The Dictionary of Financial Scam Terms: The truth vs. the scam

 

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 You are here: Home > Dictionary > Blocked Funds 

 

Blocked Funds (Letter/Certificate/Notice)

 

Truth:

Funds may be legally blocked for one of four reasons: 

(1) For political reasons, usually during wartime or national emergency;  

(2) An account may be frozen by court injunction due to the death of the account holder or due to criminal activity; 

(3) In the securities industry, an account may be blocked from further trading because of trading violations; 

(4) Currency in an importer or exporter's account that cannot be removed from the country because of exchange controls.  

Certain brokers/banks specialize in trading such currencies at a discount.  In other words, the broker charges a commission for facilitating the trade (conversion) from one currency to another.  The difference between the value of the currency offered for trade and the value of the currency received is the amount of the commission.

For U.S. and European importers, this can be a dicey transaction as money-laundering uses blocked currency transactions to exchange drug money for clean money.  See BLACK MARKET PESO EXCHANGE.

Scam:

In the scam industry, blocked funds means something else entirely: fraudsters present a blocked funds situation as one in which an investor blocks funds in favor of the fraudster.  

When the so-called TRADER, COMMITMENT HOLDER or TRUSTEE calls for the funds in order to supposedly effect enormous trade profits for the investor, the fraudster has an assurance that the funds will be at his disposal.  

This invariably means that the funds are transferred to his pocket.  Excuses for the "bank error" usually follow. See The 14 most common excuses used by swindlers for not returning your money

 

 

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