Bank froze an account or transfer and asks for the source of funds: what to do under Georgian law

What to do

1. Classify it: this is the bank’s own check, not an arrest by the NBE or an investigation. A bank must know its client, the client’s activity and the risk of money laundering (Law on Commercial Banks, Art. 21¹), and may request additional information (Art. 21¹).
2. The fastest step is to provide documents on the source of funds in writing. Then demand: once the grounds are removed, the bank must unblock without unjustified delay (Law on Payment Services, Art. 30¹).
3. Client’s rights on refusal: when refusing a payment order, the bank must state the grounds and the procedure for correction, unless the law prohibits it (Law on Payment Services, Art. 25). Notice of refusal must be given no later than the deadline for executing the order (Art. 25). A card may be blocked on objective security grounds or on suspicion of fraud (Art. 30¹), and the bank must give the reason if disclosure is not prohibited (Art. 30¹). However, a bank may refuse to open an account or to provide services without giving reasons (Law on Commercial Banks, Art. 21¹). You cannot force a bank to continue servicing you.
4. The client’s money remains his: the bank must execute payments within the balance (Civil Code of Georgia, Art. 859). When closing an account, the bank must allow the client to be served in another way, except for an important reason (Art. 864). On closing, demand that the balance be transferred to an account at another bank.
5. Complaint: a complaint to the bank about a payment service must receive a reply within 15 business days (Law on Payment Services, Art. 41¹). Then comes the Dispute Resolution Commission of the National Bank of Georgia, no later than 6 months from the complaint (Art. 41¹). The Commission hears disputes up to GEL 100,000. One may go to court without the Commission (Art. 41²).
6. Where to apply: the bank (compliance department, written application); the Dispute Resolution Commission of the National Bank of Georgia (საქართველოს ეროვნული ბანკი); the court.
7. Evidence: contracts; invoices; the sender’s statements; declarations; crypto transaction history; correspondence with the bank.
8. Traps: refusing to provide documents, which allows the bank to end service; splitting transfers to “avoid a check”, which raises the risk; confusing a bank freeze with an NBE freeze or an investigation, since these are different authorities and routes.

Be sure to check

• the bank must perform KYC and AML checks and may request documents on the source of funds
• the bank may refuse service without explanation, and must notify the client of a refusal or block and unblock once the grounds are removed
• the balance on account closure: return to the client or transfer to another bank
• complaint to the bank, then the Dispute Resolution Commission of the National Bank of Georgia or the court