Blocked accounts are any type of bank accounts that have been frozen for political reasons, or that contain funds that are subject to some sort of exchange controls. The term is also sometimes applied to any account that is frozen when the account holder dies. Depending on the reasons behind the action, releasing a blocked account may require the intervention of a federal treasury or revenue agency, rather than a directive from a local court.
A blocked account is a more serious matter than a frozen account. Local authorities can have bank accounts frozen for a number of reasons, such as in relation to a pending divorce action. Those same authorities can lift the freeze once the court case has been settled in some manner. In contrast, a blocked account is rarely related to civil matters between private citizens. Instead, the focus is on issues with the account and the currency contained within that account, and how they relate to some issue that has an impact on the nation.
One of the main reasons for a blocked account has to do with the exchange rate between currencies. In the event that the currency relevant to the contents of the account is blocked from trading for some reason, there is a good chance that the account will also be blocked until the currency is allowed to be traded on foreign exchange markets once more. In the interim, the account holder is not able to remove funds from the account, although there are situations where the funds can be transferred to another account for internal use in the country that issues the currency.
A blocked account may also come about as a response to some sort of national emergency. In the event there is some sort of political upheaval within a given country, steps may be taken to freeze or block the bank accounts for a period of time. The same strategy may be employed if some sort of natural disaster takes place or if war is declared, since events of this type can and sometimes do render the normal security measures that protect the funds within the accounts inoperable. In situations of this nature, a federal agency or department would be charged with the responsibility of deciding when or if to unblock the accounts. For example, in the United States, the U.S. Treasury department has the power to block and unblock bank accounts under circumstances that impact national security.