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When a Payment Gets Blocked for Serious Reasons
Most ACH returns are caused by simple things—typos, closed accounts, or missing information.
But sometimes, a payment gets rejected because something much bigger is going on: a government freeze or security hold on the account.
That’s when you’ll encounter ACH Return Code R16.
Let’s walk through what R16 – Account Frozen / Returned per OFAC means, why it’s a serious return code, and what steps you need to take if you see it.
What Exactly Does R16 Mean?
ACH Return Code R16 stands for:
“Account Frozen / Returned per OFAC.”
Here’s the official NACHA definition:
R16 – Account Frozen / Returned per OFAC: The receiving bank has frozen the account and/or blocked the payment in accordance with regulations issued by the Office of Foreign Assets Control (OFAC) or similar regulatory reasons.
To put it plainly:
The account you tried to send money to is either frozen internally or flagged due to a federal government watchlist, like an OFAC sanctions list.
Why an R16 ACH Return Happens
There are two main reasons you’ll encounter an R16:
The account is frozen by the receiving bank—usually because of legal action, fraud investigations, or internal holds.
The account holder is flagged by OFAC (Office of Foreign Assets Control)—which oversees U.S. sanctions on foreign governments, organizations, and individuals linked to illegal or restricted activities.
Either way, the funds can’t be accepted, and the payment is immediately sent back.
What To Do When You See an R16 Code
Because an R16 points to a serious situation, you’ll want to handle it carefully:
Step 1: Do Not Attempt to Resubmit the Payment
If an account is frozen or flagged by OFAC, sending the payment again won’t help—and could even create legal complications.
Step 2: Contact Your ACH Provider or Bank Immediately
Your payment processor or bank can give you more information about why the payment was returned and guide you on next steps.
Step 3: Notify the Customer (If Appropriate)
If it’s a standard freeze (not an OFAC match), you can reach out to the customer to explain that their bank account is frozen and they’ll need to speak to their financial institution.
Step 4: Document the Return
Keep detailed records of the R16 return and any related communication. You may need this documentation if any compliance reviews happen later.
Step 5: Stay Alert to Regulatory Obligations
If there’s an OFAC match, you may have obligations to report the transaction attempt to OFAC under U.S. law.
How to Minimize the Risk of R16 Returns
Although you can’t always prevent these kinds of issues, you can protect your business by:
Using enhanced due diligence for new customers, especially in high-risk industries or international transactions
Working with a compliance-aware ACH provider that monitors transactions for OFAC risks
Training your payments team on how to handle sensitive returns like R16
Implementing screening tools for customers and vendors before sending high-value payments
When compliance is baked into your process, you’re better prepared for rare—but serious—return codes like R16.
Final Thoughts: R16 Is a Serious Warning, Not Just a Bounced Payment
ACH Return Code R16—“Account Frozen / Returned per OFAC”—means something bigger than a typo caused the payment to fail. Whether it’s a standard account freeze or a red flag tied to government sanctions, it’s important to tread carefully, respond promptly, and document your actions.
At Durango Merchant Services, we help businesses navigate ACH compliance, prevent high-risk returns, and manage sensitive transactions with confidence. Whether you’re sending basic domestic payments or dealing with complex international transactions, we’ve got your back.
