What occurs when a credit union blocks a transaction?

When a credit union blocks a transaction, it typically involves accepting the funds but freezing them. This action is taken to comply with regulations and to ensure that the transaction does not proceed due to suspicion of illegal activity, potential fraud, or other compliance-related concerns. By freezing the funds, the credit union can hold onto the money while further investigation takes place or while ensuring that any regulatory requirements are met.

Blocking a transaction serves as a protective measure for both the financial institution and its members, allowing for a cautious approach before any funds are released or further action is taken. This process can also help in tracking and reporting any potential suspicious activity in alignment with the Bank Secrecy Act, thereby fulfilling the credit union's compliance obligations.

In summary, when a transaction is blocked, the funds are not merely allowed to transfer; they are frozen to evaluate the situation appropriately and to maintain regulatory compliance.