When the Bank Says “Blocked”
Imagine waking up to a notice from your bank:
“Your account has been frozen due to compliance with international sanctions regulations.”
Suddenly, your funds are locked. Your company can’t pay employees. Your assets are untouchable. Whether it’s OFAC in the U.S., the EU’s External Action Service, or FATF-aligned regulators abroad, the financial freeze is immediate and devastating.
But here’s the good news: In many cases, these freezes can be challenged. Success depends on how quickly you act, what documentation you can present, and how well you understand the system that locked you out.
Why Are Accounts Frozen?
Bank accounts are typically frozen under three scenarios:
1. You’re Listed
If your name or company appears on the SDN List (OFAC) or similar sanctions databases (EU, UN, UK), your assets are legally blocked. All U.S.-linked banks and many global institutions will enforce the freeze.
2. You’re Flagged
Sometimes, banks preemptively freeze accounts if you appear in a database as a high-risk individual, such as being a Politically Exposed Person (PEP), related to a sanctioned person, or part of an entity under scrutiny.
3. You’re Under Investigation
If a bank notices suspicious transactions or receives alerts through SWIFT or internal compliance tools, they may block funds temporarily, pending investigation.
In all cases, you have legal options — but acting early is key.
Step-by-Step: How to Reverse the Freeze
Step 1: Identify the Trigger
Before anything else, ask the bank in writing for the basis of the freeze. You may get vague language like:
- “Pending regulatory clarification”
- “Blocked under internal sanctions protocols.”
- “Potential match with SDN or AML lists”
Push for specific answers:
- Is it due to an OFAC alert?
- Which transaction or counterparty triggered it?
- Was it based on a government instruction or internal flag?
Understanding the cause shapes the legal path forward.
Step 2: Confirm If You’re Sanctioned
Go directly to the OFAC website:
https://sanctionssearch.ofac.treas.govAlso check:
- EU Consolidated Sanctions List
- UK HM Treasury Sanctions List
- UN Sanctions Database
If your name or entity appears there, you are officially designated. If not, the freeze may be defensive or misapplied, which gives you a stronger case.
Step 3: Prepare a Compliance Package
Your next move is to mitigate risk to the bank or regulator by preparing a package that includes:
- Proof of identity (passport, corporate documents)
- Source of funds explanation
- Business activity breakdown
- Any licenses or clearances from regulators
- Proof of dissociation from sanctioned parties
Attach an affidavit and cover letter from your legal counsel if possible.
Step 4: Engage with the Bank’s Legal and Compliance Team
Do not rely on customer service. Request escalation to:
- Sanctions compliance officer
- Legal and regulatory affairs manager
- External legal counsel (if assigned by the bank)
Use your compliance package to argue that:
- The freeze was a false match
- The entity was mistakenly flagged
- Risk is mitigated and monitored
Ask for an internal review or filing with regulators for potential unblocking.
Step 5: File a Petition with OFAC (If You’re Listed)
If you are on the SDN List, you can file a formal delisting request under 31 C.F.R. § 501.807. Your legal team must:
- Present a strong factual rebuttal
- Document behavioral change or dissociation
- Offer supporting evidence from neutral third parties
- Request a general or specific license while the petition is under review
Be prepared for follow-up inquiries and a lengthy review period — but remember, success is possible.
What Happens If You’re Not on the List?
If you’re not sanctioned, you have a much stronger position. Many freezes are precautionary or based on weak links (e.g., same last name, same company name, or outdated data). In these cases:
- The bank has more discretion to lift the freeze
- A legal notice, a compliance file, and a formal appeal usually work
- Time-to-resolution is usually faster (2–8 weeks)
Cases Where Relief Has Worked
Tech Entrepreneur in Dubai:
Flagged due to a similar name to an Iranian oil trader. After submitting passport scans, registration papers, and a legal opinion, the account was unfrozen in 21 days.
West African Trader:
Funds blocked due to links with a blacklisted port. Provided rerouting documents, compliance audit, and contract revisions. Partial access restored via specific OFAC license.
Ukrainian Family Trust:
Caught in banking freeze after 2022 sanctions. Showed divestment from targeted assets and implemented new risk protocols. Funds unfrozen after 3-month legal battle.
Important Don’ts
- Do not try to move blocked funds using friends, crypto, or new accounts
- Do not threaten the bank — be firm but professional
- Do not go silent — inactivity is treated as non-cooperation
Your Legal Toolkit
To strengthen your efforts, consider using:
- Sanction law firms to draft petitions or compliance plans
- External auditors are to certify the source of funds or business legitimacy
- Diplomatic channels (if PEP or political) to support your case
When facing a sanctions-related bank freeze, time and precision are critical. Lionel Iruk, Esq., Managing Partner and General Counsel at Empire Global Partners, has helped clients recover frozen funds through OFAC-specific licenses, diplomatic legal filings, and direct negotiation with international financial institutions. His approach is tailored for high-net-worth individuals and global companies who need more than just a template — they need a strategic recovery roadmap.
Freezes Aren’t Always Final
A frozen account due to sanctions is frightening, but it’s not the end. With quick response, strong documentation, and legal guidance, most freezes can be resolved or mitigated.
The longer you wait, the harder it becomes. Act early, stay informed, and build your response like a legal case — because that’s what it is.
