My family is being targeted by sanctions imposed by the US Treasury. More specifically, one major US bank has refused to accept payments from my father's account in order to pay off credit card bills accrued by his medical practice. No further information was divulged by the bank except that they are reviewing his account activity because his name matched a suspect on the sanctions list.
My father has been a partner in the same private medical practice in Southern California for 25+ years and is a naturalized American citizen. However, he was born in Iran with an Arab last name, and, to make matters more confusing, he comes from ethnically Iraqi Jewish parents. He has had virtually no connection with Iran since they immigrated to the United States in the 1960s amid fears of rising anti-Semitism and in search of better opportunities.
Despite the fact that his age, background, and other characteristics don't match the suspect flagged by the US Treasury Department, he has been targeted by economic sanctions imposed on groups and individuals connected to the Iranian government. Financial institutions bear the responsibility of vetting their customers in compliance with sanctions, or risk up to hundreds of millions of dollars in fines (see here, here and here) from the Office of Foreign Asset Control (OFAC). Thus, it is in the interest of financial institutions to be overly cautious when the alarms go off for a particular account, even false alarms.
The United States has levied sanctions against Iran since the 1979 Islamic Revolution and hostage crisis for actions that undermine or threaten US national security, foreign policy, or economic interests. In 2010, the Obama administration instituted the most sweeping sanctions yet to halt that country's nuclear program by crippling its economy. This strategy has apparently worked with the cooperation of the international banking industry. Iran has effectively been shut out of the global financial system, and its economy has ground to a halt (along with other consequences). Many agree this was a major reason for Iran's decision to return to the negotiating table, signing an interim deal with the P5+1 (Permanent Members of the Security Council and Germany) that went into effect on January 20, 2014.
Unfortunately, my family and many others like us have been unfairly caught in the cross-hairs while the international community inches toward a nuclear deal with Iran (or not). Some have been scrupulously investigated by federal authorities, received subpoenas, and been charged with “accepting large money transfers from Iran that violated U.S. sanctions against that country.”
US citizens seem to have better success sorting out these issues, but that's not necessarily a safeguard. According to one immigration lawyer, there are many reported cases of Iranian-Americans running into problems when traveling to Iran or transferring funds. Even the simple act of checking a bank account from Iran can raise suspicions. Since OFAC empowers financial institutions to resolve sanctions-related issues, getting off the black list can depend on whether you're able to prove that your activities are innocent to the company enforcing it.
Charges can lead to a range of punishments, from blocked or frozen accounts to jail time. Among those more serious cases is Mahmoud Reza Banki, an Iranian-American and a senior employee of the McKinsey Group who was sentenced to 30 months in prison for violating sanctions against Iran. Banki received 3.4 million dollars from his family in Iran for personal use, which he reported in his tax returns, but was convicted of operating a hawala, an informal money transfer network considered illegal by OFAC.
While his conviction was overturned after 20 months due to the court’s failure to give the jury proper instructions, the court ruled that the “sanctions laws do allow for noncommercial family transfers.” And yet, the US Department of Treasury claims that “such transactions should be carried out through an ‘intermediary third-country bank."
From these two statements, it becomes quite clear how unclear it is for Iranian-Americans who are supposed to balance on this tightrope. Facing this predicament, many are asking what to do when your government’s sanctions abroad have a biting sting at home?
People who believe they have been unfairly targeted have the right to appeal violations under this sanctions regime by writing to the Director of OFAC. However, unlike sanctions against Cuba, for example, they have no right to an administrative hearing, according to the Georgetown Journal of International Law. This is a major distinction since an administrative hearing is "less formal, more expeditious, less expensive, and less publicized should a person charged with a violation wish to challenge the OFAC’s decision through the courts." In addition to wasted time and money, an unfavorable decision in the courts could do irreparable damage to one's reputation.
As of this writing, Iran is complying with the interim agreement and correspondingly receiving modest relief from sanctions, including the release of assets frozen since 1979. The negotiating parties have just returned to the table and hope to finalize an agreement by late July 2014. In the meantime, how about some sanctions relief for those of us caught in the cross-hairs?
Amanda Sass and Claire Fraisl contributed to the research and writing of this article.