diff --git a/crates/precompiles/src/ztip20.rs b/crates/precompiles/src/ztip20.rs
index 9108cd4b2..026639125 100644
--- a/crates/precompiles/src/ztip20.rs
+++ b/crates/precompiles/src/ztip20.rs
@@ -154,6 +154,12 @@ impl<P: PolicyCheck> ZoneTip20Token<P> {
                 if let Some(revert) = self.reject_crossed_mint_caller(caller) {
                     return Some(revert);
                 }
+                // Skip TIP-403 enforcement for deposit mints from ZoneInbox.
+                // The sequencer already checks the recipient, and failed-deposit
+                // refunds to the sender must always succeed to prevent zone lockup.
+                if caller == ZONE_INBOX_ADDRESS {
+                    return None;
+                }
                 let call = decode_or_revert!(ITIP20::mintCall, args);
                 self.enforce_mint(address, call.to)
             }
@@ -161,6 +167,9 @@ impl<P: PolicyCheck> ZoneTip20Token<P> {
                 if let Some(revert) = self.reject_crossed_mint_caller(caller) {
                     return Some(revert);
                 }
+                if caller == ZONE_INBOX_ADDRESS {
+                    return None;
+                }
                 let call = decode_or_revert!(ITIP20::mintWithMemoCall, args);
                 self.enforce_mint(address, call.to)
             }
@@ -1140,6 +1149,56 @@ mod tests {
         Ok(())
     }
 
+    #[test]
+    fn inbox_mint_skips_tip403_for_blocked_recipient() -> TestResult {
+        // Simulates a failed encrypted deposit refund to a TIP-403 blocked sender.
+        // The zone must not enforce TIP-403 on deposit mints from ZoneInbox,
+        // otherwise the zone locks up.
+        let mut harness = PrecompileHarness::new(MockPolicyProvider {
+            mint_authorized: false,
+            transfer_authorized: false,
+            policy_id: 1,
+            fail_policy_id_resolution: false,
+        })?;
+
+        // Mint from ZoneInbox to a blocked address must succeed.
+        let inbox_mint = harness.call(
+            ZONE_INBOX_ADDRESS,
+            ITIP20::mintCall {
+                to: harness.bob,
+                amount: U256::from(99_000u64),
+            }
+            .abi_encode()
+            .into(),
+            100_000,
+            false,
+        )?;
+        assert!(
+            !inbox_mint.reverted,
+            "ZoneInbox deposit mint must not be blocked by TIP-403"
+        );
+        assert_eq!(harness.balance_of(harness.bob)?, U256::from(99_000u64));
+
+        // Mint from the issuer to the same blocked address must still be rejected.
+        let issuer_mint = harness.call(
+            harness.issuer,
+            ITIP20::mintCall {
+                to: harness.bob,
+                amount: U256::from(1_000u64),
+            }
+            .abi_encode()
+            .into(),
+            100_000,
+            false,
+        )?;
+        assert!(
+            issuer_mint.reverted,
+            "issuer mint to blocked address must still be rejected"
+        );
+
+        Ok(())
+    }
+
     #[test]
     fn has_role_enforces_account_or_sequencer_access() -> TestResult {
         let mut harness = PrecompileHarness::new(MockPolicyProvider::allow_all())?;
diff --git a/crates/tempo-zone/src/l1.rs b/crates/tempo-zone/src/l1.rs
index 258569a88..ed09371aa 100644
--- a/crates/tempo-zone/src/l1.rs
+++ b/crates/tempo-zone/src/l1.rs
@@ -1196,7 +1196,7 @@ impl L1BlockDeposits {
                         // Check TIP-403 policy via the provider (cache-first, RPC fallback).
                         // Errors are propagated so the engine retries rather than allowing
                         // unauthorized deposits through.
-                        let authorized = policy_provider
+                        let recipient_authorized = policy_provider
                             .is_authorized_async(
                                 d.token,
                                 dec.to,
@@ -1205,7 +1205,7 @@ impl L1BlockDeposits {
                             )
                             .await?;
 
-                        let recipient = if authorized {
+                        let recipient = if recipient_authorized {
                             debug!(
                                 target: "zone::engine",
                                 recipient = %dec.to,
@@ -1214,12 +1214,38 @@ impl L1BlockDeposits {
                             );
                             dec.to
                         } else {
+                            // Best-effort check whether the sender is also
+                            // blocked. The zone precompile skips TIP-403 on
+                            // deposit mints so this won't cause a lockup; we
+                            // only log it for observability.
+                            let sender_blocked = match policy_provider
+                                .is_authorized_async(
+                                    d.token,
+                                    d.sender,
+                                    l1_block_number,
+                                    crate::l1_state::AuthRole::MintRecipient,
+                                )
+                                .await
+                            {
+                                Ok(authorized) => !authorized,
+                                Err(error) => {
+                                    warn!(
+                                        target: "zone::engine",
+                                        sender = %d.sender,
+                                        %error,
+                                        "Failed to check sender TIP-403 status, continuing"
+                                    );
+                                    false
+                                }
+                            };
+
                             warn!(
                                 target: "zone::engine",
                                 sender = %d.sender,
                                 recipient = %dec.to,
                                 token = %d.token,
                                 amount = %d.amount,
+                                sender_blocked,
                                 "Encrypted deposit recipient unauthorized, redirecting to sender"
                             );
                             d.sender