May 15, 2014

Why Is Bank of America Closing Iranian Students’ Accounts?

Across the country, many Iranian students are having their financial lifeline severed, often with little or no warning, by one of the largest banks in the United States: Bank of America.

Students across the world grow up dreaming of the opportunity to study at the best universities the United States has to offer, either to bring their skills back to their home country or to start a new life in the land of opportunity. Many go to great lengths to achieve that dream, and are heavily dependent upon the financial lifeline that their family or others have extended to them from their home countries. Iranians are no different, despite the differences between the U.S. and Iranian governments. 

However, across the country, many Iranian students are having their financial lifeline severed, often with little or no warning, by one of the largest banks in the United States: Bank of America. 

Due to a sudden, unnecessary and – most of all – discriminatory change in bank policy, Iranians and Iranian Americans across the country suddenly try to use their debit cards to make a purchase or withdraw money from an ATM, only to find that their accounts have been frozen effective immediately. When they try to get answers from the bank, they are often subject to a Kafkaesque bureaucratic run-around before a person with proper clearance is found, at which point the process begins anew.

The bureaucratic fight to re-open an account can drag on endlessly with little indication as to when, if ever, the issue will be resolved and they will be able to access their own money. Meanwhile, these students are hit with late fees for failing to make payments and often have to try to borrow money from friends to make ends meet. Their only crime is that they were born in Iran. None of them have a nuclear program hidden in their student dorms.

This entire process is unjust: nobody should fear that their bank could very well take away their money for an extended period because of where they are born.

These Iranians are innocent of any wrong doing yet, on the simple basis that they were born in Iran and do business with Bank of America, the bank has upended their lives by denying them the right to access their money – all out of a misguided fear of violating U.S. sanctions. This policy is discriminatory and wrong, undermines the protections that should extend to everyone that calls America home, and directly threatens the ability of Iranians to pursue their dreams.

Bank of America’s customers – regardless of national origin – put their trust in the bank on a daily basis, assuming that they will be able to access their money when it is needed. Few customers assume that their bank, which profits off of the relationship, would violate that basic trust on the discriminatory basis of race or national origin. But Bank of America is doing just that when it throws Iranians into financial limbo by freezing accounts without warning or justification.

In recent weeks, our organization, the National Iranian American Council, has received numerous complaints from Iranian students, as well as Iranian Americans born in Iran, who have suffered from Bank of America’s preemptive freeze policy. It appears that those we have heard from are just the tip of the iceberg.

The justification for this discriminatory and damaging policy lies in an over enforcement of U.S. sanctions law. Under extensive financial sanctions that have cut off Iran’s financial sector from the United States, U.S. banks cannot provide any services or permit accounts from being accessed within Iran. Many Iranians and Iranian Americans know these restrictions and are careful to ensure that they do not access their accounts when visiting Iran.

Nevertheless, Bank of America has employed a scorched earth approach to ensuring sanctions compliance: freezing domestic accounts with little to no warning for weeks at a time until they obtain additional documentation. These freezes are simply not necessary under U.S. sanctions law and solely rely on the legally questionable and ethically problematic justification of national origin. By contrast, many other banks simply request the documents and allow their customers to continue to access their accounts from the U.S. while they review and assess the risk of the customer running afoul of financial sanctions.

Navigating the minefield of U.S. sanctions on Iran is certainly difficult, and violating U.S. sanctions often comes with particularly heavy penalties. But legal and financial challenges are no excuse for discriminatory policies. Further, such practices carry risks of their own. In Canada, TD Bank’s closure of Iranian bank accounts was met with a large-scale public campaign against its practices, and the Minnesota Department of Human Rights is currently investigating TCF Bank for possible discrimination following their closure of Iranian student accounts. Rather than continue its discriminatory practices, Bank of America should follow the example of Bank of Hawaii, which took steps to reverse preemptive closures of Iranian and Iranian American accounts while ensuring that it did not violate U.S. sanctions law.

While many policymakers like to pretend that sanctions are a cost-free option, it is clear that such is not the case. The people of Iran have suffered under inflation and medical shortages caused by the sanctions. Further, Iranians and Iranian Americans that are pursuing the American dream now face racial discrimination from Bank of America and others as a direct result of sanctions.

While the U.S. and Iran continue to try to resolve their many differences, action must be taken prevent the fallout of these disputes from disrupting the peaceful lives of citizens in each country. Bank of America has a clear role to play in this effort, and should immediately halt its discriminatory account freezes and undertake a thorough review of its sanctions compliance policy to ensure that these practices do not continue. The innocent customers that Bank of America has harmed deserve, at least, to know that their policy has changed and that they won’t have to suffer through this discrimination again.

This article originally appeared in Huffington Post.

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