Blocking Funds in Deposit Accounts

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 financial institutions block funds

There are several reasons why financial institutions 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 (BLOCK_AND_SEIZE_FUNDS) permission.

The feature is available via Mambu API v2. 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.

To block a certain amount of money on a client's account, you must make a block request by making a POST request to the /deposits/{depositAccountId}/blocks endpoint.

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.

Retrieving blocked funds

To view how much money is blocked in a deposit account, make a GET request to the /deposits/{depositAccountId}/blocks endpoint.

This GET request retrieves the sum of all blocked amounts against the specified deposit account.

Seizing funds

To seize a blocked amount, make a POST request to the /deposits/{depositAccountId}/seizure-transactions endpoint.

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 window, view details about the seized amount and the total balance.

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.

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 making a DELETE request to the /deposits/{depositAccountId}/blocks/{blockID} endpoint.