Ninth Circuit Holds IEEPA Shield Covers Bank of America Sanctions Compliance Policy

Writing for a unanimous panel in Abdollah Nia v. Bank of America, N.A., Circuit Judge Lawrence VanDyke rejected the plaintiff's argument that 50 U.S.C. § 1702(a)(3) immunizes only actions mandated by the Iranian Transactions and Sanctions Regulations. The provision states that "No person shall be held liable in any court for or with respect to anything done or omitted in good faith in connection with the administration of, or pursuant to and in reliance on, this chapter, or any regulation, instruction, or direction issued under this chapter."

"Nia's argument has no root in the text of the statute," VanDyke wrote, citing 1977-era dictionary definitions of "pursuant" and "reliance" that did not connote compulsion. The shield also extends to actions taken in reliance on "instruction[s]" or "direction[s]," language that, the panel said, "affords financial institutions like the Bank some discretion on how best to comply with the ITSR."

The case arose from Bank of America's Consumer Residency Monitoring policy, which requires accountholders who are citizens of comprehensively sanctioned countries to periodically submit documents proving they are not present or permanently resident in those countries. Plaintiff Mohammad Farshad Abdollah Nia, an Iranian citizen living in the United States, opened a credit card account in 2015. After the bank twice mistakenly identified his Form I-797C as permanent rather than temporary proof of residency, his account was restricted on October 1, 2019 and closed on October 21, 2019.

Nia sued under 42 U.S.C. § 1981, the Equal Credit Opportunity Act, the California Unruh Civil Rights Act, and the Unfair Competition Law. The Southern District of California granted summary judgment to the bank on all of Nia's claims except his ECOA notice claim and an associated UCL claim; Nia voluntarily dismissed both surviving claims to take the appeal.

The panel held that the bank's CRM policy "falls comfortably within the liability shield's ambit," noting that the policy was "clearly built around the demands of the ITSR" and tracked information directly relevant to whether the bank might be servicing accounts of persons "ordinarily resident in Iran" under 31 C.F.R. § 560.320. OFAC's risk matrix lists "nonresident aliens" and "foreign customers" as "high-risk customers" for compliance program purposes, and the agency has previously penalized banks for failing to collect citizenship data.

"Applying a sanctions compliance program based on citizenship may not be compelled by the ITSR, but it is certainly permitted under OFAC's guidelines," VanDyke wrote. The panel distinguished Silesian American Corp. v. Clark, 332 U.S. 469 (1947), and McGrath v. Cities Service Co., 189 F.2d 744 (2d Cir. 1951), saying those cases at most established that compulsion is "a sufficient condition—but not a necessary one—to trigger the liability shield."

On the good-faith requirement, the panel held that Nia failed to raise a genuine dispute of material fact. The opinion noted the bank's August 2019 letters had told Nia that "[t]he temporary residency documentation you provided will soon expire," and that the bank followed its consistent practice of requesting updated documents months ahead of expiration. The panel rejected Nia's reliance on letters from Senators Cortez Masto and Menendez and the National Iranian American Council criticizing the policy, writing that "whether third parties dislike the Bank's policy says nothing about the Bank's good faith."

The panel also discounted seven CFPB complaints Nia identified, observing that the bank "has served 67,000 Iranian citizen accountholders since 2016" and that a handful of complaints "falls far short of proving any sort of widespread lack of good faith." The panel did not reach the district court's alternative holdings that Bank Secrecy Act regulations can also implicate the IEEPA shield or that the bank would prevail without the shield.

Circuit Judges John B. Owens and Holly A. Thomas joined the opinion. Jason S. Rathod of Migliaccio & Rathod LLP argued for Nia, joined on the briefs by lawyers from Singleton Schreiber LLP and Hundley Law Group. Michael B. Kimberly of Winston & Strawn LLP argued for Bank of America.