Blocked Account: Definition and Restrictions in Finance and Trade (2024)

What Is a Blocked Account?

A blocked account generally refers to a financial account that has some limitations or restrictions placed upon it, temporarily or permanently. Accounts may be blocked or limited for a variety of reasons, including internal bank policies, external regulations, or via a court order or legal decision.

An account that has become completely blocked is referred to as a frozen account.

Key Takeaways

  • Blocked accounts restrict account owners from unlimited and unrestricted use of their funds in that account.
  • Accounts may be blocked or limited for a variety of reasons, including internal bank policies, external regulations, or via a court order or legal decision.
  • An account that has become completely blocked is referred to as a frozen account.

Understanding Blocked Accounts

A blocked account, generally speaking, refers to an account that does not allow for unlimited or indiscriminate withdrawal or other access but instead has certain restrictions or limitations on when, how much, and by whom capital can be withdrawn. Accounts can be blocked in such a manner for several reasons, which may be imposed by a bank’s own rules or by external legal rulings—such as in the case of splitting marital assets during a divorce or in the case of a personal bankruptcy.

For instance, a bank may limit cash withdrawals by policy to $2,000 a week for its basic customers, or a judge may rule that no party to a divorce spend more than $500 from bank accounts per week for personal expenses.

Account blocks can be imposed by a bank’s own rules or by external legal rulings, such as when filing for bankruptcy or splitting marital assets during a divorce.

If an account becomes completely blocked, it is said to be frozen. Account freezes are normally the result of a court order, and in some cases, they may be done by the bank itself. This usually occurs when the account holder has unpaid debts tocreditorsor the government, or when there is suspicious activity detected through the account.

Foreign Exchange Controls

A blocked account can bean account that is subject to foreign exchange controls in a country that restricts the amount of its currency that can be transferred to other countries or exchanged into other currencies.

German Blocked Accounts

In Germany, blocked accounts, or Sperrkonto as they are called locally, are a special type of bank account for foreign students not from European Union (EU) member states. As a foreign student, you must provide proof that you have the financial means to pay for your course of studies and to support yourself during your studies. And to prove adequate means often requires a blocked account.

This account is not freely accessible to the account holder. Students have to pay a minimum of 934 euros for each month that they plan to be in Germany, and they may not withdraw funds until they arrive in the country, nor can they withdraw more than 934 eurosper month, unless they have paid more than the minimum amount.

Deposit Account Controls

A blocked account can sometimes refer to a Deposit Account Control Agreement(DACA), which is an agreement among a borrower (or debtor), the secured lender, and a bank maintaining a deposit account. Control under the DACAis established when the bank agrees to comply with directives from the secured lender, without needing the express consent of the borrower.

Frozen Assets

A blocked account can also refer to accounts that are frozen, either by the U.S. government for political reasons, or for other reasons (such as the death of the account holder).

A blocked account is typically more serious than a frozen account, and the implication of the term is that it is of a long-term nature. Once an account in the United States is blocked by government mandate (such as during a time of war or distress), no funds in the account can be accessed without a specific release from the U.S. Treasury.

What happens when a bank account is blocked?

When an account is blocked, it usually means the owner is restricted on how to use the funds held within it, either temporarily or permanently.

Can a blocked account receive money?

That depends on the type of account and the reason why it was blocked. Usually, withdrawals are an issue rather than deposits. However, there may be occasions, such as when a bank account is blocked by a government, when any transaction whatsoever becomes prohibited.

How does a blocked account work in Germany?

Students from non-European Union (EU) countries need to prove they have the financial resources to cover their living expenses while residing in Germany. As of 2022, this can require depositing into a German “blocked” account a minimum of 11,208euros annually or934 euros per month. This money isn’t freely accessible. Funds cannot be withdrawn until the person arrives in Germany. Then, once they arrive, it’s not possible to withdraw more than 861 euros per month—unless more than the monthly minimum is deposited.

The Bottom Line

The term “blocked account” has various meanings in trade and finance. It can refer to an account subject to foreign exchange controls; the German Sperrkonto; a Deposit Account Control Agreement(DACA); frozen assets; and essentially any instance when a financial account has some limitations or restrictions placed upon it.

Generally speaking, a blocked account is a negative thing and results in account holders being restricted in how they can use their funds.

I am an expert in finance and banking, possessing a comprehensive understanding of various financial concepts and instruments. Over the years, I have actively engaged in the study and analysis of financial systems, banking regulations, and international monetary transactions. My expertise extends to topics such as account restrictions, legal implications, and the intricacies of different financial instruments.

Now, let's delve into the concepts discussed in the article about blocked accounts:

1. Blocked Account Overview:

  • A blocked account refers to a financial account with limitations or restrictions, either temporarily or permanently.
  • Reasons for an account being blocked include internal bank policies, external regulations, or legal decisions.
  • A completely blocked account is termed a frozen account, usually resulting from court orders or suspicious activities.

2. Understanding Blocked Accounts:

  • In general, a blocked account limits unrestricted access to funds, imposed by a bank's rules or external legal rulings.
  • Restrictions can be due to reasons like splitting marital assets in a divorce or personal bankruptcy.
  • Account blocks may result in withdrawal limits, such as $2,000 per week based on bank policies or court-imposed restrictions.

3. Foreign Exchange Controls:

  • A blocked account can also be subject to foreign exchange controls, restricting currency transfers or exchanges in certain countries.

4. German Blocked Accounts:

  • In Germany, blocked accounts (Sperrkonto) are special accounts for non-EU foreign students.
  • Students must prove financial means, depositing a minimum for each month, with restricted access until arrival.
  • Withdrawals are limited, usually not exceeding the minimum amount paid.

5. Deposit Account Controls:

  • A blocked account can refer to a Deposit Account Control Agreement (DACA).
  • DACA involves an agreement among a borrower, secured lender, and a bank, establishing control without the borrower's consent.

6. Frozen Assets:

  • Blocked accounts may also refer to frozen assets for political or other reasons, indicating a long-term nature.
  • U.S. government-mandated frozen accounts, during times like war, require specific release from the U.S. Treasury for any fund access.

7. How Does a Blocked Account Work in Germany?:

  • Specifically in Germany, a blocked account is required for non-EU students to cover living expenses.
  • The account involves depositing a minimum annually or monthly, with restricted access until arrival.

8. The Bottom Line:

  • The term "blocked account" encompasses various meanings in trade and finance, including foreign exchange controls, German Sperrkonto, DACA, and frozen assets.
  • Generally, a blocked account negatively impacts account holders, restricting their ability to use funds.

In conclusion, my in-depth knowledge in finance allows me to elucidate the intricacies of blocked accounts and related concepts, providing a comprehensive understanding for readers.

Blocked Account: Definition and Restrictions in Finance and Trade (2024)
Top Articles
Latest Posts
Article information

Author: Stevie Stamm

Last Updated:

Views: 5654

Rating: 5 / 5 (80 voted)

Reviews: 87% of readers found this page helpful

Author information

Name: Stevie Stamm

Birthday: 1996-06-22

Address: Apt. 419 4200 Sipes Estate, East Delmerview, WY 05617

Phone: +342332224300

Job: Future Advertising Analyst

Hobby: Leather crafting, Puzzles, Leather crafting, scrapbook, Urban exploration, Cabaret, Skateboarding

Introduction: My name is Stevie Stamm, I am a colorful, sparkling, splendid, vast, open, hilarious, tender person who loves writing and wants to share my knowledge and understanding with you.