When running a business in the UK, many companies may suddenly face a situation like this:
The corporate bank account can no longer send or receive payments, and the bank only responds with:
“We are conducting a compliance review.”
No further explanation is given, and no timeframe is provided for unfreezing the account.
In most cases, this is linked to Anti-Money Laundering (AML) checks. If handled incorrectly, it can disrupt business operations — and in serious cases, may even trigger regulatory scrutiny.
1. Why Would a Bank Freeze a Company Account?
In the UK, banks have strict legal obligations to prevent money laundering and terrorist financing.
When suspicious or high-risk activity is detected, a bank may freeze an account temporarily and start an internal investigation — often without giving advance notice.
Common triggers include:
- unusual transaction flows or amounts (large movements in a short period, frequent split transfers)
- transaction patterns that do not match the company’s declared business activities
- frequent international transfers, especially involving high-risk countries or regions
- mixing personal and corporate funds
- unclear source of funds or unclear purpose of payments
- risk alerts received from third parties or regulatory bodies
It is important to note:
A frozen account does not automatically mean the company has committed a money laundering offence.
However, it does indicate the bank believes there is a compliance risk that requires verification.
2. What Should a Company Do After the Account Is Frozen?
1) Do not repeatedly chase the bank or give inconsistent explanations
During an AML review, banks usually do not disclose investigation details — and this is legally permitted.
Frequent calls, emotional communication, or contradictory explanations may be recorded and could negatively impact the bank’s risk assessment.
2) Identify the nature of the freeze: internal review or law enforcement action
Account freezes generally fall into two categories:
- internal compliance freeze by the bank (most common)
- law enforcement or regulatory freeze (e.g., involvement of police or HMRC)
The legal consequences and response strategies are very different, so early professional assessment is highly recommended.
3) Prepare and organise compliance documentation
During a compliance review, banks commonly request:
- a clear explanation of the company’s business activities
- contracts, invoices, and commercial documents
- explanation of source of funds and intended use of funds
- background information on directors or shareholders
All documents should be accurate, consistent, and logically presented, avoiding repeated revisions, contradictory statements, or last-minute changes.
4) Use professional representation for external communication
If the frozen amount is significant or the freeze continues for an extended period, it is advisable to have a solicitor or compliance adviser communicate with the bank on behalf of the company, in order to:
- ensure responses remain compliant
- avoid unnecessary risk statements
- assess whether the matter may escalate into a regulatory investigation
3. Common but High-Risk Mistakes
In practice, the following actions can significantly increase risk:
- hiding or fabricating the source of funds
- deleting or altering historical transaction records
- giving inconsistent explanations to multiple banks
- attempting to operate through third-party accounts to bypass restrictions
- continuing high-risk transactions before the account is released
These behaviours may be seen as attempts to evade scrutiny and could further intensify suspicion.
4. Potential Consequences of an Account Freeze
Depending on the circumstances, a corporate account freeze may result in:
- long-term restriction of access to funds
- the bank terminating the banking relationship
- the company being flagged for enhanced monitoring
- information being passed to HMRC or law enforcement
- reputational damage and disruption to commercial relationships
In extreme cases, the matter may escalate into criminal or tax investigations.
5. Professional Note
In the UK, a corporate account freeze is not simply a “technical issue”.
It is fundamentally a compliance and risk management issue.
The earlier a company responds in a professional and structured manner, the more likely it is to keep the situation within the bank’s internal review process — and reduce the risk of escalation to regulators or law enforcement.
Conclusion
Corporate bank account freezes often occur without warning. Whether the account can be successfully released depends not on how urgently the company reacts, but on whether it follows the correct and compliant response pathway.
During the freeze period, any improper actions may lead to long-term consequences.
