If banks have to insert themselves into every transaction (cash is banned for larger transactions), then it follows that debanking should be viewed as a legal instrument of punishment, and should only be allowed following a violation of the law, and subject to the usual due process like fines or prison sentences. Anything else is a significant infringement on personal freedom.

Also, "freezing" the funds without a court judgement or the opportunity of retrieving them is effectively theft. If you didn't pay the parking fees on my property for a couple days, it's not legal for me to just boot or chain it or hide it somewhere (at least in the US), and I think the same should go here.