Blocked Account Agreements

A blocked account usually refers to a financial account that has temporary or permanent restrictions or restrictions that can occur for a variety of reasons and reasons. If an account is completely blocked, it is called “frozen”. The freezing of accounts is usually the result of a court order and can, in some cases, be carried out by the bank itself. This normally happens when the account holder has outstanding debts to creditors or the government or when suspicious activity is detected through the account. One act that a third-party bank must perform under a BAA is the unloading of funds from one or more blocked accounts to a consolidation account. Sweeping is important because it concentrates funds on a single account from which payments can be made easily to the lender. If the lender is a bank and maintains the consolidation account on which funds are swept away, it is he, not the third bank, that controls the funds. To do this, a lender may need frequent sweeping to minimize the risks associated with a potentially less credible bank, which holds the funds. This may be a point of contention with the borrower, as more frequent sweeping could lead to increased costs through wire transfers and administrative fees collected by the third bank.. . .


By Tim