Frozen bank account? What to do about account blocks and KYC checks

If your bank freezes your account, blocks payments or asks for source-of-funds evidence, act quickly but keep the complaint factual. Ask what information it needs, provide organised evidence, keep a timeline, and record the impact on bills and access to money. If the bank handles the review unfairly, you can complain and escalate to the Financial Ombudsman Service for free.

Banks do sometimes have legitimate reasons to review or restrict accounts. The complaint is usually not "the bank asked questions." It is "the bank handled the review badly, delayed unnecessarily, asked unclear questions, or caused avoidable harm."

Key takeaways

• Banks have legal and regulatory obligations around identity, financial crime, money laundering and account monitoring.
• A freeze or block can be legitimate, but the bank's handling can still be unfair.
• Source-of-funds evidence works best when it directly explains the transaction or activity being questioned.
• A clear timeline and impact evidence matter if the account block caused hardship.
• The Financial Ombudsman Service is free and independent.

Who this guide is for

This guide is for people whose bank, e-money account or payment provider has:

• frozen an account
• blocked a payment
• restricted withdrawals
• asked for KYC documents
• asked for source of funds or source of wealth
• closed an account after a review
• returned money to source
• refused to explain what is happening

It is especially useful if your main account is blocked and you need to show urgency clearly.

Why banks freeze or block accounts

Common reasons include:

• unusual account activity
• large or unexpected incoming payments
• source-of-funds questions
• identity or address verification issues
• fraud concerns
• sanctions or politically exposed person checks
• money laundering risk reviews
• suspected misuse of the account
• a decision to close the relationship under the account terms

The FCA has reported that payment account providers may suspend or terminate accounts for financial crime reasons, sometimes at short notice. It has also highlighted that financial crime controls can create difficulties for customers, so firms need effective processes and fair treatment.

Sources: FCA UK Payment Accounts: access and closures, FCA UK Payment Accounts update, and Financial Ombudsman Service guidance on frozen accounts and blocked payments. Last checked: 23.06.2026.

Why the bank may not explain everything

This is one of the most frustrating parts. During some financial crime reviews, banks may be limited in what they can tell you. They may avoid giving details that could undermine checks or legal obligations.

That does not mean the bank can ignore you indefinitely. A fair process should still be as clear as possible, ask for information in a usable way, review what you provide, and avoid unnecessary delay.

Common mistakes

• Sending scattered screenshots instead of a clear evidence pack.
• Ignoring a source-of-funds request because it feels intrusive.
• Calling repeatedly without creating a written record.
• Arguing only that the bank has "no right" to review the account.
• Not documenting missed bills, charges or hardship.
• Failing to ask exactly what information is still outstanding.

What evidence helps most?

The best evidence depends on the payment or activity being questioned.

Useful documents include:

• payslips or employment contract
• invoices and client contracts
• sale receipts, vehicle sale documents or marketplace records
• tenancy, property sale or remortgage documents
• inheritance or gift evidence
• tax records or accountant letters
• bank statements showing the money trail
• crypto exchange records, if relevant
• loan agreements
• messages from the bank requesting information
• evidence of failed payments, fees or hardship

Do not just send everything. Label the evidence so the bank can connect each document to the transaction it is questioning.

How to respond to a KYC or source-of-funds request

Use this structure:

1. Identify the account and request: account, date of bank request, what it asked for.
2. Explain the money trail: where the money came from and why it moved.
3. Attach matching evidence: label each document.
4. Ask what remains outstanding: make the bank say what else it needs.
5. Explain urgency: bills, rent, mortgage, food, business costs or vulnerability.
6. Ask for a timescale: when the review will be completed or updated.

Keep the tone factual. Anger is understandable, but clarity moves the review forward.

When the handling may be unfair

Potential complaint points include:

• the bank repeatedly asked for documents already supplied
• it gave unclear or contradictory instructions
• the review took much longer than necessary
• it failed to consider hardship or vulnerability
• it blocked more funds than necessary
• it returned money to source without clear handling
• it closed the account without following the relevant terms
• it caused avoidable charges, missed bills or distress

The Financial Ombudsman Service can look at whether the bank acted fairly in the circumstances. It may not force the bank to keep you as a customer, but it can consider delay, communication, impact and whether money was handled fairly.

How to complain

Your complaint should include:

• account details
• date the account was frozen or payment blocked
• what the bank asked for
• what you provided and when
• any unanswered questions or repeated requests
• the practical impact on you
• the outcome you want

Possible outcomes include return of funds, clearer communication, reimbursement of charges, correction of records, or compensation for distress and inconvenience where appropriate. Present these as requested outcomes, not promised results.

When and how to escalate

If the bank sends a final response you disagree with, or eight weeks pass without resolution, you can complain to the Financial Ombudsman Service.

The Financial Ombudsman Service is free, independent, and you keep any compensation it awards. Keep the usual six-month referral window from the final response in mind, and check current rules before waiting.

How HeyRefund can help

Frozen account complaints are document-heavy. HeyRefund helps you organise the bank's requests, your source-of-funds evidence, the account timeline and the impact on you into a clearer complaint you can send yourself.

You can complain and escalate for free. HeyRefund just helps you prepare the file in a way a decision-maker can follow.

Related guides: if the freeze followed a fraud or scam on your account, see what to do if your bank refuses to refund money lost to a scam.