Bank Account Closures
Despite the partial lifting of sanctions on Iran in January 2016, Iranians and other British residents with Iranian backgrounds are experiencing a sudden or noticed closure of their bank accounts. In certain situations, closure of accounts has been extended to the target person’s family members including minor children. In all such cases, the bank often provides no explanation or reason for its decision to discontinue services.
It cannot be proposed that every account closure is due to discrimination based on race, however complaints have been filed and won against high street banks for account closures.
Race discrimination is prohibited under Section 29(2)(a) to (c) of the Equality Act 2010 (“the Act”), both direct (under Section 13 of the Act) and indirect (under Section 19 of the Act). When accounts are closed in violation of these sections, claimant may suffer financial losses and injury to feelings. In such situations, loss may be recovered from the offending bank.
In addition to standard compensation for financial damages caused by the closure, a court can award a financial payment due to injury to feelings. The evidence a claimant will want to produce is the material which shows the impact of the discrimination on any subjective feelings of anxiety, and mental distress. For example, this might include evidence about the impact the discrimination has had on relationships with colleagues, friends and family and any particular difficulties caused by the discrimination. Such evidence might include medical evidence, but where the injury to feelings amounts to a mental illness such as depression, the claimant might well consider seeking an award for personal injury in addition to injury to feelings.
(1) If you deposit cash into your account, please make sure you can prove source of funds.
Under Money Laundering regulations, banks have the right to investigate cash deposits and seek proof for source of funds. In such cases, the bank may contact you to ask you where the cash came from. Should you refuse to provide the bank with proof of funds, the bank may then choose to freeze your account for a period of 7 days or close your bank account.
This is a double-edged sword for deposits of cash from Iran as most banks also close bank accounts when the account involves Iran-related transactions. If you have deposited cash from Iran, we advise you to consult your solicitor so that your rights are protected without compromising your privacy.
(2) To transfer funds from Iran, use registered money exchange companies that can deposit the funds into your account by bank transfer.
Although there are dozens of money exchange companies in the UK and abroad, we advise you to use registered government-approved money exchange companies. These companies are themselves regulated and will transfer funds into your account using bank transfer services, not cash.
(3) If your bank account is closed or restricted, you have options.
(a) In most cases, the bank will serve you a 60-day notice of closure. At other times, however, the closure is immediate and without notice. In both cases, there is major inconvenience and distress in losing banking facilities. Therefore, it is important that you proceed carefully and plan in advance.
(b) We advise you to have two bank accounts at different banks and utilize only one for cash deposits and Iran transfers. This way you can continue to have banking facilities if one account is suddenly restricted.
(c) If your bank account is restricted or closed, you may choose to shop for another account or seek legal remedies. It is important, however, for you to make this decision immediately as your actions and correspondence with the bank can affect your claim against the bank. If you decide to see legal remedies, it is extremely important for you to follow your solicitor’s advice at every stage of the process. A solicitor can then attempt to have your account reinstated, recover your funds from the bank, and seek compensation for financial losses and emotional injury. Your solicitor can confirm that in most cases you will not face any reprisals for seeking a legal remedy and should not be afraid of filing a complaint.
Please, remember that your account may be closed but your funds are usually not blocked. In very rare situations, funds may be blocked and, at times, the bank may mail you a check within a few weeks of closure. However, in most cases you can withdraw your funds from the bank or have it transferred elsewhere.
It is important to note this leaflet only provides general guidance and does not constitute legal advice as every case is different. If you have faced account closure, you should consult a solicitor to best understand and protect your rights.
Blackstone Solicitors have extensive experience of matters involving bank account closures. Simply call 0161 929 0121 for our Manchester office or 020 3693 4507 for our London office or complete our online contact form to see how our tenacious approach can work for you.
For more information on our legal services for Iranian clients please visit our Iran Desk: http://blackstonesolicitorsltd.co.uk/legal-service-for-iranians/