What is a flagged account? Being listed as flagged is bad enough, but could it even lead to criminal charges? When an account is involved in fraud, money laundering, or other criminal cases, financial institutions will place that account on a “watchlist,” suspending functions such as transfers and withdrawals to prevent the account from continuing to be used as a tool for crime. However, being listed as flagged does not mean the account holder is a criminal. Many people only discover their account has been frozen when conducting routine transactions! This article aims to help readers understand: “Why would an account be flagged?” “What is the difference between a flagged account and a derivative restricted account?” and “If an account is unfortunately frozen, what should you do?”

Account Freeze: Flagged Accounts vs. Derivative Restricted Accounts

The so-called “account freeze” refers to situations where a bank designates an account as either a “flagged account” or a “derivative restricted account.” The definitions, effects, and procedures for lifting both statuses are regulated under the “Regulations Governing Deposit Accounts and the Management of Suspected Illegal or Abnormal Transactions” (hereinafter referred to as the Regulations). The following table provides a simplified summary for readers:

1. Flagged Account

If an account is designated as a “flagged account,” it is usually due to suspected involvement in illegal activities (such as fraud, money laundering, etc.). Upon notification by judicial authorities, the bank will temporarily suspend all transaction functions of that account, including deposits, withdrawals, transfers, and remittances, in order to prevent further circulation of criminal funds.

In addition, according to Article 13, Paragraph 2, Subparagraph 5 of the Regulations, as long as any account under the account holder’s name is flagged, the account holder is, in principle, not allowed to open new accounts until the flagged status is lifted.

2. Derivative Restricted Account

When an account is flagged, the bank will also list the account holder's other accounts as “derivative restricted accounts.”
For example, if Person A has accounts with both Bank A and Bank B, and the Bank A account is flagged, then the Bank B account will also become a derivative restricted account.

When an account is designated as a “derivative restricted account,” the bank will temporarily suspend ATM card usage, remittances, online banking, and other electronic payment functions. However, the account holder may still conduct deposits and withdrawals at the counter.

Why Would an Account Be Frozen?

According to Article 4 of the Regulations, if a bank’s transaction records show abnormalities, or if there is a possibility of involvement in a criminal case, the account will be frozen. Common situations for the general public include:

• Lending an account to others

Many people, out of goodwill or trust, lend their accounts to friends or relatives to receive or transfer funds. This is highly risky! If the other party engages in illegal activities, the lent account may be flagged. Even if the lender claims ignorance, it is difficult to avoid responsibility.

• Falling into dummy account traps

Fraud groups often recruit with promises of high-paying part-time jobs, fast loans, or through online romance scams, to obtain account details. Once these accounts are used to receive criminal proceeds, they will be flagged, leaving innocent people not only inconvenienced in daily life but also suspected of criminal involvement.

• Abnormal cash flows

If an account suddenly has large transactions in a short period or receives funds from unknown sources, it may signal account misuse, with criminals testing its validity. If the account is used for illegal activity and flagged, the account holder’s other accounts may also be frozen, creating severe disruption to daily life.

Does Being Flagged Carry Legal Liability?

Many people only realize their accounts have been flagged after receiving bank notifications. Even if the account holder had no criminal intent and was unknowingly exploited, they may still face the following legal liabilities:

• Criminal Code, Article 339 (Fraud):
  If someone uses deceit to unlawfully obtain money or benefits for themselves or others, it may constitute fraud, punishable by imprisonment of up to 5 years, detention, or a fine of up to NT$500,000.

• Money Laundering Control Act:
  If someone conceals, uses, acquires, or safeguards criminal proceeds, it may constitute money laundering. Penalties vary by amount:
  If the amount reaches NT$100 million or more: imprisonment of 3–10 years and a fine of up to NT$100 million.
  If the amount is less than NT$100 million: imprisonment of 6 months–5 years and a fine of up to NT$50 million.

Therefore, readers are reminded: If you notice any irregularities in your account, immediately contact your bank or financial institution and report to the police to avoid continuous disputes.

How to Lift the Flagged Status of an Account?

An account freeze does not necessarily mean the account holder has already been indicted or convicted. Even at the investigation or trial stage, as long as judicial authorities deem it necessary, they may notify the bank to freeze suspicious accounts.
So how can an account holder apply to lift the flagged account and derivative restricted account status? The procedures are summarized in the following table:

According to Article 10, Paragraph 1 of the Regulations, a flagged account can only be lifted by a new notification from the original reporting authority, or once the flagged period has expired (maximum of 3 years). As for derivative restricted accounts, the designation is a preventive measure taken by the bank based on the flagged account list. In principle, once the primary account’s flagged status has been lifted, the account holder may apply directly to the bank for removal.

Prevention Is Better Than Cure! Never Underestimate the Risks of an Account Being Flagged

Once an account is restricted, the consequences range from limited transactions to long-term impacts on personal credit and future life. Readers should keep the following principles firmly in mind:

1. Never lend your account to others!
   Even if it is to a relative or long-time friend, their misconduct could cause your account to be flagged as a dummy account or fraudulent account, leaving behind a record that is nearly impossible to clear.

2. Do not collect or transfer funds for strangers!
   Fraud groups often disguise their schemes as shopping refunds, salary payments, or other excuses, tricking people int

3. Be cautious if your account receives unexplained remittances!
   Immediately report to the police and notify the bank to suspend use of those funds. Otherwise, you risk being accused of aiding money laundering.

4. Be careful when choosing part-time jobs or work.
   Job postings promising “high pay” or “no experience needed” online may be traps designed to steal personal information and account details. Always exercise caution when job hunting.

Having your account flagged is no trivial matter. Yet many people, out of negligence or lack of legal awareness, are mistakenly labeled as high-risk individuals. In such cases, it is important not only to actively collect supporting documents but also to seek timely professional legal assistance. Only by knowing the law, understanding the law, and acting in accordance with the law can you avoid becoming a tool exploited by fraud syndicates, protect yourself from wrongful liability, and safeguard the security of your account.

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