Bank blocking your account over crypto: how to deliver conclusive proof of origin
Date: | Week 28 | Reading time: 7 minutes | Updated: Author: Tyler Dijst
In short
An account frozen over crypto usually means the bank first wants to see where the money came from. That does not automatically mean the bank suspects you of anything. With a clear, traceable explanation of the source of funds the bank can move on, and that is where Paucitas helps.
Paucitas is an independent expert firm in the Netherlands that establishes the origin and legitimacy of crypto assets. In practice, questions about where money came from usually come from a bank or the tax authority.
Get in touch with Paucitas or ring +31 20 244 5774. We are happy to look at your bank's questions with you, even if the deadline is tight.
In a nutshell
A freeze is stressful, but usually it is a request for information. The bank wants to see a chain from your first deposit to the payment it is holding. Paucitas sets out that chain in a report the bank can check for itself.
Your account has been frozen after a large crypto payment came in, or a transfer from your exchange has not arrived. Perhaps you cannot pay your bills for now and do not know how long it will last. That is unsettling. We understand that well.
This article is about that urgent situation. Why banks ask about the origin of funds in the first place is covered in the origin of crypto: what your bank wants to see.
Why is an account frozen over crypto?
Usually not because the bank thinks crypto is suspicious, but because it is legally required to know where money comes from. Under the Money Laundering Regulations, including regulation 28 on customer due diligence, a bank must know its customers and look into unusual transactions. Where something looks out of place, banks report to the National Crime Agency. A large payment from an exchange, many small deposits or an amount that does not fit the bank's picture of you can trigger that check.
To you it feels like mistrust. At heart it is an information problem: the bank sees money coming in without being able to follow where it came from. As long as that remains the case, the freeze can stay in place.
What does the bank want to see as proof of source of funds?
A bank wants an overview that covers the whole chain, from the first pound you put in to the payment that was held. Loose screenshots of a wallet balance are rarely enough. It is about coherence: can an outsider follow the route, and does each step match the previous one?
That is different from simply showing you own crypto. Asset verification shows where the wealth came from, not just that it exists. More on the origin of assets is in our glossary.
Has your bank asked questions? Let Paucitas take a look before you reply. A complete first response often saves a lot of time. You can ring at any time, 24/7, on +31 20 244 5774.
What is the best thing to do now?
- Ask the bank in writing which documents it needs and by what date.
- Put all the bank's questions in one overview, so you miss nothing.
- Keep all correspondence, including chat messages.
- Get in touch with Paucitas for an independent explanation of the source of funds.
- Send one complete file instead of separate documents in instalments.
A report from an independent party with no stake in the outcome often carries more weight with a bank than an overview you have put together yourself. Paucitas sets out the chain, matches it to your bank transactions and records everything in a report anyone can follow and understand step by step. Paucitas does all its tracing itself, without tracing tools. We also go through your documents, emails and other communication with the bank and exchanges, so that a complete picture emerges, with a timeline of where the money came from and where it went.
An example from practice
A business owner sold part of his bitcoin after many years and had the proceeds paid into his bank account. The bank held the payment and asked for proof of source of funds. He still had old exchange statements, but some of his purchases had gone through an exchange that no longer existed.
Paucitas reconstructed the route from his first deposits and matched it to his bank statements. Where export files were missing, the blockchain showed the transactions. The bank received one complete report and could assess the matter.
Paucitas takes privacy very seriously and never shares clients' personal details. This is a composite example: names, amounts and details have been changed. The situation is one we see in practice.
High-street bank or app-based bank: does it matter?
All UK banks are subject to the same Money Laundering Regulations and the same supervision. So the rules are the same for every bank. The difference sometimes lies in how contact works.
With traditional high-street banks you often deal with a dedicated team that assesses the file on its merits. With app-based banks contact often runs through a chat, so questions sometimes arrive in instalments. Either way, the same things help: keep everything in writing, put the bank's questions in one overview and send one complete, traceable file. If a freeze drags on, you can use the bank's own complaints procedure.
Has your explanation already been rejected once? Then read origin of crypto assets: grounds for rejection.
What does Paucitas do, and what not?
Paucitas provides the independent explanation that you submit to your bank. The decision to lift a freeze always lies with the bank, and nobody can promise in advance that a bank will accept a report. Paucitas also gives no tax or legal advice: what you report to HMRC is for you or your adviser.
What we can often tell you quickly is whether the chain can be closed and what that will take. Sometimes it turns out simpler than you expected.
What you can get ready
- the bank's letter or messages with its questions and deadline;
- bank statements showing your payments to exchanges;
- transaction exports from every exchange you used;
- your wallet addresses;
- a short timeline of what you bought and sold, and when.
What does an investigation cost and how quickly can you get help?
We take account of the deadline your bank has set.
- Costs: every investigation is tailored. You receive a bespoke quote in advance, which we go through together, so there are no surprises.
- Turnaround: from the same day to around two weeks.
- Contact: you can ring at any time, 24/7. We answer the form within 1 to 3 hours, and email within 24 hours, usually the same day.
Want clarity quickly? Get in touch for a free intake, or ring +31 20 244 5774. More is on proving the origin of assets and who can help prove the origin of crypto.
Sources: Money Laundering Regulations 2017, regulation 28; National Crime Agency, suspicious activity reports; GOV.UK, tax on cryptoassets.
Do you have questions about this blog?
Feel free to get in touch with Paucitas. Paucitas can be reached by phone 24/7, including evenings and weekends. Through the contact form we usually reply within 1 to 3 hours, and we answer e-mail within 24 hours.
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Frequently asked questions about an account frozen over crypto
How long will my account stay frozen?
Paucitas explains: that is up to the bank. Usually the freeze stays in place until the bank can follow the source of funds. The sooner you send a complete file, the sooner the bank can assess it.
What evidence of crypto will my bank accept?
Paucitas sees that a bank looks for a closed chain from deposit to payment, with documents it can check itself. Nobody can promise in advance that a bank will accept it, but a complete file gives the best basis.
Can Paucitas unfreeze my account?
Paucitas does not unfreeze accounts itself, but provides the independent explanation that you submit to your bank. The decision always lies with the bank.
What if an exchange I used no longer exists?
Paucitas can often still reconstruct the route from the blockchain and your bank statements. Paucitas looks at what is still available and where the chain closes.
Does Paucitas give tax advice?
Paucitas does not give tax advice, but explains the origin of assets. Your tax return and tax questions are for you or your tax adviser.
From Amsterdam, for the whole of the UK
Everything can be done fully online. Prefer to meet in person? You are very welcome at our office in Amsterdam, by appointment.
Paucitas is an independent expert firm based in the Netherlands that, for clients across the UK, investigates investment fraud and crypto fraud, establishes the origin and legitimacy of crypto assets and prepares expert reports for legal proceedings and compliance.
Your own situation
If you are reading this, you probably have a question about your own situation. That is exactly what Paucitas does.
The first step is contact by phone. You can book that call by phone or through the contact form, so you do not have to wait. In the call we look together at what can factually be established in your case and what Paucitas can examine for you.