Dr.Thomas (Special Correspondent)
Over the course of more than a decade,we Indians have been subjected to the arrogance of banks freezing our savings and checking accounts for technical reasons,the most common of which is our failure to comply with the frequent updation of know-your-customer (KYC) documents mandated by the government.
The Reserve Bank of India is to fault, say the banks (RBI).The Reserve Bank of India absolves itself of blame by referring to the PMLA and the record-keeping regulations it enacted in 2005.
The government has the right to seek answers and urge banks to freeze accounts if it has reasonable suspicion that the funds within reflect the proceeds of criminal activity,money laundering,or tax evaded income.
However, there is a serious problem when bank employees at the branch level have the authority to freeze customers’accounts.
These employees may wreak havoc on people’s lives and livelihoods based on technicalities or a misunderstanding of the regulations.
A Few of the Potential Causes of Account Freezing
There are a few potential causes for a frozen account.If the account holder fails to make required withdrawals or commits other infractions,the authorities or a court may freeze the account.
If you violate the terms of Regulation T,the Federal Reserve Board can seize both your bank and brokerage accounts,preventing you from accessing cash or buying securities.
The 90-day halt is put in place to discourage free-riding, which occurs when an investor tries to purchase and sell assets without actually paying for them.
Even if a trader’s account is frozen, they can still make purchases of securities so long as they pay for them in full on the day of the deal.
If a bank has reason to suspect that an account’s recent behavior is suspicious or out of the norm, the bank may choose to temporarily freeze the account in question.
This may happen if the bank notices activity on the account that raises suspicions that it was fraudulently performed.
For instance,if you make a large withdrawal or transfer to an offshore account out of the blue,it might be a sign that your account has been hacked.
In the event of the account holder’s death and the absence of a beneficiary or administrator of the estate, the account may be frozen.
Any and all joint accounts, such as those owned by a spouse or business partner,may be frozen if a person is determined to be involved in certain offences.
If the owner of an account is suspected of engaging in criminal activities,the bank or a court of law may freeze the account.Customers can request that their accounts be frozen by the financial institution.
How to Unfreeze an Account
Account freezes are temporary, but there are steps you need to do to get your money back in your account.When all past due debts to creditors or the government have been paid in full,the freeze on the account will be lifted. Creditors can sometimes negotiate debt reductions that benefit both parties.
When the bank has finished investigating an instance of questionable conduct, the freezing order is often lifted.
Account closure and the forfeiture of any remaining cash may occur upon the discovery of criminal behavior or the account holder’s participation in fraud involving the account.
