diff --git a/modules/apps/29-fee/ibc_module_test.go b/modules/apps/29-fee/ibc_module_test.go
index 8bdc92458f7..fb2bd8ecf01 100644
--- a/modules/apps/29-fee/ibc_module_test.go
+++ b/modules/apps/29-fee/ibc_module_test.go
@@ -622,6 +622,7 @@ func (suite *FeeTestSuite) TestOnAcknowledgementPacket() {
 				}.Acknowledgement()
 
 				expectedRelayerBalance = packetFee.Fee.AckFee
+				expectedBalance = expectedBalance.Add(packetFee.Fee.RecvFee[0])
 			},
 			true,
 		},
@@ -693,7 +694,6 @@ func (suite *FeeTestSuite) TestOnAcknowledgementPacket() {
 				expectedRelayerBalance,
 				relayerBalance,
 			)
-
 		})
 	}
 }
diff --git a/modules/apps/29-fee/keeper/escrow.go b/modules/apps/29-fee/keeper/escrow.go
index 37c9dd7e624..525ce258d05 100644
--- a/modules/apps/29-fee/keeper/escrow.go
+++ b/modules/apps/29-fee/keeper/escrow.go
@@ -56,7 +56,7 @@ func (k Keeper) DistributePacketFees(ctx sdk.Context, forwardRelayer string, rev
 		}
 
 		// distribute fee to valid forward relayer address otherwise refund the fee
-		if !forwardAddr.Empty() {
+		if !forwardAddr.Empty() && !k.bankKeeper.BlockedAddr(forwardAddr) {
 			// distribute fee for forward relaying
 			k.distributeFee(ctx, forwardAddr, packetFee.Fee.RecvFee)
 		} else {
diff --git a/modules/apps/29-fee/keeper/escrow_test.go b/modules/apps/29-fee/keeper/escrow_test.go
index 647b968f56d..2f6b2fe62b1 100644
--- a/modules/apps/29-fee/keeper/escrow_test.go
+++ b/modules/apps/29-fee/keeper/escrow_test.go
@@ -5,6 +5,7 @@ import (
 	"github.com/tendermint/tendermint/crypto/secp256k1"
 
 	"github.com/cosmos/ibc-go/v3/modules/apps/29-fee/types"
+	transfertypes "github.com/cosmos/ibc-go/v3/modules/apps/transfer/types"
 	channeltypes "github.com/cosmos/ibc-go/v3/modules/core/04-channel/types"
 	ibctesting "github.com/cosmos/ibc-go/v3/testing"
 )
@@ -141,6 +142,11 @@ func (suite *KeeperTestSuite) TestDistributeFee() {
 				forwardRelayer = "invalid address"
 			}, false,
 		},
+		{
+			"invalid forward address: blocked address", func() {
+				forwardRelayer = suite.chainA.GetSimApp().AccountKeeper.GetModuleAccount(suite.chainA.GetContext(), transfertypes.ModuleName).GetAddress().String()
+			}, false,
+		},
 	}
 
 	for _, tc := range testCases {
diff --git a/modules/apps/29-fee/types/expected_keepers.go b/modules/apps/29-fee/types/expected_keepers.go
index 0b42718ff02..3a58f0706b3 100644
--- a/modules/apps/29-fee/types/expected_keepers.go
+++ b/modules/apps/29-fee/types/expected_keepers.go
@@ -37,4 +37,5 @@ type BankKeeper interface {
 	SendCoinsFromAccountToModule(ctx sdk.Context, senderAddr sdk.AccAddress, recipientModule string, amt sdk.Coins) error
 	SendCoinsFromModuleToAccount(ctx sdk.Context, senderModule string, recipientAddr sdk.AccAddress, amt sdk.Coins) error
 	SendCoins(ctx sdk.Context, fromAddr sdk.AccAddress, toAddr sdk.AccAddress, amt sdk.Coins) error
+	BlockedAddr(sdk.AccAddress) bool
 }