diff --git a/middleware/packet-forward-middleware/go.mod b/middleware/packet-forward-middleware/go.mod
index 7e85e928..34b6dd03 100644
--- a/middleware/packet-forward-middleware/go.mod
+++ b/middleware/packet-forward-middleware/go.mod
@@ -9,7 +9,7 @@ require (
 	github.com/cometbft/cometbft-db v0.8.0
 	github.com/cosmos/cosmos-sdk v0.47.5
 	github.com/cosmos/gogoproto v1.4.10
-	github.com/cosmos/ibc-go/v7 v7.3.0
+	github.com/cosmos/ibc-go/v7 v7.3.1
 	github.com/golang/protobuf v1.5.3
 	github.com/gorilla/mux v1.8.0
 	github.com/grpc-ecosystem/grpc-gateway v1.16.0
diff --git a/middleware/packet-forward-middleware/go.sum b/middleware/packet-forward-middleware/go.sum
index 4a87ee33..f612ee4b 100644
--- a/middleware/packet-forward-middleware/go.sum
+++ b/middleware/packet-forward-middleware/go.sum
@@ -141,8 +141,8 @@ github.com/cosmos/gogoproto v1.4.10 h1:QH/yT8X+c0F4ZDacDv3z+xE3WU1P1Z3wQoLMBRJoK
 github.com/cosmos/gogoproto v1.4.10/go.mod h1:3aAZzeRWpAwr+SS/LLkICX2/kDFyaYVzckBDzygIxek=
 github.com/cosmos/iavl v0.20.0 h1:fTVznVlepH0KK8NyKq8w+U7c2L6jofa27aFX6YGlm38=
 github.com/cosmos/iavl v0.20.0/go.mod h1:WO7FyvaZJoH65+HFOsDir7xU9FWk2w9cHXNW1XHcl7A=
-github.com/cosmos/ibc-go/v7 v7.3.0 h1:QtGeVMi/3JeLWuvEuC60sBHpAF40Oenx/y+bP8+wRRw=
-github.com/cosmos/ibc-go/v7 v7.3.0/go.mod h1:mUmaHFXpXrEdcxfdXyau+utZf14pGKVUiXwYftRZZfQ=
+github.com/cosmos/ibc-go/v7 v7.3.1 h1:bil1IjnHdyWDASFYKfwdRiNtFP6WK3osW7QFEAgU4I8=
+github.com/cosmos/ibc-go/v7 v7.3.1/go.mod h1:wvx4pPBofe5ZdMNV3OFRxSI4auEP5Qfqf8JXLLNV04g=
 github.com/cosmos/ics23/go v0.10.0 h1:iXqLLgp2Lp+EdpIuwXTYIQU+AiHj9mOC2X9ab++bZDM=
 github.com/cosmos/ics23/go v0.10.0/go.mod h1:ZfJSmng/TBNTBkFemHHHj5YY7VAU/MBU980F4VU1NG0=
 github.com/cosmos/ledger-cosmos-go v0.12.2 h1:/XYaBlE2BJxtvpkHiBm97gFGSGmYGKunKyF3nNqAXZA=
diff --git a/middleware/packet-forward-middleware/packetforward/keeper/keeper.go b/middleware/packet-forward-middleware/packetforward/keeper/keeper.go
index fbac42f2..edf5e8b7 100644
--- a/middleware/packet-forward-middleware/packetforward/keeper/keeper.go
+++ b/middleware/packet-forward-middleware/packetforward/keeper/keeper.go
@@ -182,6 +182,10 @@ func (k *Keeper) WriteAcknowledgementForForwardedPacket(
 					panic(fmt.Sprintf("cannot burn coins after a successful send from escrow account to module account: %v", err))
 				}
 			}
+
+			// We move funds from the escrowAddress in both cases,
+			// update the total escrow amount for the denom.
+			k.unescrowToken(ctx, token)
 		}
 	}
 
@@ -197,6 +201,14 @@ func (k *Keeper) WriteAcknowledgementForForwardedPacket(
 	}, ack)
 }
 
+// unescrowToken will update the total escrow by deducting the unescrowed token
+// from the current total escrow.
+func (k *Keeper) unescrowToken(ctx sdk.Context, token sdk.Coin) {
+	currentTotalEscrow := k.transferKeeper.GetTotalEscrowForDenom(ctx, token.GetDenom())
+	newTotalEscrow := currentTotalEscrow.Sub(token)
+	k.transferKeeper.SetTotalEscrowForDenom(ctx, newTotalEscrow)
+}
+
 func (k *Keeper) ForwardTransferPacket(
 	ctx sdk.Context,
 	inFlightPacket *types.InFlightPacket,
diff --git a/middleware/packet-forward-middleware/packetforward/types/expected_keepers.go b/middleware/packet-forward-middleware/packetforward/types/expected_keepers.go
index b9bf9fb2..97575175 100644
--- a/middleware/packet-forward-middleware/packetforward/types/expected_keepers.go
+++ b/middleware/packet-forward-middleware/packetforward/types/expected_keepers.go
@@ -14,6 +14,8 @@ import (
 type TransferKeeper interface {
 	Transfer(ctx context.Context, msg *types.MsgTransfer) (*types.MsgTransferResponse, error)
 	DenomPathFromHash(ctx sdk.Context, denom string) (string, error)
+	GetTotalEscrowForDenom(ctx sdk.Context, denom string) sdk.Coin
+	SetTotalEscrowForDenom(ctx sdk.Context, coin sdk.Coin)
 }
 
 // ChannelKeeper defines the expected IBC channel keeper
diff --git a/middleware/packet-forward-middleware/test/mock/transfer_keeper.go b/middleware/packet-forward-middleware/test/mock/transfer_keeper.go
index a49c96d8..a583ec4a 100644
--- a/middleware/packet-forward-middleware/test/mock/transfer_keeper.go
+++ b/middleware/packet-forward-middleware/test/mock/transfer_keeper.go
@@ -51,6 +51,32 @@ func (mr *MockTransferKeeperMockRecorder) DenomPathFromHash(arg0, arg1 interface
 	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "DenomPathFromHash", reflect.TypeOf((*MockTransferKeeper)(nil).DenomPathFromHash), arg0, arg1)
 }
 
+// GetTotalEscrowForDenom mocks base method.
+func (m *MockTransferKeeper) GetTotalEscrowForDenom(arg0 types.Context, arg1 string) types.Coin {
+	m.ctrl.T.Helper()
+	ret := m.ctrl.Call(m, "GetTotalEscrowForDenom", arg0, arg1)
+	ret0, _ := ret[0].(types.Coin)
+	return ret0
+}
+
+// GetTotalEscrowForDenom indicates an expected call of GetTotalEscrowForDenom.
+func (mr *MockTransferKeeperMockRecorder) GetTotalEscrowForDenom(arg0, arg1 interface{}) *gomock.Call {
+	mr.mock.ctrl.T.Helper()
+	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "GetTotalEscrowForDenom", reflect.TypeOf((*MockTransferKeeper)(nil).GetTotalEscrowForDenom), arg0, arg1)
+}
+
+// SetTotalEscrowForDenom mocks base method.
+func (m *MockTransferKeeper) SetTotalEscrowForDenom(arg0 types.Context, arg1 types.Coin) {
+	m.ctrl.T.Helper()
+	m.ctrl.Call(m, "SetTotalEscrowForDenom", arg0, arg1)
+}
+
+// SetTotalEscrowForDenom indicates an expected call of SetTotalEscrowForDenom.
+func (mr *MockTransferKeeperMockRecorder) SetTotalEscrowForDenom(arg0, arg1 interface{}) *gomock.Call {
+	mr.mock.ctrl.T.Helper()
+	return mr.mock.ctrl.RecordCallWithMethodType(mr.mock, "SetTotalEscrowForDenom", reflect.TypeOf((*MockTransferKeeper)(nil).SetTotalEscrowForDenom), arg0, arg1)
+}
+
 // Transfer mocks base method.
 func (m *MockTransferKeeper) Transfer(arg0 context.Context, arg1 *types0.MsgTransfer) (*types0.MsgTransferResponse, error) {
 	m.ctrl.T.Helper()