Ninth Circuit Shields Bank of America From IEEPA Suit Over Iranian Customer's Account Closure

Mohammad Farshad Abdollah Nia sued Bank of America after the bank terminated his credit card account under its Consumer Residency Monitoring policy. That policy requires customers who are citizens of comprehensively sanctioned countries to periodically submit documentation proving they do not reside in sanctioned territory, consistent with Iranian Transactions and Sanctions Regulations barring U.S. financial institutions from servicing "accounts of persons who are ordinarily resident in Iran."

The bank mistakenly classified Nia's Form I-797C as permanent proof of residency in some letters while treating it as temporary internally. After Bank of America assigned the form an internal expiration date and asked Nia for updated documents, he did not respond, and the account was closed in October 2019.

Writing for a unanimous three-judge panel, Circuit Judge Lawrence VanDyke rejected Nia's argument that the IEEPA liability shield protects only actions specifically mandated by sanctions regulations. "Given IEEPA's expansive language, the Bank's CRM policy falls comfortably within the liability shield's ambit," VanDyke wrote.

The panel found the policy "is clearly built around the demands of the ITSR" and that citizenship-based monitoring "is done pursuant to and in reliance on sanctions guidance" from the Office of Foreign Assets Control. VanDyke wrote that while such monitoring "may not be compelled by the ITSR, it is certainly permitted under OFAC's guidelines."

The court also rejected Nia's arguments tied to the bank's administrative errors and allegedly discriminatory practices. "Third-party disapproval has no bearing on the Bank's good faith," VanDyke wrote. The panel added that even assuming seven consumer complaints could raise good faith questions, such complaints across Bank of America's 67,000 Iranian citizen accountholders since 2016 "falls far short of proving any sort of widespread lack of good faith."

The decision affirms a ruling by U.S. District Judge Cynthia A. Bashant, who granted summary judgment to Bank of America on all of Nia's claims except those under the Equal Credit Opportunity Act, which Nia voluntarily dismissed before appeal. Nia originally filed suit in state court in August 2021, and the bank removed the case to federal court.