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Bank of Hawaii is Closing The Accounts of Iranian Citizens

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BANK OF HAWAII
Bank of Hawaii Corp. signage is displayed outside of a branch in Honolulu, Hawaii, U.S., on Wednesday, Jan. 9, 2013. Honolulu, the southernmost major U.S. city, is a major financial center of the islands of the Pacific Ocean. Photographer: Tim Rue/Bloomberg via Getty Images | Bloomberg via Getty Images
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Bank of Hawaii is closing the accounts of Iranian nationals living in the state, a move that is angering Iranian activists and civil rights supporters.

A national Iranian organization sent a letter to the bank last week protesting the action.

“Bank of Hawaii has made a business decision to close all accounts belonging to customers with Iran citizenship,” according to a letter from the bank sent to 17 Iranian nationals in December.

The bank cites U.S. sanctions against Iran, issued from the U.S. Department of the Treasury Office of Foreign Assets Control (OFAC), the agency responsible for regulating the economic sanctions between the U.S. and Iran.

“U.S. depository institutions, including foreign branches, are prohibited from servicing accounts of the Government of Iran, including banks owned or controlled by the Government of Iran ... or persons in Iran,” one of the sanctions states.

The Bank of Hawaii letter noted that while the bank was aware the addresses associated with the account holders are located in the U.S., the bank is “not able to prevent the operation of your account if, or when, you are in Iran.”

Taking Action

Hamid Pourjalali, a professor at the University of Hawaii at Manoa’s Schidler College of Business, knows of several people who have received the letter; he believes it’s “outrageous” for the bank to take such action.

“This is an extreme case, because even in the letter they say it’s not based on transactions,” Pourjalali said. “The accounts are closing based on citizenship.”

The closures are mainly affecting students who are here on visas and others who live here with green cards. Pourjalali knows of at least one person who, once he proved his U.S. citizenship, was able to save the account.

In a statement to Civil Beat, Stafford Kiguchi, spokesman for the Bank of Hawaii, apologized for the inconvenience to customers. "In response to the customer feedback we received, we are working on a technology solution that may allow the reopening of these accounts, should our customers wish to do so," he said.

Kiguchi noted that there are many Iranian citizens legally in the U.S. and that there are exceptions to the rules for some situations. "However, if the person returns to Iran and leaves the account open, the financial institution is required to immediately restrict access to the account."

Under Iran’s citizenship laws, anyone born there is automatically a citizen, as are the children born outside of Iran to fathers who are Iranian nationals, which includes many Iranian-Americans.

Some fear this could lead to U.S. citizens having their bank accounts closed as well.

Erich Ferrari is an attorney in Washington, D.C., who specializes in issues related to U.S. trade sanctions. He says he has never seen a case like this and believes the bank went “way overboard.”

“What’s problematic here is that Iranians can have dual nationality regardless of if they have a connection there or not,” or ever go to the country, he said.

An Iranian advocacy group is taking on the bank. Jamal Abdi is the policy director at the National Iranian American Council (NIAC), a grassroots organization that addresses issues facing the Iranian community.

"We strongly urge for Bank of Hawaii to reverse this discriminatory action and to ensure its policies do not violate constitutional and legal protections for U.S. persons," he said in a Feb. 24 letter on behalf of NIAC.

Similar situations have happened before, “but nothing like this,” Abdi told Civl Beat. “Nothing where the bank has stated that they are cutting off customers solely because of their citizenship.”

Last year, more than 20 Iranian students at the University of Minnesota had their accounts terminated by TCF bank, triggered by the bank's investigations into transactions it believed may have violated the federal sanctions.

The bank denied it was targeting international students. Students filed a complaint with the Minnesota Department of Human Rights and the bank is now under an investigation to determine if there was discrimination.

In 2012, TD Bank in Canada closed the accounts of Iranians due to the federal sanctions, although many who got their accounts closed were shocked and said they hadn’t tried to send any money to Iran.

Caught Between Service and Compliance

The timing of the account closures comes after the U.S. and other world powers agreed to a six-month accord with Iran that began in January, temporarily freezing Iran’s nuclear program and in return easing some of the economic sanctions, allowing for negotiations over a long-term deal on Iran’s nuclear program.

Data from the 2010 census showed there were 370 individuals living in Hawaii that identified as Iranian alone or in combination.

According to the NIAC, many Iranian students studying in the U.S. have had difficulty paying for their tuition and living expenses because of the sanctions that make it difficult to access or transfer funds that are held in Iran.

Ferrari noted that banks operate under strict liability and have been known to refuse to service accounts to people they believe have a connection to Iran. Iran citizens have a higher risk profile, and raise red flags to banks, he said.

Kiguchi said that it is difficult for the Bank of Hawaii to monitor when someone returns to Iran. "We must be able to restrict their use of our internet, telephone and mobile services, or even their ability to write a check to access their accounts while in Iran, or we are in violation of the law. We are caught here between trying to serve our customer and being in compliance with U.S. regulations," he said.

Abdi says he realizes the banks “are put in a tough place” with regard to the sanctions.

“I don’t think that the Bank of Hawaii is intentionally discriminatory against Iranians,” he said. “I understand that they’re doing this because of the sanctions. The sanctions are broad. The issue here, though, is that complying with them doesn’t give them a blank check to use racial profiling.”

Abdi says the bank's reasoning, that it can’t control what Iran citizens will do with the account if or when the person returns to Iran, doesn’t hold up.

“Iranian Americans travel to Iran, other Americans travel to Iran, plenty of people travel to Iran. I’m not clear why they’re using Iranian citizenship as their criteria here,” Abdi said. “That’s not justifiable for cutting off a bank account.”

Kiguchi says the bank is hoping to reach a resolution to accommodate its Iranian customers within the next two weeks.

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