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May 30, 2014

Update on Account Closures at Bank of America

WASHINGTON DC – Bank of America has issued a response to NIAC’s request for the bank to stop closing accounts of Iranians located in the US. In its letter, Bank of America states that Iranian accounts are being terminated in order to uphold the bank’s “due diligence” obligations under US sanctions law.

Over the past few months, NIAC has received a significant number of communications from Iranians across the US – primarily Iranian students studying at US universities – informing us that Bank of America is closing or restricting their bank accounts with no prior notification or explanation.

NIAC delivered a letter to Bank of America’s CEO seeking resolution to this issue and urging the bank to halt all further account closures, provide prior notification to Iranian account-holders that their accounts are being shuttered, and reevaluate current policies to ensure that the bank is not discriminating against Iranians on the basis of their national-origin. NIAC also joined with several other Iranian-American organizations – including PAAIA, IABA, and Pars Equality Center – to send a separate letter requesting Bank of America to reevaluate its policies.

Bank of America responded to NIAC’s initial letter last week, stating that the account closures were performed in strict compliance with US sanctions law and that no accounts were closed without prior notice. Bank of America’s letter also states that the bank does not discriminate on the basis of national-origin.

Under US sanctions law, banks are indeed required to restrict access to accounts if they have reason to believe the account-holder is “ordinarily resident” in Iran and in Iran. However, in all of the communications NIAC has received, the Iranian account-holders whose accounts were restricted were living in the US and had not been in violation of US sanctions law. In all cases, the affected individuals were able to get their accounts re-opened by providing proof of US residency – though only after weeks of having no access to a bank account.

NIAC believes Bank of America can do far more to ensure that the bank is not taking an overly-broad approach to sanctions enforcement. NIAC has helped facilitate solutions in previous cases where banks had unduly closed Iranian accounts.

NIAC is also now taking steps to address this broader problem with how sanctions are being interpreted and implemented under US sanctions law.

The Obama Administration has long made it clear that expanding people-to-people ties with Iran is a significant and enduring US interest. In that vein, the Treasury Department issued a new General License this past March aimed at fostering academic exchanges between US and Iranian universities. In past years, too, the State Department has also made significant efforts to facilitate greater access to student visas for Iranians, which has led to an increase in the number of Iranian students studying at US universities.

NIAC has been in contact with the Treasury and State Department regarding this issue, believing that both can play a vital role in ensuring that banks implement US sanctions law in a manner that does not conflict with the US’s broader public diplomacy goals.

NIAC has proposed that steps be taken to more clearly define what banks must do – and what they are not required to do – in order to uphold their “due diligence” obligations under US sanctions law. Such a step could include redefining “due diligence” in such a way so that banks are encouraged to contact account-holders prior to closing their accounts. In this way, Iranian account-holders would first be able to provide proof of US residence without having to deal with the hardships associated with a restricted bank account.

In the absence of a change like this, US objectives vis-à-vis Iran will continue to compete with each other, as the perception that US sanctions are targeting Iranian students due to their national-origin (as is the case with Bank of America) will serve to undermine administration efforts to build goodwill with ordinary Iranians.

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