A frozen bank account means you cannot carry out any transactions. The banks allow you to access your frozen bank account, but there are certain limits to what you can do. You can receive funds including your monthly salary but can’t transfer or withdraw any money.
Once your bank account gets frozen, the deposits stay put until it unfreezes. So there is a good chance that your rent, car loan payment or any other monthly payments won’t go through. There are various reasons why banks in the UAE freeze accounts. It may be a suspicious activity or any judgement against you for recollecting unpaid debts. Let us find out the primary reasons for the same.
Why Banks Freeze Accounts in the UAE?
Bank accounts in the UAE can be frozen for the following reasons.
- Suspicious Activity: Banks in the UAE monitor accounts to track down suspicious or illegal activities. They have the authority to freeze your bank account if they notice any activities such as money laundering, terrorist financing and many others.
Bad cheques are also suspicious when it comes down to a bank’s security measures. If you are writing or cashing a bad cheque, the bank can freeze your account. If you have written a cheque for a specific amount and you don’t have enough balance in your account, it is considered a fraud. The banks can freeze your bank account on account of this activity as well.
In some cases, large and unusual deposits can also be considered suspicious activity. Make sure if you have such an amount coming into your account, you alert your bank about the same.
- Huge Unpaid Debts: Your creditors can also have your bank freeze your account to satisfy your huge unpaid debts. However, they need to ask for the court’s permission to be authorised for the same. If the court grants the permission, the freeze cannot be lifted until the debt is cleared in full.
- Loss of Employment: In the UAE, when someone leaves or loses a job, the banks get a final salary payment notification from the employers. The statement shows that the employee will no longer be working with the specific company. In case the employee has any unpaid debts, the employer can request the bank to freeze the employee’s bank account. These debts include personal loans, car loans, parking fines and much more.
However, many employees in the UAE change their jobs smoothly. Freezing bank accounts is not always the case, and the possible actions vary from bank to bank. Most people do not come across any challenges while changing their jobs, while others have all their finances put on hold.
- Death of the Account holder: This is another common reason for bank accounts being frozen in the UAE. The banks freeze individual accounts in the event of the unfortunate death of the account holder. Only the joint accounts with other living members can be activated through the UAE Sharia court’s order. The process for the same could take up to several months.
- Arrest of the Account holder: If the account holder gets arrested for reasons like getting involved in a car accident, causing injuries, or claimed pending debts by the employer, there is a huge risk of getting a bank account frozen until the charges have been revoked or resolved.
You get the notification for your bank account freeze. Make sure you contact your bank immediately to find out what you need to do next. You must not ignore the bank freeze notification. It may cause a drop in your credit score and you may need to pay additional banking charges.
If you find the reason for your bank account freeze due to some legitimate activity, you must contact your bank with proof and let them know that there should be no freeze. There is a possibility the bank releases the suspension and enables you to access your bank account after verifying the information provided.
If your bank account has been frozen due to unpaid debts, you must contact the creditors and arrange repayment for them. You can also consider taking legal help and understand the legal actions that can be taken against you and your rights in such cases.