Blocking Funds in Deposit Accounts
  • 15 Nov 2021
  • 2 Minutes To Read
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Blocking Funds in Deposit Accounts

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Overview

Blocking funds in an account essentially means you prevent clients from withdrawing or transferring a specified amount. Clients can still withdraw any remaining funds and receive deposits including their paycheck, but the freeze stops withdrawals or transfers over a certain amount from going through. Therefore, a set amount deposited stays in the account and later gets transferred to the creditor.

Reasons why banks block funds

There are several reasons why banks might need to block clients' funds:

  • Creditors seek judgment against bank clients.
  • Unpaid taxes, child support, student loans or fines.
  • Account holder passes away, so the funds are blocked while assessing who the recepient is.
  • Transaction disputes.
  • Payments and clearance.

Blocking funds

To use this feature, you must have administrator rights or the Block and seize funds permission.

The feature is available via API 2.0. You can block any amount, even larger than the available balance on the account. The blocked amount reduces the available balance, therefore the client can only withdraw or transfer the remaining amount.

A Block Request is the means used to request blocking a certain amount of money on a client's account. Block requests can be performed via API 2.0 only via the following call (click for more information):

POST {...}/deposits/{depositAccountId}/blocks

Each Block request in Mambu has a reference number and impacts the account’s Available Balance. Once a Block Funds request is created, it has Pending status until it is settled or unblocked.

Please be Aware
You can block funds in accounts that are in Active, Active in arrears, Locked or Dormant states.

Retrieving blocked funds

To view how much money is blocked in a deposit account, use the following API call (click for more information):

GET {...}/deposits/{depositAccountId}/blocks

Please Note
This GET call to retrieves the sum of all blocked amounts against the specified deposit account.

Seizing funds

To seize a blocked amount, use the following API call (click for more information):

POST {...}/deposits/{depositAccountId}/seizure-transactions

To view the seized transaction on the UI:

  1. Open the deposit account.
  2. Click the Transactions tab.
  3. Find the Seized Amount type transaction that you want to view and, on the right hand side of the screen, click on Actions > View.
  4. In the Deposit Account Transaction vindow, view details about the seized amount and the total balance.

View the seized transaction on the UI

Partial seizure

When authorities are seizing large amounts to collect outstanding debt, you can control the amount you block each month to make sure you provide account holders subsistence income that is transferred to a so-called "Protection Account".

To support this use-case, we enabled three behaviours in Mambu:

  1. Blocking amounts larger than the available balance on the account.
  2. Transferring partial amounts to separate deposit accounts (managed with permissions).
  3. Partial seizures to collect funds as they enter the account and collect outstanding debt over time.
Please Note
In order to release this functionality to all production environments, we rely on your feedback to iterate on our solution. We would like to encourage you to reach out to us with your feedback, please contact us through Mambu Support.

Unblocking funds

In case you made a mistake or the creditor informed you that the debt was recovered, you can unblock a previously blocked amount by using the following API call:

DELETE {...}/deposits/{depositAccountId}/blocks/{blockID}

Please be Aware
You can only unblock funds in Pending state and in accounts that are in Active, Active in arrears, Locked or Dormant states.

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