“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.”
“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.”
“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”
FATCA is a US federal crime which violates the American constitution since it has caused Americans living abroad to be denied banking services due to their citizenship.
The Bank of Hawaii announced on Tuesday that it had reinstated access to accounts for Iranian nationals who had seen them frozen due to U.S. sanctions on Tehran.
The bank said that it unfroze these accounts following a pressure campaign by the National Iranian American Council (NIAC), a pro-Tehran advocacy group long suspected of lobbying on behalf of the Iranian regime.
I should have indicated that the text of my previous message was cut and pasted from the newspaper article.
Boy- they got a pretty fast reaction with positive outcome.
… and so should US Persons Abroad who have bank accounts closed.
Somewhat related news with parallels and implications to national origin discrimination:
RBS accused of closing accounts on ‘basis of race’ :
Royal Bank of Scotland backtracks on Iranian account closures
“The letter (notifying account closure) came days before RBS paid $100m to US regulators to resolve allegations that it has violated sanctions prohibiting business dealings with Iran and other regimes”.
Looks like Ms Nawaz (Blackstone Solicitors) maybe the solicitor to contact if accounts of ‘US persons’ are closed in the UK, as this is indeed seen as a breach of the Equality Act (2010) in the above case.
It looks like what’s happening is some people don’t know the difference between practicing racism and following laws which prohibit companies from doing business with anyone while that person is in a country classified as a state sponsor of terror. Also if an Iranian person was sending or receiving funds from Iran, that person and their bank would be violating US laws (and possibly the laws of other countries).
But closing the account of a person simply because they are Iranian is racist and is not actually what the terrorism laws were designed to do.
As an example, I do business with customers all over the world but there is a short list of countries that are on the terrorism list and you cannot do business with someone who you have determined has a billing/or shipping address or an IP address showing they are in one of these countries.
I once received an order for an online course for my business from an Iranian professor who resides and teaches in the United States. Unfortunately, he placed his order while he was vacationing in Iran. I had to tell him I could not fill his order due to his IP address showing he was in Iran. I gave him a link to a website that showed it was illegal to do business with him in his circumstance.
This Iranian professor was very polite and asked that I fill his order anyway since he was a professor who taught at an American university. I told him I would be happy to do that if he placed his order once he returned to the United States using a credit card with a US billing address.
The problem with saying you can’t do business with Iranians is that alot of people don’t understand the nuances of the terrorism laws. Terrorism laws do not say you have to cut off all Iranians. They say you cannot supply products/services to Iran. There’s a big difference.
I wonder how long it will take before some backwards countries start closing the accounts of all white people just because they might be a US person. Some Americans when they go on vacation to a foreign land pretend to be Canadian to get better service because people don’t like Americans already.
Imagine a white missionary stuck in some dangerous country unable to access funds in his bank account because it’s been frozen.
Imagine a US person being blackmailed by a bank employee in a country that has open corruption.
Will white people start being treated like Iranians in foreign countries because their banks don’t know how to tell a US person from a non US person?
Does anyone know Dutch?
There seems to have been a ruling against the Binckbank in the Netherlands yesterday. Binckbank has been closing the accounts of U.S. persons rather explicitly because of FATCA and one dual national who had moved from the U.S. at the age of one took the bank to court. The judge appears to have ruled that it was discrimination on the basis of national origin. Unfortunately, all the material coming out is in Dutch. There are quite a few banks in Europe that are known to have engaged in automatic closures, such as AXA France and some national branches of ING Direct, so it would be good to know more about the prosecuting arguments made against the Binckbank and the case in general.
@Publius , I actually “do not have a problem” if non-US firms seek to close the accounts of Americans. Can you blame them?
Besides the more accounts closed, the more likely IGA/FATCA will come crumbling down.
George and Publius,
…the more accounts closed down — the more visibility of the problem, the more individual and class-actions like the proposed Canadian Charter Challenge.
… and perhaps bravery of more victims (and persons who could see they could be similar victims if precedents are set) to stand up to the bullies, on whichever side of the border.
I understand that FATCA has imposed cost on the banks; however, the banks are pressuring people to renounce within very short time frames, which is stressful. If these people don’t have enough years of tax compliance, they will also fall automatically into the undesirable category of covered expatriate. There may also be people for whom renunciation is not desirable for whatever reason, such as the very unfavourable U.S. rules regarding inheritance.
The U.S. government can be a bully, but so can the banks. The chances of people getting hurt are high and not all of these people will necessarily become anti-FATCA activists. I am not sure that U.S. persons in many countries will necessarily have the numbers to fight against the IGA through the legislature and the U.S. government has been reluctant to admit that there even is a problem with bank closures (while putting anti-discrimination clauses into the new IGAs and they wonder why we’re cynical). Some people will want to fight their corner based on laws against discrimination based on national origin. All I am trying to do is point out that someone has won a legal challenge on this basis, to give people more options.
Interesting thread in Dutch about Fortis Bank-Belgium blocking an American citizen’s account in October 2013. The final message on the page is to consider filing nationality discrimination charge against Fortis:
Thanks again for posting your message yesterday and today on the Dutch human rights commission’s decision. I agree that it is important that someone took the bank to court and won.
This is what I have been able to determine so far:
1) Binckbank/ Alex tossed out 150 American citizens in 2013 due to FATCA and their unwillingness to bear the extra costs to comply with FATCA:
2) Dutch Human Rights Commission ruled that discrimination based on nationality had occurred. Summary:
3) Blog by a Dutch attorney on the topic:
1) This is the first time that I have seen that a human rights commission has ruled that FATCA is discriminatory (due to nationality).
2) The commission focused on the fact that the discrimination occurred due to the person’s nationality and dismissed the US Person definition, which is broader than nationality.
– In Switzerland, the banks argue that they are allowed to discriminate against those who must file US taxes, i.e., US Persons, and thereby avoid the US citizen discrimination discussion.
3) The blogger, Ellen Timmer, made these concluding remarks:
“An interesting judgment because, in principle, every business in the Netherlands is free to accept or reject customers. For that reason, it is only logical that some banks can refuse American customers.
A practical alternative would be that Americans have to pay higher rates to the banks (so they pay the additional administrative burden themselves). But the banks continue to have the problem that they have to distinguish between nationalities in their systems and they would have to connect them to tariffs and FATCA compliance regulations.
I have great difficulty with the opinion of the commission. Namely, I do not see why Dutch businesses should give free services for the benefit of the US government.”
According to their 2013 annual report, Binckbank has 551k customer accounts of which 418k are brokerage accounts. The translation I read said they got rid of 150 US person account holders. So their US person customer base for brokerage accounts was 0.04%. Let’s assume for the time being that it would cost them $10m to implement the FATCA reporting capability. How on earth are they going to recoup that investment from 150 US person customers? There is zero chance the 150 US person customers are going to pay $66k each to have their accounts reported on. If Binckbank is forced to retain the 150 US person customers, the remaining 418k non-US brokerage customers will all see their costs rise.
I think this is a really interesting ruling. As I have commented previously, most investment account providers appear to be (certainly in the UK) pursuing a FATCA “lite” strategy. That is, they implement all the required client on-boarding procedures to identify US person accounts but then they use that information to get rid of those customers. In the end, they save a bundle in not having to implement the reporting systems that require them to overlay the US tax code in each country of operation. Of course, that strategy is predicated on being able to discriminate. They presumably had legal advice that this was going to be ok. If discrimination is not allowed, I wonder if they regret not fighting FATCA (more vigorously if at all). If FFIs are forced to accept US person customers and bear the true cost of FATCA implementation there are more likely to be howls of protest at having to pay a fortune to implement a bespoke system for reporting on a handful of US person accounts.
It would be nice to have access to a real English translation of the opinion. I wonder whether “discrimination” is having an account and losing it or not being able to get the account in the first place. I also wonder how the discrimination is remedied. Maybe they can pay token compensation to the 150 US person account holders and not accept any going forward? If so, that’s a far less costly strategy than actually implementing FATCA reporting. Or maybe, they can be allowed to price discriminate? If you are a US person, you can have an account as long as you pay the $10-50k per annum FATCA reporting fee. That way, they just price themselves out of the market.
@Edelweiss, I think in the UK someone has it right and someone has it wrong.
Look at the questions that some firms are asking and some are not.
Some simply ask, Are you a US Citizen?
Others ask citizenship, nationality, tax residency current, tax residency historical, place of birth.
Of all things, I think the place of birth question is very problematic.
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