What is an asset freeze?
An asset freeze bars dealing with a designated person's funds and economic resources, and separately bars making funds or economic resources available to them, directly or indirectly. The assets stay where they are; ownership does not pass to the state.
The asset freeze is the core financial sanction in the EU, UK, UN and US regimes, and two duties run together inside it. You must not move or use the frozen property, and you must not give the designated person anything of value, which reaches goods, services, credit and even office space. Firms reliably catch the first duty and miss the second. Freezing is also not confiscation: the designated person keeps title, and licences exist for basic needs, legal fees and pre-existing contracts.
What this workflow covers
SCOPE- On a confirmed match, stop the payment, restrict the account, notify the authority where required, and timestamp the sequence.
- Withhold the goods as well as the money. Delivering them makes an economic resource available.
- Paying a non-designated relative who passes the benefit on, or crediting a joint account, can breach the making-available limb even though the payee is not listed.
- The freeze runs while the designation stands and lifts on delisting, on the authority's conditions.
Compliance glossary
TERMS- Economic resources
- Assets other than funds that can be used to obtain funds, goods or services; they fall within the freeze alongside money.
- Making available
- The separate prohibition on providing funds or economic resources to, or for the benefit of, a designated person, directly or indirectly.
Authoritative references
SOURCES- 01Financial sanctions general guidance
Office of Financial Sanctions Implementation, HM Treasury
- 02OFAC Frequently Asked Questions
U.S. Department of the Treasury — OFAC
- 03Overview of sanctions and related tools
European Commission
Frequently asked questions
Q&A- Blocking or freezing: is there a difference?
- They are the same control in two vocabularies. US regulations speak of blocking property and interests in property; EU and UK regulations speak of freezing funds and economic resources. The practical duties, do not deal, do not make available, report, line up closely.
- What counts as an economic resource?
- Assets of every kind that are not funds but can be used to obtain funds, goods or services: property, vehicles, commodities, equipment, and in some analyses intangible assets such as licences. This is why a freeze reaches well beyond bank balances.
- Do we have to report a freeze?
- Usually yes. OFAC requires blocking reports within ten business days, and OFSI requires reporting where a firm knows or suspects it holds frozen assets or has dealt with a designated person. Check the reporting rule of the regime that binds you rather than assuming they match.