For years, the National Iranian American Council has been tracking reports as Iranian Americans, Iranian nationals and other minority groups have faced discrimination by U.S. financial institutions. One of the most egregious actors is Bank of America, which has a long-standing history of closing or restricting bank accounts based on national heritage. They have claimed these closures are a result of their compliance with U.S sanctions and have denounced any claims of discriminatory practices. Historically, while some financial institutions have been responsive and taken measures to guard against discriminating on the basis of sanctions enforcement, large institutions like Bank of America have refused to adjust and avoided facing any consequences. But a new court case coupled with numerous complaints and petitions from NIAC may reverse this trend.
In July 2019, NIAC sent a letter to David Leitch, General Counsel for Bank of America, providing clarification of sanctions laws and calling for an end to the discriminatory practice of bank account closures. This follows earlier letters from NIAC to Bank of America in both 2014 and 2018 regarding their egregious targeting of the Iranian-American community. Unfortunately, Bank of America consistently failed to comply with NIAC’s requests, as they continued the discriminatory practice of shuttering accounts of Iranian Americans.
However, a class action lawsuit (Case No. 3:21-cv-01799-H-BGS0) against Bank of America for these discriminatory account closures has now been upheld by a district court, and will soon put a spotlight on their damaging practices. The class action was filed by Migliaccio & Rathod LLP, along with Singleton Schreiber McKenzie & Scott LLP, on behalf of Mohammed Farshad Abdollah Nia. Mr. Nia is a permanent resident of the United States and an Iranian national who was victimized by an unjust account closure by Bank of America. Mr. Nia alleges his account was closed because of Bank of America’s discriminatory practices against persons of Iranian or Middle Eastern descent. NIAC provided Mr. Nia’s legal team with key background on this issue before the class action was filed.
Bank of America attempted to have the claim dismissed, but was denied by the Honorable Cynthia Bashant of the Southern District of California. In her report, Judge Bashant favorably cited the letters NIAC sent to Bank of America, which were key in building Mr. Nia’s claims of discriminatory intent. As the judge stated, “Drawing reasonable inferences in Plaintiff’s favor, the Court finds that at the pleading stage Plaintiff’s allegations based on consumer complaints, articles, and social media posts support a plausible inference of intentional discrimination” from Bank of America. NIAC understands that institutions must comply with U.S. sanctions laws, but they should not be able to hide discriminatory practices as simply complying with OFAC regulations – a belief included in Judge Bashant’s report. “The Court agrees with Plaintiff that [Bank of America’s] arguments regarding OFAC compliance are insufficient at the motion to dismiss stage to overcome Plaintiff’s allegations regarding discriminatory intent.”
Mr. Nia came to the United States in 2011 and became a permanent resident in 2019. Like many Americans, he opened a credit card with Bank of America to help with his day-to-day expenses. Bank of America would periodically require proof of Mr. Nia’s residency, to which he always obliged. In 2019, Mr. Nia provided both a drivers license and an 1-797C form both of which Bank of America rejected as subsequent evidence of residency. Even after Mr. Nia’s multiple attempts to demonstrate proof of residency, on September 30, 2019 Bank of America restricted his account and ultimately closed it a few days later. As the court stated, “Even if [Bank of America’s] policy to require proof of residency from Iranian nationals is justified by its need to comply with OFAC regulations as [Bank of America] argues, Plaintiff alleges that [Bank of America’s] cancellation of Plaintiff’s account occurred only after he submitted the documentation [Bank of America] required for the ‘stated purpose’ of complying with OFAC.” Mr. Nia did everything BOA asked of him for sanctions compliance purposes, but was still punished in discriminatory fashion. Not only did Bank of America close the account, they failed to provide Mr. Nia with verbal or written notice, and even after calling Bank of America representatives he was given no additional information. As a result of his account closure, Mr. Nia lost his accumulated reward points and faced a drop in his credit score, an important indicator of financial health which can lead to additional adverse effects.
The National Iranian American Council is hopeful that this case serves as an important precedent that discriminatory behavior, even under the banner of sanctions compliance, will be held accountable and could be subject to litigation. All persons residing in the United States regardless of their heritage, racial, or religious background should live without fear of random closures or suspensions to their bank accounts. We are hopeful that the class action moves forward, shines a light on Bank of America’s discriminatory banking practices, and comes up with a just and fair ruling that deters other financial institutions from engaging in similar targeting of Iranian Americans, Iranian nationals and other impacted groups.
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