What Are Frozen Assets? Who Can Freeze Them and How to Respond

Frozen assets are property you still legally own but cannot access, move, sell, or spend because a government agency or court has ordered them held in place. The freeze preserves the property while some other legal process runs its course: a sanctions designation, a criminal investigation, a civil lawsuit, or an unpaid tax debt. You remain the owner. The money or property sits right where it was. You simply lose the ability to touch it until the freeze is lifted or the underlying matter is resolved.

What you can do about it depends almost entirely on who ordered the freeze. The deadlines, the forum, and the arguments that work are different for each source, and getting the wrong one wrong can cost you the property permanently.

Freeze, Seizure, and Forfeiture Are Not the Same Thing

A freeze is a hold. You keep title to the property, and nothing physically changes hands. A bank account is locked; a house cannot be sold; investments cannot be traded.

Seizure is the next step up. The government physically takes custody: cash is removed, a vehicle is impounded, a bank turns over the balance in an account. Seizure usually requires a court order or search warrant.

Forfeiture is the end of the road. A court determines the property was tied to criminal activity, and ownership passes to the government permanently. Federal civil forfeiture proceedings run under specific rules that include protections for owners who had no involvement in the underlying offense.¹ A freeze is reversible; forfeiture generally is not.

Who Can Freeze Your Property

Four sources account for most freezes people encounter. Each operates under its own authority and its own timetable.

OFAC Sanctions

The Treasury Department’s Office of Foreign Assets Control maintains the Specially Designated Nationals and Blocked Persons List, known as the SDN List. Once a person or entity is placed on the list, any U.S.-connected property is blocked, and U.S. persons and businesses are prohibited from dealing with them.²

OFAC’s authority comes largely from the International Emergency Economic Powers Act, which allows the President to block property involving foreign nationals during a declared national emergency.³ No court order is required. The block takes effect the instant the designation is published, and banks act on it immediately because the penalties for missing a block are severe.

Criminal Investigations

Federal prosecutors can ask a court to freeze property they believe is subject to forfeiture if a defendant is convicted. For drug-related offenses, the government can obtain a restraining order preserving that property on a showing of probable cause.⁴

Before charges are filed, the government can get a temporary restraining order without notifying you if warning you would risk the property vanishing. Those pre-indictment orders expire after 10 days unless extended for good cause; a formal order entered after a hearing can last up to 90 days pending indictment.⁴ Once an indictment is filed, the freeze typically holds through the entire case.

Civil Lawsuits

Courts freeze assets in private disputes too. A company suing you for fraud that fears you’ll shift money offshore can request a temporary restraining order or preliminary injunction under Rule 65.⁵ The same tool shows up in high-asset divorces, where a judge locks marital property so one spouse cannot drain the accounts before division.

A restraining order issued without notice to the other side expires within 14 days, with one possible 14-day extension for good cause. To keep the freeze in place beyond that, the requesting party must convert it into a preliminary injunction after a full hearing, showing a real likelihood of winning on the merits and that without the freeze the assets would disappear in a way money damages could not later fix.⁵

IRS Levies

This is how most ordinary people first encounter a freeze. The IRS does not need a court order. If you owe back taxes and do not pay within 10 days of receiving a notice and demand, the IRS has statutory authority to levy your bank accounts, wages, and investment accounts.⁶

When the IRS serves a levy on your bank, the bank must hold the funds for 21 days before turning them over.⁷ That 21-day window is your entire opportunity to act. After it closes, the money leaves.

Several categories of property are exempt from IRS levies, including unemployment benefits, workers’ compensation, court-ordered child support, certain pension payments, and a minimum amount of wages. Social Security benefits can be levied only up to 15%.⁸ If exempt funds have been swept up, that alone is grounds to challenge the levy.

What a Freeze Does to Your Daily Life

The moment a freeze hits, you cannot withdraw cash, transfer money, sell investments, or borrow against the property. Autopay stops working. Mortgage, car loan, utility, and insurance payments bounce even though the money is technically sitting there, and late fees and credit damage pile up while you sort things out.

Banks and other financial institutions are legally required to enforce the freeze the moment they receive the order. From your side, the account just goes dark.

Cryptocurrency held on a regulated exchange works the same way as a bank account: the exchange controls the private keys and must block withdrawals when it receives an order. Crypto in a private wallet is harder for authorities to lock down technically, but a court order freezing that property still binds you legally. Moving it because no one can physically stop you is contempt of court.

Real estate creates a particular squeeze. The property generates no income, cannot be sold or refinanced, and continues to accumulate property taxes, insurance premiums, and maintenance costs. Releasing frozen funds to cover those expenses requires permission, either through an OFAC license application or a motion to the court that ordered the freeze.⁹ OFAC also issues general licenses that pre-authorize certain categories of transactions, so it is worth checking whether one already covers what you need before filing an individual request.

Federal Benefits Have Automatic Protection

If your account receives Social Security, veterans’ benefits, or federal retirement payments and a creditor garnishes it, federal regulations require the bank to review the account and calculate a protected amount equal to two months of federal benefit deposits. The bank cannot freeze the protected amount, and you do not have to file anything to claim it.¹⁰ The bank must handle the calculation within two business days of receiving the garnishment order. Funds above the protected amount can still be held.

Important boundary: this rule covers creditor garnishments. IRS levies and federal criminal forfeiture orders run under separate rules with narrower protections.

How Long a Freeze Lasts

Civil temporary restraining orders expire within 14 days, with one possible 14-day extension for good cause, unless converted to a preliminary injunction.⁵
Criminal pre-indictment restraining orders issued without notice expire in 10 days. Orders entered after a hearing last up to 90 days unless charges are filed or the court extends them.⁴
Criminal post-indictment restraining orders remain in place until the case concludes, which in complex federal prosecutions can take years.
OFAC sanctions freezes are indefinite. They last as long as you remain on the SDN List.
IRS bank levies leave a 21-day window before the funds leave the account.⁷

How to Get a Freeze Lifted

The right path depends on who ordered the freeze. Filing the wrong challenge in the wrong forum burns time you may not have.

OFAC Designations

Relief from an SDN listing comes through an administrative petition, not a lawsuit. You submit a petition to OFAC by email with proof of identity, the specific listing you are contesting, and a detailed explanation of why the designation should be removed.¹¹ Successful petitions usually show either a genuine change in circumstances or that the listing rested on mistaken identity.

While the petition is pending, you can separately apply for a specific license authorizing particular transactions, such as paying legal fees or basic living expenses.⁹ OFAC decides those case by case and does not commit to a set timeline.

Court-Ordered Freezes

When a court issued the freeze, you go back to that court. In a criminal case, that means moving to challenge the probable cause connecting your property to the alleged offense. In a civil case, it means arguing the other side has not shown a likelihood of success or a real risk that assets would disappear. Either way, the court will set a hearing.

If you are not the defendant but you own or claim an interest in property caught up in a criminal forfeiture, you can file a petition asserting your interest.⁴ In civil forfeiture, federal law provides an explicit innocent owner defense: property should not be forfeited from someone who did not know about the illegal conduct or who took reasonable steps to stop it once they learned.¹

IRS Levies

You have 21 days from the moment the levy is served. Within that window, you can request a Collection Due Process hearing, propose an installment agreement, or show the levy is creating economic hardship. Proving that the funds fall in an exempt category is also a direct path to release.⁶

Missing that 21-day window is where most people lose. Once the bank sends the money, recovering it is a fundamentally harder problem than stopping the transfer would have been. Any IRS notice about unpaid taxes deserves an immediate response, because by the time a levy actually hits, several warnings have already come and gone.

What to Do in the First Days

Find out who ordered the freeze. Call the bank and ask for a copy of the order or notice that triggered the block. Banks are sometimes limited in what they can share, especially where a suspicious activity report is involved, but they can confirm the freeze and point you to the issuing authority.

Pull your records together. Bank statements, tax returns, proof of income sources, and documentation for any transactions likely to draw scrutiny should be organized and ready. If you later have to prove that funds came from legitimate sources, having the paperwork already in order saves weeks.

Get a lawyer involved quickly. Deadlines are short, and the correct next move depends on whether you are dealing with OFAC, a federal prosecutor, a civil plaintiff, or the IRS. Counsel who works in forfeiture or sanctions matters regularly will know which filings take priority and how to request emergency access to funds for living expenses and legal fees. Waiting is almost always more expensive than the legal fees themselves.

1
Office of the Law Revision Counsel. 18 U.S. Code 983 – General Rules for Civil Forfeiture Proceedings
2
U.S. Department of the Treasury. Specially Designated Nationals (SDNs) and the SDN List
3
Office of the Law Revision Counsel. 50 USC 1702 – Presidential Authorities
4
Office of the Law Revision Counsel. 21 USC 853 – Criminal Forfeitures
5
Legal Information Institute. Federal Rules of Civil Procedure Rule 65 – Injunctions and Restraining Orders
6
Office of the Law Revision Counsel. 26 USC 6331 – Levy and Distraint
7
Office of the Law Revision Counsel. 26 USC 6332 – Surrender of Property Subject to Levy
8
Office of the Law Revision Counsel. 26 USC 6334 – Property Exempt From Levy
9
U.S. Department of the Treasury. OFAC License Application Page
10
eCFR. 31 CFR Part 212 – Garnishment of Accounts Containing Federal Benefit Payments
11
U.S. Department of the Treasury. Filing a Petition for Removal from an OFAC List