suspend accounts if they suspect fraud, money laundering, or financial irregularities. Blocks can also occur if you're going through bankruptcy, have unpaid debts, or are facing a court order.

In this guide, we explore the implications of a frozen account, the most common reasons for an account seizure, and how to get your finances back on track. This way, you can regain control of your money as soon as possible, with minimal damage to your financial health.

Freezing a bank account is a legal process that restricts access to funds. It can apply to both personal and business products, usually resulting from legal, financial, or security concerns.

UK banks have a regulatory obligation to follow anti-money laundering (AML) regulations. Under bank account freeze rules, financial institutions must investigate if they notice unusual activity, such as large payments or transactions inconsistent with your usual habits.

You could also lose access to your account if you owe money and your creditor (the person to whom you are in debt) obtains a third-party debt order—a court order allowing the creditor to recover the debt directly.

The suspension may last until relevant authorities determine the amount you owe and the most appropriate repayment methods.

If a bank suspects illegal activity on an account, it will file a Suspicious Activity Report (SAR) with the National Crime Agency (NCA), which may result in the account being frozen.

Under the Proceeds of Crime Act 2002, the NCA has 7 days to decide whether to unfreeze the account or pursue a formal investigation.

A block also requires an Account Freezing Order (AFO), which is obtained through authorities such as HMRC or the police. Accounts containing just £1,000 may be subject to an AFO.

Frustratingly for those undergoing an investigation, banks often can’t provide you with a reason for seizing your account. From a bank’s perspective, revealing the cause of an inquiry may interfere with criminal or regulatory proceedings.

Furthermore, bank employees could face criminal prosecution and up to 5 years’ imprisonment if they share the reason for a suspension. This is known as ‘tipping off’ or alerting someone they are under investigation.

You can also ask a bank to freeze your accounts if you believe you have been the victim of criminal activity.

If a business owner fails to repay a debt, a creditor may make a ‘winding-up’ petition—a legal move that could force a company into liquidation and lead to an account seizure.

Unfortunately, small businesses are particularly vulnerable to suspensions. Unlike large or international firms, smaller companies often rely on a single account to pay staff or suppliers, and receive payments from customers. If that account is frozen, the subsequent disruption can prevent the company from operating efficiently.

This can result in late payments, damaged client relationships, or missed sales. In some cases, business owners may need to use personal funds or seek emergency financing to keep the company afloat.

While you may never know the exact reason for an account freeze, common causes include:

Large deposits, frequent international transfers, or irregular spending patterns can trigger a block while authorities investigate.

If your bank can't verify the source of your funds or confirm your identity, it may freeze your account until you can provide the required documentation, which may include a passport or other photo ID.

A court can freeze your account if you’re involved in legal proceedings—often based on suspected financial misconduct.

If you’re declared bankrupt or your business becomes insolvent, your account may be blocked to protect your creditors and help recover their funds.

When a creditor has won a court judgment against you, they can apply to freeze your account to recover any debts.

If a bank suspects someone else is illegally using your account, it may initiate a freeze to protect you from further loss.

In extreme cases, your account could be frozen due to non-payment of taxes or breaches of tax law.

If you don’t comply with the rules of your account, your bank may suspend access. Examples of breaches include exceeding credit card limits and regularly going beyond authorised overdrafts.

If you’re locked out of your only source of income, regaining access is understandably a top priority. Here’s what to do:

The first step is to contact your bank to see if you can determine the reason for the freeze. You should ask to speak directly to the company’s fraud team.

As previously mentioned, however, the bank may not provide this information if there’s suspicion of illegal activity.

If you can still log in to online banking, you may want to search for any unusual transactions, as these could provide a clue to the reason behind the block.

In simple cases, unlocking your account may require you to repay a debt, confirm your identity, or address a technical issue. Seeking advice from a solicitor or financial expert specialising in frozen bank accounts is also wise.

It’s also sensible to gather as much documentation as possible and keep detailed records, especially if you believe the freeze is unjustified and you want to lodge a complaint. Having clear evidence could also help your solicitor unfreeze your account more quickly.

Sadly, some issues aren’t so easy to resolve, and you may need to take matters further. For instance, you may not be satisfied with your bank’s response to your complaint letters, its reply times, or the level of compensation offered.

If you complain directly to your provider, the company will have 8 weeks to investigate or issue you with a ‘deadlock letter’—stating that you can’t come to a satisfactory resolution.

At this stage, you can escalate your grievance to the Financial Ombudsman Service (FOS), which deals with disputes between UK financial services and consumers. In extreme cases, the FOS can award up to £430,000 to those who have been mistreated by a financial provider.

When making your initial complaint to your bank, clarify that you’re willing to escalate things to the Ombudsman, if necessary. This threat alone could encourage your bank to take a more reasonable stance or speed up its investigation. If the Ombudsman upholds your complaint, your bank is legally bound to comply with its decision.

You can’t usually withdraw money from a blocked account, as most banks prevent withdrawals and direct debits while an investigation is underway. You’ll normally regain access once the cause of the freeze has been resolved. Likewise, a bank will typically prevent third-party payments into a frozen account.

However, there are exceptions. If a court freezes your account, you or your solicitor can apply to have funds released for essential living expenses, such as rent, food, and day-to-day bills.

Fortunately, there are other ways to access cash if your account is unexpectedly blocked. While these methods won’t solve underlying issues, they can alleviate some of the immediate financial pressure and keep your personal or business finances on track in the short term.

Despite the freeze, you may still be able to set up another account with a different provider. In some cases, a basic bank account could be the best option following bankruptcy or insolvency, as these tend to accept applicants with a less-than-perfect financial history.

Ask your new provider if you can set up your regular payments, and notify anyone who owes you money to make deposits into the new account.

While getting into debt is never ideal, one of the simplest solutions to a temporary freeze is to use a credit card to cover urgent costs. However, you should repay the balance immediately as soon as you regain access to your account, as this will help you avoid unnecessary interest payments on your credit card.

Systems such as PayPal, Apple Pay, or Google Pay sometimes allow you to continue making payments if your main account is inaccessible.

If you have funds in another account, temporarily transferring money from your savings into an unaffected current account could offer a temporary solution. You could also speak to friends or family about using their accounts to receive wages or cover day-to-day spending.

Having a backup account can be a lifesaver for small businesses. Otherwise, you could use third-party payment providers, such as Stripe, PayPal Business, or Square. These allow you to continue taking and, in some cases, making payments independent of your main account.

If your bank suspects fraud or needs to comply with anti-money laundering regulations, it can suspend your account immediately. Luckily, providers typically resolve investigations within a few days or weeks. However, complex cases can take far longer.

In fact, a freeze can last for up to 2 years if authorities such as HMRC and the NCA believe you’re involved in criminal activity. Initial orders remain in place for 6 months, but courts can extend this period if they believe there is reason to do so. If an account is frozen due to non-payment of taxes or debts, the block may remain in place until you pay what you owe.

This depends on the provider and the nature of the issue. Some banks allow you to resolve issues online, while others require a phone call or face-to-face meeting. Your bank should clearly explain its process for reactivating your account, if and when you can do so.

Yes, you can challenge an Account Freezing Order (AFO). You may argue that your bank has misrepresented facts or didn’t follow proper procedures when instigating the freeze. A specialist solicitor should be able to help with this matter.

Yes, although closures operate differently from account freezes. In some cases, a bank may close your account if it believes you haven’t followed its terms and conditions by regularly going into an unarranged overdraft or failing to make credit card repayments.

If a bank closes your account without any suspicion of criminal activity, it should return your funds. However, you’ll likely need to provide information as to where you’d like your money to go.