diff --git a/pallets/asset/src/lib.rs b/pallets/asset/src/lib.rs
index 169e7795b0..f8829eb056 100644
--- a/pallets/asset/src/lib.rs
+++ b/pallets/asset/src/lib.rs
@@ -3740,8 +3740,15 @@ impl<T: AssetConfig> Pallet<T> {
             }
         }
 
+        if let Err(e) = Self::ensure_holder_is_not_frozen(sender, asset_id) {
+            asset_transfer_errors.push(e);
+        }
+
         if skip_locked_check {
-            if Self::get_holders_balance(sender, asset_id) < transfer_value {
+            let frozen_balance = Self::get_holders_frozen_balance(sender, asset_id);
+            let current_balance = Self::get_holders_balance(sender, asset_id);
+
+            if current_balance.saturating_sub(frozen_balance) < transfer_value {
                 asset_transfer_errors.push(Error::<T>::InsufficientBalance.into());
             }
         } else {
diff --git a/pallets/nft/src/lib.rs b/pallets/nft/src/lib.rs
index af9772aa18..2d3c3855d1 100644
--- a/pallets/nft/src/lib.rs
+++ b/pallets/nft/src/lib.rs
@@ -1229,6 +1229,12 @@ impl<T: Config> Pallet<T> {
             nft_transfer_errors.push(e);
         }
 
+        if let Err(e) =
+            pallet_asset::Pallet::<T>::ensure_holder_is_not_frozen(sender, nfts.asset_id())
+        {
+            nft_transfer_errors.push(e);
+        }
+
         if skip_locked_check {
             for nft_id in nfts.ids() {
                 if !Self::is_holder_of_nft(nfts.asset_id(), nft_id, sender) {
@@ -1471,6 +1477,7 @@ impl<T: Config> Pallet<T> {
             !Self::is_nft_locked(&asset_id, &nft_id, &asset_holder),
             Error::<T>::NFTIsLocked
         );
+        pallet_asset::Pallet::<T>::ensure_holder_is_not_frozen(&asset_holder, &asset_id)?;
 
         match asset_holder {
             AssetHolder::Account(acc_id) => {
diff --git a/pallets/runtime/tests/src/settlement_pallet/transfer_funds.rs b/pallets/runtime/tests/src/settlement_pallet/transfer_funds.rs
index 3f7d8c3dfa..ba27fe85f2 100644
--- a/pallets/runtime/tests/src/settlement_pallet/transfer_funds.rs
+++ b/pallets/runtime/tests/src/settlement_pallet/transfer_funds.rs
@@ -1310,7 +1310,7 @@ fn cross_identity_nft_transfer_when_portfolio_is_frozen() {
                 AssetHolder::Account(bob.acc()),
                 non_fungible_fund(asset_id, NFTId(1)),
             ),
-            SettlementError::FailedAssetTransferringConditions
+            AssetError::InvalidTransferSenderIsFrozen
         );
     });
 }