MINNEAPOLIS — Following the Islamic Revolution in 1979 in Iran that toppled the U.S.-backed dictator, Mohammad Rezâ Šâh Pahlavi, the Shah, the United States hit the Islamic Republic with economic and trade embargoes. The implementation of sanctions — the blocking of assets and trade restrictions — has taken an economic and psychological toll on the people of Iran.
These sanctions are also now affecting Iranian-Americans and Iranians in the U.S. whose bank accounts are being closed by major U.S. financial institutions.
One of the largest banks in the U.S., Bank of America, has been accused of unnecessarily closing the bank accounts of Iranians living in America and Iranian-Americans, thereby cutting off the financial lifeline on which many depend.
“These Iranians are innocent of any wrongdoing. 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,” Jamal Abdi, policy director for the National Iranian American Council, and Ryan Costello, a policy fellow with the organization, wrote in a recent guest blog post for The Huffington Post.
“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.”
It was first reported in January 2013 that several Iranian students at the University of Minnesota and other members of the American Islamic community had their bank accounts closed without explanation the previous year by the Minneapolis-based TCF Financial Corp. But it wasn’t until earlier this year that reports surfaced that Bank of America was engaged in these practices, as well.
When it was reported that Bank of America was closing the accounts of Iranians living in the U.S. and Iranian-Americans, there was speculation that the bank did so on the basis of discriminatory ideology, since Bank of America did not give these individuals any reason why their accounts were being closed. The bank responded to these accusations, arguing that it was only following the rules put forth by the U.S. federal government regarding economic relations between the U.S. and Iran.
The human price of compliance
Betty Riess, a spokeswoman for Bank of America, told MintPress News via email, “We do not close accounts on the basis of nationality, nor do we close accounts without notice to customers.”
Riess explained that bank officials “continually verify that our operation of accounts remain in compliance with U.S. sanctions requirements. This may include outreach to some customers to ensure that our records remain current, particularly regarding the ordinary residence and physical presence of customers outside of sanctioned countries.”
For many of these individuals, their frustrations were compounded when they discovered how difficult it is to re-open a bank account. It also wasn’t clear when or if they would get their money back from the frozen accounts. And because they could not access the funds in a frozen account or hadn’t yet received funds remitted by the bank from closed accounts, they faced fees for not paying bills on time.
As Minneapolis-based lawyer Samira Afzali, Esq., told MintPress, lawyers often don’t want to get involved when they learn that the bank accounts were closed due to “U.S./Iran sanctions,” as that makes the case a national security issue. “A lot of attorneys don’t know how to approach it,” she said.
Whether or not this latest banking incident was, in fact, due to the bank’s attempts to follow the rules laid out by the sanctions, Abdi and Costello argue in their blog post that these “discriminatory banking policies were not only racist,” but harmful to the livelihood of those living in the U.S., whose only crime was being born in Iran.
While Abdi and Costello acknowledge that “navigating the minefield of U.S. sanctions on Iran is certainly difficult, and violating U.S. sanctions often comes with particularly heavy penalties,” they argue that “legal and financial challenges are no excuse for discriminatory policies.”
Afzali says Bank of America should be more transparent with customers who have their accounts frozen or closed.
“A lot of people call me and say, “We try to abide by the law, we’re just normal people, why is this happening to us?’”
Sanctions against Iran
There’s no denying the United States has anything but a tumultuous relationship with Iran. Even though the two nations are largely estranged, their relationship is arguably better than the United States’ historical relationships with other countries, like Cuba, which is why the banking issue gets tricky when it comes to Iran.
Since the late 1980s, the U.S. has enacted economic and trade embargoes on Iran in an attempt to restrict the nation from engaging in behaviors and practices that U.S. officials do not agree with. The most notable point of contention is Iran’s nuclear program — something other states, including the U.S., have.
The implementation of sanctions is far from a new tactic when it comes to U.S. foreign policy, though. Sanctions were first used in the U.S. prior to the War of 1812 in order to prevent Great Britain from harassing American sailors. Sanctions were also enacted against the Confederacy during the U.S. Civil War.
The U.S. currently has sanctions in place for a handful of countries, including North Korea, Cuba, Sudan, Syria, Myanmar and Libya. The extent of these sanctions varies by country.
The Office of Foreign Assets Control, which is part of the Treasury Department, is tasked with ensuring that the sanctions are enforced. When it comes to Iran, this largely means the Office of Foreign Assets Control must ensure that the transfer of money — either in the form of cash or as goods and services — is restricted in order to ascertain that U.S. dollars are not being used to fund terrorism or the Iranian government in any way.
Afzali, who represented the Iranian students at the University of Minnesota who had their bank accounts closed, told MintPress that the economic sanctions against Iran are not as straightforward and clear as those against other countries, like Cuba, since travel to Iran is not prohibited.
A troubled and complicated relationship
Given that Iranians can travel to the U.S., and vice versa, economic transactions such as those meant to assist Iranians in the U.S. and Iranian-Americans to pay education-related expenses are allowed, which is why some have argued that the bank account closures are more indicative of racist ideologies and policies in the U.S. than an attempt to prevent terrorism funding.
However, others point out that failure to follow the rules set out by the U.S. government on dealing with any nation — not just Iran — could result in a bank being charged thousands of dollars in fines.
Some of the U.S. restrictions against Iran were eased in 1996, when President Bill Clinton was working to improve relations between the two countries. But in 2009, harsher economic sanctions were once again enacted as the Obama administration tried to financially force Iran to abandon its nuclear program.
Whether the sanctions could be eased again is up in the air, as negotiations between the P5+1 — the five permanent members of the U.N. Security Council and Germany — and Iran are expected to continue through the summer. But given that conservative Israeli and Saudi Arabian lobbies are often connected to the push for tougher sanctions against the Islamic Republic of Iran — they argue that without the sanctions, Iran will create a large nuclear program and destabilize the region — U.S. attempts to develop a positive relationship with Iran while also maintaining its relationship with Israel and Saudi Arabia represents a delicate and tricky balancing act.
Although Iran does have a nuclear program, nuclear technology doesn’t appear to be the nation’s focus, as some news reports may lead the public to believe. The nation has also agreed to open up its nuclear facilities for inspection, but that hasn’t put an end to the crippling sanctions against the country.
A diplomatic relationship between Washington and Tehran is a relationship that Kayhan Barzegar, director of the Tehran-based Institute for Middle East Strategic Studies, thinks is necessary. He wrote an article in April to explain why misinformation about Iran is bad for world peace, and further argued that a mutually beneficial relationship between the U.S. and Iran is in the United States’ best interest.
After pointing out the influence of lobby groups and the interests they have in the region, Barzegar wrote that “any improved relations between Iran and the United States that result from a comprehensive nuclear deal, following the removal of sanctions and a reduction in nuclear activities, will immediately bring about positive implications for regional stability through cooperation.”
Zbigniew Brzezinski, a leading U.S. strategist and Obama foreign policy adviser, shares this line of thought. He has called on U.S. lawmakers to reject pressure from Israeli lobby groups like the American Israel Public Affairs Committee when it comes to American national security policy, since he said Israel often beats the war drums when it comes to Iran. Brzezinski has also stressed that there is no “implicit obligation” for the U.S. “to follow, like a stupid mule, whatever the Israelis do.”
Preventing racial banking
When asked if Bank of America would accept the National Iranian American Council’s request to work together to ensure that accounts are not closed unnecessarily in the future, Riess told MintPress that the bank had nothing further to add.
It’s not clear when and how this issue will be remedied. Abdi, the policy director for the National Iranian American Council, told MintPress that the organization is currently in talks with Bank of America, but there is no clear indication of what kinds of solutions the bank is open to.
Afzali says some Iranians and Iranian-Americans are suspicious of the individuals who have had their bank accounts closed. This suspicion is somewhat unfounded, the attorney says, explaining that sanctions often prompt financial institutions to target innocent people from a variety of immigrant communities.
Many of these people who have become victim to the bank account closures by these large institutions are not considered U.S. citizens, but permanent residents holding green cards. Their accounts were closed at a time when the nation is debating how immigrants fit into this country. Lawmakers are posing questions about who is considered a citizen, who is awarded protection under the law, and to what extent racial profiling is acceptable.
Nevertheless, Afzali says the closures were of particular concern to her because “racial policies in the banking world are dangerous.”
Bank of America may be the latest financial institution to close the accounts of a group of people without offering a reason, but it is far from the first to do so and it likely won’t be the last. The Bank of Hawaii, for example, started closing the bank accounts of its Iranian customers in the U.S. without reason last December. The bank issued a statement in March saying that it had worked with the Treasury Department and the National Iranian American Council to allow Iranian residents to bank with it once again.
The Hawaii-based bank also announced that it has created and implemented new policies in an effort to ensure that the accounts of Iranians living in the U.S. and Iranian-Americans are not closed in the future due to the sanctions on Iran.
Is there a resolution?
Afzali recognizes the difficulty the banks face when trying to follow the sanctions that are not explicitly clear. A gift from Iran valued under $100 is allowed into the U.S., for example, but a gift valued at $101 or even $100.50 is not. While some material items such as medicines, films and photographs are generally allowed in and out of Iran, the Commerce Department reserves the right to restrict the export of these products to Iran if the agency suspects they will be traded or sold there.
That’s part of the tricky and confusing aspect of the sanctions — the rules can change at any time because there is a legal clause allowing the U.S. government to change the rules or prohibit a transaction without prior notice or explanation.
Abdi says some groups are pushing for tougher sanctions on Iran, which creates significant costs for companies, including private businesses, that do business with Iranians. He says he believes Office of Foreign Assets Control or the Treasury Department asked financial institutions like Bank of America to take a tougher stance regarding the accounts of Iranian customers, adding that this is likely what prompted the Bank of America account closures.
Afzali also points out how bizarre it is that almost every bank that has unnecessarily and without reason closed the bank accounts of customers from certain demographics, later reopened the accounts after the closures were reported in the media. Speaking to the banks, she asked if these people are so dangerous and are breaking the law, why are banks so willing to reopen their accounts?
It remains to be seen whether Bank of America will allow the affected individuals to bank with it once again and agree to work with National Iranian American Council to improve its policies to ensure customers do not have their accounts closed or frozen without reason. But Abdi says he’s curious if groups that endorse tough sanctions on Iran, such as United Against Nuclear Iran, are aware that the sanctions affect students studying abroad. If they do, he continues, do the groups view this violation of the students’ civil rights as acceptable?
MintPress reached out to some lobby groups that have pushed for sanctions against Iran — including United Against Nuclear Iran and the American Israel Public Affairs Committee — for comment on the issue. Our requests for an interview or statement were not returned.