Asset freeze
Also called asset freezing, blocking of property
An asset freeze is a sanctions measure that stops anyone from dealing with the funds or economic resources of a designated person, or making funds available to them. The assets stay with the bank or holder but cannot be moved, used or released without a licence from the sanctions authority.
How it works
When a government or the UN designates a person or company, every firm under that jurisdiction must freeze what it holds for them straight away. Banks screen customers and payments against the sanctions lists, and a confirmed match means the account is blocked and incoming funds are held. The freeze also covers entities the designated person owns or controls, so firms check ownership as well as names.
Frozen assets stay frozen until the designation is lifted or a licence allows a specific payment, such as basic living costs or legal fees. Firms must report frozen assets to the authority within set deadlines, for example to OFSI in the UK or OFAC in the US. Dealing with frozen funds, or helping someone get round a freeze, is a criminal offence or a civil violation.
The rules
Requires states to freeze without delay the funds and economic resources of persons who commit or facilitate terrorist acts.
All UN member statesLets ministers make sanctions regulations, including asset freezes on designated persons, enforced by OFSI and HM Treasury.
All UK persons and anyone in the UKFreezes all funds and economic resources of listed persons and bans making funds available to them, directly or indirectly.
EU persons and anyone doing business in the EURequires a report to OFAC within 10 business days of property becoming blocked, plus an annual report of blocked property.
US persons, including financial institutions, holding blocked propertyCommon questions
Is an asset freeze the same as confiscation?
No. Frozen assets still belong to the designated person, but nobody can use or move them. Confiscation transfers ownership to the state and needs a separate legal process, usually through the courts.
Does an asset freeze cover companies owned by a designated person?
Yes. In the UK and EU a freeze extends to entities a designated person owns or controls. OFAC's 50 percent rule blocks entities owned 50 percent or more, in total, by blocked persons.
Can frozen funds ever be released?
Yes, under a licence from the sanctions authority. Licences cover set purposes such as basic needs, legal fees or winding down contracts, and firms must keep records of every payment made under one.
