Paying the price for sanctions: The customers with Iranian links being ditched by British banks

HSBC and others deny discrimination, but have hefty fines led to some banks being far too cautious?

HSBC has already closed bank accounts belonging to Syrian refugees and students in the UK, such as Majid Maghout (Susannah Ireland)

Ellie Rafighi, a 29-year-old Iranian on a student visa, received a letter from HSBC informing her about the imminent termination of her two-year-old account last year. She had no history of transferring money to or from Iran and had less than £1,000 when the account was closed.

“At first I thought it was a mistake, so I called HSBC and they told me I was from a country under sanctions,” she told The Independent. “I’ve never sent money to Iran, I had nothing left to send. I’m here thanks to a scholarship.”

Dr Kayvan Kamalvand, a consultant cardiologist for the NHS, was outraged when his mother, a 72-year old American-Iranian pensioner living in Kent, received a similar letter from HSBC informing her that the account he had opened for her to use for UK expenses would be closed within two months.

The letter read: “Please be assured that this decision is based on our own assessment of risk and does not reflect you as a customer or the manner in which you have conducted your business.”

Dr Kamalvand says he contacted HSBC, only to be told that his mother, who had recently travelled to Tehran to visit her family, had spent a “considerable amount of time” in Iran and the latter appeared to be a reason for the closure of the account.

As reported in The Independent earlier this month, HSBC has also closed a number of accounts belonging to Syrian refugees in the UK, although it insists these are the result of individual assessments of risk.

Majid Maghout, a 26 year old student from Syria, only discovered his HSBC account had been closed when he tried to withdraw cash and the ATM swallowed his card. Mohammed Isreb, who works in the UK, also saw his account closed despite banking with HSBC since 2006. “They could have checked my account and see that I haven’t received or sent [any money] to Syria… The sanctions are against the government, not the people of Syria.”

Now documents seen by this paper show that customers with Iranian links have also been sent letters informing them their accounts would be closed, again citing “compliance” with internal regulations concerning payments to and from sanctioned countries.

HSBC insists that neither race or religion plays a part when it comes to closing a customer’s account, but the bank admits it has stepped up its risk controls after it was fined $1.9bn (£1.2bn) by US authorities in 2012 for allowing Mexican drug cartels to funnel cash into the United States. As a result, the bank has put in place what it describes as a “six filters” test for its accounts.

Emma Nawaz, managing director at Blackstone Solicitors, a law firm which is representing a number of Iranian clients in disputes with high street banks, including NatWest, RBS and Lloyds, argues that many account closures breach the Equality Act. “We argue this is a case of discrimination and ethnic profiling that is widespread across high street banks as a result of the large fines imposed on a number of banks in recent years,” she said.

“We’ve been contacted by more than 90 people of Iranian heritage, some born and bred in the UK, many of them based in the UK and some with British passports. Sadly, many that contact us do not want to take on a fight against the banks due to fear of losing or having to pay the banks costs.”

Lloyds and RBS have denied race is a factor when it comes to opening or closing an account.

An HSBC spokesman said: “HSBC is committed to adopting and enforcing the most effective standards to combat financial crime across its operations globally. These standards apply to customers with links to a country subject to international financial sanctions. In certain cases, an assessment of the risks involved may require ending a customer relationship.”

Customers like Ms Rafighi and Dr Kamalvand say that such experiences with the banks can be humiliating.

Ms Rafighi eventually managed to get a replacement basic account at Halifax after her university wrote a letter confirming she was a student.

Dr Kamalvand, meanwhile, encountered difficulties having the money transferred from his mother’s account at HSBC, after the bank refused to give her cash or to wire the funds to his HSBC premier account, until he opened an account for her at Lloyds.

“She had never transferred money to or from Iran. She was only visiting her sisters in Tehran, that is all. The account closure upset and humiliated all of us.

“I am a British consultant cardiologist and it made me feel we are second-class people,” he said. “Iranians are used to this type of discrimination at airports, when boarding a plane. I just never thought I’d have to go through this in my bank. It was insulting and put our family under a lot of stress.”

Penalties: Standard Chartered fined $300m

Standard Chartered’s settlement with New York’s superintendent of Financial Services, Ben Lawsky, highlights the narrow path banks now have to tread when it comes to money laundering related investigations.

The latest $300m settlement is not much less than the $340m Mr Lawsky accepted on the original deal two years ago, when the bank was accused of violating US sanctions linked to Iran.

An independent monitor, who was imposed on Standard Chartered as part of the original settlement, found that the bank still failed to spot “millions” of suspicious transactions from its United Arab Emirates and Hong Kong operations. Now the bank will have to suspend dollar clearing activity for some Hong Kong clients and exit certain client relationships in the Gulf. It will also retain a monitor for another two years.

HSBC’s chairman, Douglas Flint, recently warned of the “growing danger of disproportionate risk aversion” while the British Bankers’ Association chief, Anthony Browne, pointed out that escalating penalties for banks could force UK banks out of overseas markets.

But banks have to accept that regulators here and across the pond are taking money laundering much more seriously.

Nick Goodway