IF YOUR BANK HAS frozen your Spanish bank account, you have probably wondered whether this measure is legal and what the reason for the closure is. Let's explain this often-misunderstood practice.
The answer is that it is legal, and the bank has the right to do so. This is because money laundering and terrorist financing regulations require banks to request documentation they deem necessary to identify and monitor the account holder and their activities.
According to the Bank of Spain, there are several reasons a bank may block a customer's account.
Freezing a bank account due to a lack of identification documents
If your Passport, Residence Card, Foreigners Identity Card, or Personal Identification Card has expired, be careful, because you could end up with your bank account blocked. Banks are required by law to identify all their customers and ensure that their documentation is up to date.
If the bank detects that your personal identification document is not up to date, it may block your account, as this is considered a lawful basis.
Freezing a bank account for the prevention of money laundering
The bank is legally obliged to request information about your economic activity, a process known as “Know Your Customer”. This is an anti-fraud measure that all banks must follow to prevent money laundering and terrorist financing.
If the bank requests information about your professional activity and you do not provide it, the bank may freeze your account until you provide the required documentation.
Blocking an account due to discrepancies between account holders
If you share an account with one or more account holders and they issue contradictory orders, the bank may place a block on the account to avoid taking sides in a dispute (e.g., during a divorce or the breakdown of a business).
A frozen bank account when the account holder dies
This is very common for non-residents living in Spain who die leaving assets and open bank accounts. In this case, their partner or relatives find that the bank has frozen the deceased's account and cancelled all direct debits and payment cards.
It is important to note that the bank must notify the account holder(s) before blocking the account and, if this is not possible, the announcement must be made immediately afterwards.
The problem is that many bank account holders receive a letter at their registered home address in Spain, and relatives living overseas often only learn that the account has been frozen upon arrival.
Others, on the other hand, receive an email outlining the documentation and how to submit it digitally, which, for many, is more technologically complex than simply taking the documentation to the bank in person.
For these reasons, many of our clients who do not live permanently in Spain ask us for assistance from their home countries to unfreeze their bank accounts.
The solution to this problem is to grant your lawyer in Spain a Power of Attorney in advance. With this power of attorney, your lawyer can easily unfreeze your account on your behalf and remove temporary stops or blocks that might be in place.
In this way, you will not have to wait until you return to Spain to do it yourself, bearing in mind the serious consequences of closing the account, such as non-payment of local taxes or utility bills, or generating unnecessary surcharges or penalties for the account holder, which could have been avoided entirely.
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