Bank blocked a sole entrepreneur’s or LLC’s account and asks for documents: what to do under Georgian law

What to do

1. Who froze it: the bank’s own due-diligence check, not a tax levy — a different legal basis; the bank must notify the owner of this immediately (Tax Code of Georgia, Art. 71), and it is not an arrest by the National Bureau of Enforcement.
2. Limits of the bank: the bank must know its client, its activity and its money-laundering risk — including when checking transactions (Law on the Activities of Commercial Banks, Art. 21¹); it may request additional information (contracts, invoices, acts) (Law on the Activities of Commercial Banks, Art. 21¹); the bank may refuse service without giving reasons (Law on the Activities of Commercial Banks, Art. 21¹). The fastest route is to provide the package in writing: contracts, invoices, acts, counterparties’ statements, declarations.
3. Payments: when rejecting a payment, the bank must state the reason and how to remedy the deficiencies (if the law does not prohibit this) (Law on Payment Systems and Payment Services, Art. 25); no later than the execution deadline of the order (same law, Art. 25); if the conditions of the contract are met, the bank may not refuse an authorised payment except in cases provided by law (same law, Art. 25); under the account agreement the bank makes payments within the balance (Civil Code, Art. 859).
4. Closing the account: when closing an account, the bank must enable the client to be served otherwise (except for an important reason) — the balance is transferred to the client (Civil Code, Art. 864) — demand that the balance be transferred to an account at another bank.
5. Complaint: a written complaint to the bank — decision no later than 15 working days (Law on Payment Systems and Payment Services, Art. 41¹); then the Dispute Resolution Commission of the National Bank of Georgia — no later than 6 months from the complaint to the bank (same law, Art. 41²); an individual may apply to the Commission; a legal entity (LLC) only if it meets NBG criteria (same law, Art. 41²) (a sole entrepreneur is not a legal entity — it acts as an individual (Law on Entrepreneurs, Art. 2)); the dispute must be up to GEL 100,000 (or equivalent) (same law, Art. 41²); otherwise — court.
6. Where to apply: bank (compliance, written complaint); Dispute Resolution Commission of the National Bank of Georgia; court.
7. Evidence: contracts with clients, invoices, acts, statements of receipts, tax returns, registry extract, correspondence with the bank.
8. Pitfalls: staying silent on the bank’s request — this leads to account closure; assuming an LLC can always go to the NBG Commission — only if it meets the criteria; confusing a bank check with a tax levy or an arrest by the National Bureau of Enforcement.

Be sure to check

• the bank’s right to check operations and request documents; refusal of service without explanation
• when a payment is refused, the bank states the reason and how to correct it
• on closing an account, the balance is transferred to the client
• complaint to the bank, then the NBG Dispute Resolution Commission (sole entrepreneur — yes; LLC — only per NBG criteria) or court