Mohammad Farshad Abdollah Nia, an Iranian citizen residing in the United States, held a credit card account with Bank of America. Under the Bank's Consumer Residency Monitoring policy, customers who are citizens of comprehensively sanctioned countries like Iran must periodically submit documents proving they are not permanently resident in those countries. In 2019, the Bank mistakenly classified a Form I-797C as permanent proof of residency in some correspondence, leading to confusion when the document was later deemed temporary and expired. The Bank restricted and eventually closed Nia's account. Nia sued, alleging violations of federal and state civil rights and banking laws, arguing that the bank's actions were discriminatory and that the IEEPA liability shield did not apply because the specific residency monitoring policy was not strictly compelled by the Iranian Transactions and Sanctions Regulations.
The Ninth Circuit focused on the interpretation of the IEEPA liability shield provision, 50 U.S.C. § 1702(a)(3), which protects persons acting in good faith in connection with the administration of the Act or regulations issued under it. The court rejected Nia's argument that the shield applies only to actions 'compelled' by the ITSR. The court reasoned that the statutory terms 'pursuant to' and 'in reliance on' do not imply compulsion; rather, they afford financial institutions discretion to determine how best to comply with sanctions regulations. The court found that the Bank's CRM policy, which required citizenship-based residency monitoring, was built around the demands of the ITSR and was explicitly permitted under OFAC guidelines. OFAC guidance encourages a risk-based approach and lists nonresident aliens as high-risk customers, allowing banks to account for citizenship in a comprehensively sanctioned country. Regarding the good faith requirement, the court held that Nia failed to show a genuine issue of material fact. The Bank's clerical error in classifying a document did not prove bad faith, and third-party complaints or isolated CFPB complaints did not demonstrate a lack of good faith in a program applied to 67,000 accountholders.
Financial institutions implementing citizenship-based residency monitoring programs for customers from sanctioned countries are now protected from civil liability under IEEPA if they act in good faith and rely on OFAC guidance, even if the specific monitoring steps are not strictly mandated by the ITSR. The decision clarifies that the liability shield covers discretionary compliance measures permitted by agency guidance. The case was affirmed, leaving the bank immune from civil damages for the account closure, and the district court's summary judgment stands.
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