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February 24, 2020

NIAC Presses Treasury on Discriminatory Bank Account Closures

On July 19, 2019, the National Iranian American Council requested that the Treasury Department take action to halt discriminatory bank account closures targeting individuals of Iranian heritage. 

For years, NIAC has heard from concerned members of the community who have had their bank accounts closed with little to no warning simply because they have Iranian heritage. These financial institutions engage in this disruptive and discriminatory behavior because they are over-complying with existing U.S. sanctions on Iran, which do not allow U.S. nationals to operate bank accounts inside of Iran. The Treasury Department could halt this discriminatory targeting of members of the Iranian-American community with a simple rule change. However, it has not yet decided to take such action.

On February 6, we sent the Treasury Department supplementary information supporting our rule change request. The information outlines NIAC’s longstanding advocacy to halt bank account closures as well as stories from impacted individuals who have been harmed by the discriminatory closure of their bank accounts. An excerpt of this supplemental information is included below.

NIAC will keep fighting until no member of our community is under threat of having their bank account closed based on their national heritage.



EXCERPT

  1. Persistent Harassment of Iranians and Iranian Americans

NIAC has tracked U.S. bank closures of the accounts of Iranian persons for years, including during the Obama administration. In 2014, NIAC worked with the Bank of Hawaii, which informed more than a dozen customers of Iranian heritage–all lawful U.S. residents– that their accounts would be terminated as a direct result of their Iranian citizenship in an effort to comply with U.S. financial sanctions against Iran. NIAC’s consultations with Bank of Hawaii led the bank to ultimately resume account relationships with those Iranian clients whose accounts it had previously terminated.  

In 2014, NIAC also received numerous complaints from Iranian nationals and Iranian Americans alike that Bank of America had shuttered their accounts with little to no warning. This included, in particular, Iranian students studying at U.S. universities, none of whom had recourse to alternative banking options or available funds by which to support themselves as they awaited the balance of their accounts in the mail. Bank of America justified its action by reference to U.S. sanctions and the need to reduce the risk posed by Iranian persons who may access banking services if and when they traveled to Iran. NIAC staff wrote about this worsening problem with Bank of America in The Huffington Post:

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. 

While many banks have engaged in discriminatory account review practices and account closures for those persons of Iranian heritage, Bank of America has proven the worst offender. NIAC has written to Bank of America to request a halt to these legally dubious and damaging actions on successive occasions. In NIAC’s letter in 2014, NIAC staff noted:

Instead of giving Iranian customers time to provide proof of U.S residence before closing or suspending bank accounts, Bank of America has acted preemptively to close accounts, all to the detriment of their customers. It has done so apparently on no other basis than the legally questionable and ethically problematic one of national origin.

With account closures continuing to affect the Iranian-American community, NIAC wrote again to Bank of America in 2018 to underscore the discriminatory and damaging impact of the bank’s actions. In this communique, NIAC noted:

[O]ne Iranian Bank of America customer who is residing in the United States who had his bank account closed without advance notice, and his funds were wrongfully withheld from him for about three months before our involvement. The funds were deposited into his account so that he could pay for medical expenses for his pregnant wife who was experiencing medical complications. The Bank of America customer ultimately had his funds released to him after NIAC contacted Bank of America with the possibility of litigation for wrongfully withheld funds without any legal justification.

As U.S. financial institutions proved immune to NIAC’s (and others in the Iranian American community’s) reproach, NIAC determined that a formal rule change might be necessary to provide sufficient assurance to banks so as to halt their discriminatory and harmful actions against persons of Iranian heritage. Simultaneous with NIAC’s submission of a formal rulemaking request to the Director of OFAC, we sent an additional letter to Bank of America urging that they take immediate steps to ensure their policies do not unlawfully discriminate against members of our community.

There has also been substantial coverage of these bank account closures and their discriminatory impact on the Iranian-American community. For instance, Forbes reported on Bank of America’s continuing account closures, citing an Iranian-American citizen who had his account closed while he was in the process of putting a down payment on a home in the United States. The Salt Lake Tribune reported this year that the Iranian American Society of Utah – a nonprofit organization – was unable to receive payment following a community event as the payment company they used–Stripe–had halted the transactions in order to ensure compliance with U.S. sanctions. The Iranian American Society of Utah civil rights director noted, “We felt that just because of our identity, our ethnic background, our transaction was being flagged…’” Similarly, many Iranian Americans have had payments rejected or held in abeyance by companies like Venmo when exchanging funds for things as benign as a get-together at a local diner and using words like “Iran,” “Iranian” or “Persian” in the payment description.

The individual cases and impacts of these bank policies, which are all the predictable result of U.S. sanctions and the incentive to over-compliance, are many and varied. NIAC has collected many of the stories from our community over the years, including the following:

  • One U.S. citizen had an account that was to be used for a down payment on a home frozen by Bank of America, in spite of the fact that they had not been to Iran in two decades and had already sent official documentation to the bank to confirm their U.S. citizenship.
  • An Iranian national studying at a U.S. university had their account at Bank of America closed, where the individual had put all of their savings while in the United States. To add insult to injury, the bank reportedly sent the funds to the individual by check, which was lost in the mail and added further delay and hardship.
  • A PhD student in the United States had their checking account closed by TD Bank without notice or lawful justification. Three days after the closure of their account, TD Bank sent a letter indicating the account would be closed at a future date. The abrupt closure resulted in the individual missing utility payments. Moreover, after experiencing this difficulty with the account closure at TD Bank, the individual sought to open a new checking account at Chase Bank that was blocked the day after it was opened. 
  • Finally, two U.S. citizens had their accounts with Bank of America blocked multiple times with no prior notice. Their credit card was closed with no notice and they were told by their local bank branch that the bank “can’t provide any information” regarding the reasons for the closure and that they are regarded as “high risk” customers. Later, Bank of America closed their checking and savings accounts, while Merrill Edge – a Bank of America company – closed their retirement account with only 1-day notice.

These are merely a snapshot of the full reach and impact of the discriminatory tactics employed by U.S. banks seeking to comply with U.S. sanctions. We have collected dozens of stories of individuals who have had their lives thrown upside down as a result of these unnecessary actions. It is because of this collective experience of the Iranian-American community that NIAC believes that OFAC should promulgate a rule authorizing U.S. financial institutions to operate accounts of persons in Iran. This rule should be similar in scope to license authorizations issued with respect to other embargoed jurisdictions. Doing so may provide significant reprieve to persons of Iranian heritage seeking to open and maintain accounts at U.S. financial institutions while lawfully resident in the United States. Given the continued discriminatory impact of these policies, we respectfully request that OFAC complete this rule change without delay.

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