How to prevent frozen bank accounts

[janinlondon]

Can anyone help with this please? Every year since she turned 18 (and therefore had access to the money we have saved in trust for her since birth) DD deposits her savngs in a high interest account. Whenever the term is up and she moves this money through her current account to put into another high interest account, the bank freeze her funds. We then have to supply them again with THEIR OWN records of where the money came from, and explain why it is moving through the current account. It is driving us to distraction. Is there a way to stop them from doing this every sodding year? Last year they froze the account for weeks, and she was left at Uni with no access to her money.

What reason do the bank give for doing this?

They dont give a reason. By law they dont have to tell you anything! I presume its money laundering regulations. They are not allowed to tell the account holder.

It's usually because they're worried about the source of funds. Do you or she have any association with countries subject to sanctions, or a business which deals with a lot of cash?

Or is anyone in the family a politician? That would trigger potential concerns about bribery.

you can't be in the UK if it is a high interest account!

hahaha - you are rigth Mencken!! - high is a relative concept. We are in the UK and the funds move in and out the bank every January. The bank held them until she was 18 so the source is very clear. And they can see she deposits them in high(er!) interest term accounts and moves them at end of term. No one is a politician. She is UK born and has lived here all her life - held this account since she was 11. The young man at the bank who was saddled with the problem last January said the same thing happened to him when he received a loan into his bank account. Frozen for three weeks. I am just trying to find a way to stop it this time before it happens!

Could you ask the bank if they have a transfer method which will work with their systems?

Look at the new account /old accounts to do direct transfers instead of using the current account as a stop point?

I don't know much about this fully but I do think there will be ways of doing it (maybe speak with an ifa?) as many people will be doing similar with funds.

Perhaps change bank?

can she open a second bank account purely to deal with this money? or not transfer directly from one saving account to the other?

Is it over £10,000 as then subject to checks

Have you spoken to the bank? Certain amounts require them to perform additional checks but most banks if you speak to them before, explain and provide proof if they need it then it's already been done so while it will still freeze it (automatic system) the process will be a lot quicker as they have everything they need

Not so much they don't have to tell you anything, they can't tell you anything. If they do, they can be charged with tipping off.

OP is she using the same bank for all accounts? If not, the bank will be erring on the side of caution as just because previous transactions were genuine it doesn't mean future transactions are.

It's the moving in and quickly moving out that's red flagging the transactions.

The thing is they freeze the account the second the money arrives into it. Its the same amount of money as they transferred out last January, and the January before....and the documents we supply each time to get it unfrozen are the exactly the same documents every year - they are the banks' own records???! And yet it is frozen for 3 weeks to a month every time.....we tried warning them in advance. No joy I'm afraid.

Instead of holding it all in one account, could she split it up.

If she had £20,000 for example:
£5,000 in an instant access savings account - this she uses for dipping in to, topping up as and when needed.
£15,000 in a Stocks & Shares ISA which she does not intend to touch for a period of about 5 years. She could access it at anytime but due to stock market risks there is a chance that she will access it when it is worth less than initially invested.

The ISA would just sit somewhere, it can be moved between platforms (the way that Funds/OEICs are accessed) but such moves remain with the ISA wrapper, so the providers are used to doing large transfers.

Another option is is split it up even more, she may be wanting some of the money to use towards a first home purchase, so she may want to put £4k into a Lifetime ISA every financial year. That will tie the money up but make it available for buying first home, or kept for retirement. Then have the remainder in an instant access account and a Stocks & Shares ISA, depending on the amount involved.

She may like the Millennial Finance podcast series which also has a free ebook.

She is doing great already in saving money for her future but she is saving cash... which will go down in value as nowhere gives a rate of return above inflation. So learning about other ways of using money for the near and far future may be useful.