What it is:
Also called an account hold, an account freeze occurs when a bank or other financial institution prevents any transactions from hitting an account.
How it works/Example:
For example, let's say John Doe is selling drugs for a living. He regularly deposits his money into a checking account at Bank XYZ.
The cops eventually discover that John Doe is a drug dealer. They arrest him and freeze his account, which prevents him from accessing any of the money he made dealing. It also prevents him from paying his bills.
Why it matters:
The government, regulators, and even creditors or courts can freeze accounts for various reasons. A freeze is not always permanent; the appropriate documentation can lift the freeze (called "thawing the assets"). Brokerage and investment accounts are also subject to freezing, and it is possible to a freeze on your own accounts.