May 16, 2024

Representative Ilhan Omar (D-MN) and Senator Elizabeth Warren (D-MA) Lead Against Banking Discrimination

For years, Iranian Americans, Iranian nationals and other minority groups have been discriminated against by U.S. financial institutions who close or restrict their accounts with little to no warning. This process, which is done in an apparent overcompliance with broad sanctions on Iran, is known as “de-risking.” 

These incidents have been well documented, with closures impacting students far removed from financial support, individuals closing on a home or expecting a child, or even just friends paying each other back via mobile apps for Iranian food. Most recently, Bank of America was sued by an Iranian national – and permanent resident in the U.S. – for closing his account with no notice. In the lawsuit, Bank of America itself revealed that they had closed or restricted the accounts of a staggering 15,000 individuals of Iranian heritage. 

Given that these actions are intended to comply with various U.S. sanctions and anti-money laundering regulations, the federal government needs to step in to better safeguard minority communities from discriminatory banking practices.

Thankfully, Senator Warren and Representative Omar have sent a new letter addressed to financial regulatory agencies with proposed executive actions to reduce the negative impacts of de-risking. This letter follows previous efforts to address such financial access issues for underserved communities, including a December 2022 letter to the banking regulators in the lead up to Treasury’s de-risking strategy and a February 2024 letter to JPMorgan, Citi, Wells Fargo, and Bank of America seeking more information on their de-risking practices.

The letter lays out the following key asks:

  1. A joint statement from the relevant agencies that financial inclusion efforts are a public priority in their work.
  2. The creation of a formal advisory group on financial inclusion that is solely dedicated to promoting closer coordination between all U.S. government stakeholders on the impact of de-risking.
  3. Issue the appropriate FAQs, advisories, or alerts to better inform banks who, in turn, can avoid shutting down or restricting accounts unnecessarily.
  4. Create and provide updated Treasury guidance standards requiring banks to provide consumers with pre-clearance mechanisms for transactions that could be flagged.
  5. Establish minimum notice and dispute resolution requirements for consumers that experience account closures.

Fellow signers of the letter include Senator Ed Markey (D-MA), Senator Bernie Sanders (I-VT), and Representatives Rashida Tlaib (D-MI), Katie Porter (D-CA), Barbara Lee (D-CA), Alexandria Ocasio-Cortez (D-NY), Pramila Jayapal (D-WA), Joyce Beatty (D-OH), and Jonathan Jackson (D-IL). You can see the letter below:

2024.05.15 Letter to Financial Regulators re. De-risking Recommendations
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