March 27, 2014

Banks Targeting Iranian Americans – What Are Your Rights?


Recently, we have heard from a number of people concerned about the increased scrutiny they have faced from US banks as a result of their Iranian citizenship. We want to clarify the basis for this increased scrutiny, as well as outline what rights Iranian-Americans have to best ensure that they can continue to conduct normal banking activities in the US without interruption. Importantly, we want to stress that if you have questions or concerns about a bank’s inquiries into you and your status as an Iranian-American, you should contact a lawyer to help you address them.

Why Is My Bank Contacting Me?

You may have been contacted by your bank regarding your place of residence, your travel plans to and from Iran, or your travel history to Iran. These are questions that your bank is asking as part of their due diligence efforts to remain compliant with US sanctions law, which prohibits banks from offering services to Iran and Iran-based persons (including banking services).

Under OFAC regulations, US banks are not permitted to debit or credit your bank account if you are “ordinarily resident in Iran” and are physically present in Iran at the time. While there is no precise definition for what constitutes “ordinary residence,” it is generally taken to mean the place where you consider yourself primarily resident (where you live the majority of the time; where you have legal, permanent resident status; where your ‘home’ is; etc.). Because US banks might have a more difficult time determining your “ordinary residence” as a result of your status as a dual national or as a non-citizen of the US, some banks may have contacted you for confirmation as to where you live, when you travel to Iran, etc. While these questions might seem harassing, they are questions that a bank may ask of you to ensure that it does not continue to operate your banking account if and when you are in Iran.

What Are My Rights?

Such bank inquiries have caught dual US-Iran nationals and non-US citizens living in the US in the cross-hairs, as their status as Iranian citizens has caused US banks to more closely scrutinize transactions and to seek confirmation of residence, travel plans, etc., to ensure compliance with US law. In extreme cases, some banks have closed down accounts of Iranian nationals living in the US for fear that the account poses too high a risk that the bank will extend prohibited services to Iran. It is thus important that you understand what rights you do have under the law and what you can do if you have questions or concerns about your bank and its inquiries.

First, US banks should not discriminate against you based on your national origin. If a bank contacts you and tells you that they are closing down your account based on the fact that you are an Iranian national, you should contact a lawyer. Many states have anti-discrimination laws that prevent banking institutions from discriminating against persons based on their national origin. Many states will also have a state bureau that handles discrimination claims. They may be able to help you as well.

It is important to remember that the fact that you are an Iranian national is NOT a reason to shut down or close your bank account. Your bank is misinterpreting the relevant OFAC regulations. Often times, US banks exercise too much caution or fail to properly interpret OFAC regulations regarding Iran sanctions, and thus assistance from NIAC or your lawyer can help them better understand your status and the applicable US law.

Second, if US banks contact you for further information, you should be cautious and reach out to NIAC and to a lawyer, especially if you have questions or concerns. So long as you are not ‘ordinarily resident’ in Iran and within Iran at the time, a US bank should not close down or restrict your account. When a bank seeks confirmation of your residence in the US, your travel plans to and from Iran, and your travel history to Iran, the best option will often be to answer their questions truthfully and completely. If you are not an ordinary resident of Iran or you are an ordinary resident but are not located in Iran at the time, the bank will have no reason to close down or restrict your account, and your confirmation to them of your status as a US resident will be enough to resolve the issue. However, if you do have any concerns, you should immediately reach out to NIAC and a lawyer to help you address those concerns.

Third, if you plan on traveling to Iran, be cautious about accessing your US bank account while there. US banks are prohibited from debiting or crediting your account while you are in Iran, and if they do see activity on your account originating from Iran, they are likely to restrict the account. Also, if you plan on being resident in Iran for an extended period and would like access to your US-based funds, you can close down your account at a US bank and transfer your funds to a bank account held outside the US. To open a bank account in Iran, however, you will first need to secure an OFAC license.

Most important, though, if you have questions or concerns about your bank and its activities regarding your account, you should contact a lawyer with special knowledge of OFAC regulations. Because this is such a dense area of law and the penalties associated with sanctions violations are so severe, US banks have routinely over-interpreted US law and, in so doing, risked discrimination against Iranian-Americans. Your best bet is to be cautious and procure timely legal advice related to your concerns.

*  The information in this article is for educational purposes only and should not be considered legal advice.  If you have a legal question, please consult with a lawyer.


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