Unfreezing a Frozen or Attached Bank Account

Unfreezing a frozen bank account depends on who froze it. Funds seized during a criminal investigation are released by filing a motion with the Magistrate Court under Section 34 of the Criminal Procedure Ordinance (Arrest and Search). A lien imposed by the Israel Tax Authority for a tax debt is handled through the collection officer, who attaches funds without a court order under the Taxes (Collection) Ordinance. A block imposed by the bank itself is examined under the Banking (Customer Service) Law. Call us with the bank's notice or the order, and we will first identify which authority froze the account.

Clients typically reach out on the day they discover they have no access to their funds:

• A credit card was declined, and the bank said there is a police or court order on the account.

• The bank notified you of a lien in favor of the Assessing Officer, VAT, or Customs.

• The Tax Authority attached funds in a joint account with a spouse, or in an account that also holds client funds.

• The bank restricted transactions or refused to accept a deposit, demanding an explanation of the source of funds.

• You were questioned on suspicion of a tax offense, and there is concern that an interim order may be imposed on assets.

• Payroll or supplier payments are due this week, and the account is blocked.

There are four ways a bank account can be frozen, each based on a different law.

Seizure in a Criminal Investigation

A police officer may seize an object if there are reasonable grounds to believe that an offense was committed with it, that it may serve as evidence, or that it was given as a reward for an offense (Section 32 of the Criminal Procedure Ordinance (Arrest and Search)). The term "object" is interpreted to include a bank account balance. Anyone claiming a right to the funds may petition the Magistrate Court to order their release, in whole or in part, subject to conditions the court may set (Section 34). If no indictment is filed and no order is issued within six months, the police must return the seized property, unless the court extends the period (Section 35). The decision may be appealed to the District Court within 30 days (Section 38A).

Interim Order on Suspicion of Money Laundering

When money laundering is suspected, a District Attorney may petition the District Court for an interim order over property even before an indictment is filed. The order expires if no indictment is filed within 90 days, and an order issued without hearing you is valid for up to 10 days (Section 36F of the Dangerous Drugs Ordinance, applicable under Section 23 of the Prohibition of Money Laundering Law). Details are on the money laundering lawyer page.

Administrative Lien by the Israel Tax Authority

A person who has not paid tax on time is a "defaulter" under the Taxes (Collection) Ordinance, and the collection officer may issue a lien order to the bank without applying to a court. The order also applies to funds deposited into the account within three months of service (Section 7). An order served on the bank's head office applies to all branches no later than three business days thereafter (Section 7C). In a joint account, the lien applies only to the debtor's share (Section 7(2)). The collection proceedings, from the payment demand through to a payment arrangement, are explained on the Tax Authority liens and collection proceedings page.

Block Imposed by the Bank Itself

A bank is required to identify customers and report certain transactions under the anti-money-laundering order applicable to banking corporations (Section 7 of the Prohibition of Money Laundering Law). In this case, there is no authority-issued order that can be revoked. On the other hand, Section 2 of the Banking (Customer Service) Law prohibits a bank from unreasonably refusing to accept a deposit or maintain a current account when the account is in credit or the customer complies with the terms of the agreement. In most cases, the solution is a document file demonstrating the source of the funds.

1. In the initial consultation, we identify who froze the account. We request the text of the bank's notice or the order number from the bank, because without it there is no way to know where to turn.

2. We calculate how much money the business needs in the coming weeks for payroll and suppliers. A partial release motion that specifies amounts and purposes gives the court or the collection officer something concrete to approve.

3. We file the motion with the appropriate authority: the Magistrate Court for a seizure under the Ordinance, the District Court for an interim order, the collection officer for an administrative lien, or the bank itself for a block.

4. We propose an alternative when possible: a guarantee or a charge over another asset, and in the case of a tax debt, a payment arrangement as well.

5. If the motion is denied, we examine an appeal within 30 days while simultaneously handling the underlying matter that caused the freeze: the investigation, the assessment, or the dispute with the bank.

Account releases are handled by Adv. and CPA Shlomi Vaknin and his firm's team. Shlomi, the firm's founder, served for nearly a decade as a national supervisor in the VAT professional division of the Israel Tax Authority. The accounting background is critical here, because a release motion relies on cash-flow analysis, bank statements, and proof of the source of funds.

For Tax Authority liens, the team also handles the underlying assessment dispute behind them.