SBS Persian has spoken to more than a dozen Australian citizens of Iranian background who claim they have received ‘de-banking’ letters from their Australian banks – which they say provided no clear explanation why.
These individuals, which include small business owners, migration agents and people sending money to their loved ones in Iran, say their lives have been turned upside down by the banks’ actions.
Highlights
- A number of Iranian Australians say they have had their Australian bank accounts shut down without clear explanation
- Australian Transaction Reports and Analysis Centre says it ‘discourages the indiscriminate and widespread closure of accounts’
- A spokesperson for Iran’s embassy in Australia says de-banking is ‘not related to Australian government sanctions’
- ‘If the de-banking problem is not addressed, it could create illegal channels,’ says Dr Mahmoud Pargoo of Deakin University
Samyar* (not his real name) is an Australian citizen with Iranian background.
As a registered migration agent, he had held a business account with St George Bank - a division of Westpac Banking Corporation - for more than 10 years.
On 22 November 2021, he said he received an email from Westpac which advised him to contact the bank as soon as possible or his accounts with St George would be suspended.
“The bank official on the phone told me the bank was considering offering me some services, and asked me some questions that I was a little bit uncomfortable with. However, because my business is completely transparent and in accordance with the Australian law, I answered all questions,” Samyar told SBS Persian.
“I told them that I am originally from Iran and, because of my business, I am in constant relation with Iranian clients.
“During our phone conversation, the bank officer asked me whether I intended to go back to Iran in the short future. I replied, ‘Why not?’ I am originally from Iran, my family are living in Iran, and I don't see any reason I should not travel to Iran,” he said.
Shortly after the phone conversation, he said he received an attestation letter from the bank, which asked him to confirm that he would not use any accounts and/or banking facilities with the Westpac Group to “conduct business into or out of Iran directly or indirectly” or “conduct business with entities or individuals with Iran addresses”.
An attestation letter sent by the Westpac Bank to an Australian-Iranian migration agent Source: SBS Persian
“First of all, I did not do anything wrong. Secondly, I had heard lots of rumours from other Iranians here that banks had closed their accounts without any explanation, and I did not want that to happen to my business accounts.
“Also, I felt that if my business activities were risky or illegal, the bank would not have contacted me to offer me extra services in the first place.”
Two weeks after signing the letter, Samyar said he received another letter from the bank advising him that they had decided to close all his accounts – including his daughter’s account.
A letter from Westpac Bank to an Australian-Iranian migration agent to let them know their account is being closed Source: SBS Persian
In his submission, which he said took him 50 hours to collate, Samyar gathered business records dating back more than 10 years.
He said he also sent copies of his complaint to the CEO of Westpac, the CEO of the Human Rights Commission, the Australian ambassador in Tehran, the Iranian ambassador in Canberra, and the Australian Banking Association.
Samyar told SBS Persian, “I believe that as a dual citizen I have the right to run a legitimate business and my country of origin shouldn’t be relevant."
I feel that I have been discriminated against due to my profession and my nationality.
In a written response from Westpac, viewed by SBS Persian, a bank representative apologised to Samyar for his experience and acknowledged that “the timing of account closures was poor”.
The letter also said, “The reason for the exit was not personally or racially motivated and was rather in response to our current sanctions policy. Westpac’s sanctions policy on Iran is based on Australian, international, and foreign sanctions, which impose obligations regarding dealings with Iran and Iranian controlled entities which Westpac is bound to comply with.”
Frustrated by the bank’s handling of his complaint and seeking a more comprehensive answer, Samyar then lodged a complaint with the Australian Financial Complaints Authority (AFCA), an external dispute resolution scheme for consumers.
“Unfortunately, not even AFCA could make any difference. As long as the bank states that their decision is based on 'commercial reasons', AFCA cannot overturn that decision,” Samyar said.
A Westpac Group spokesperson told SBS Persian the bank provides financial services to businesses and customers in accordance with legal and regulatory requirements, and risk frameworks.
“Banking services may be withheld from a particular customer for a variety of reasons, such as managing financial crime or other identified risks, dealing with companies which become deregistered, and fraud or scam convictions,” the Westpac spokesperson said.
Source: AP Photo/Gerry Broome
What is de-banking?
De-banking, also known as unbanking or de-risking, is the closure of banking services to certain businesses and customers due to regulatory concerns.
Australian Transaction Reports and Analysis Centre (AUSTRAC) is the Australian government agency responsible for detecting, deterring and disrupting criminal abuse of the financial system.
The reasons for de-banking can range from uncertainty associated with the business model of customers, particularly emerging businesses, to commercial considerations, for example the profitability of providing banking services to high-risk customers.
AUSTRAC also acknowledges that those operating remittance services, digital currency exchanges, not-for-profit organisations (NPO) and financial technology (FinTech) businesses may be considered high-risk customers.
An AUSTRAC spokesperson told SBS Persian that, “in some instances Australian banks may make a decision to stop providing banking services to customers where they have determined the customer is outside their risk framework.”
AUSTRAC continues to discourage the indiscriminate and widespread closure of accounts across entire industry sectors and seeks for financial crime risks relating to customers to be assessed on a case-by-case basis.
“The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 requires banks to develop risk-based systems and controls tailored to the nature, size and complexity of their business and proportionate to the level of money laundering, terrorism financing and serious crime risk they face,” the spokesperson said.
The Council of Financial Regulators (made up of the Reserve Bank of Australia, APRA, ASIC and Treasury) recently began a probe into de-banking after the Senate Select Committee on Australia as Financial and Technology Centre recommended last October that the government develop a process for businesses that have been shut out by their banks.
Dr Mahmoud Pargoo, who is an expert on the society and politics of post-revolution Iran at Deakin University, said the impacts of de-banking run deep.
“After de-banking, the person will not be able to access their account. They will lose all of their transaction background as well as business history. If they want to apply for a loan, for instance, they won’t have an active account and they need to open a new account.
Although they won’t lose their money, they will experience a huge stress. This is a disaster and I think they [banks] have to look at it from a humanitarian aspect.
Dr Pargoo said the issue needs urgent attention or more people might use "unofficial" financial channels.
“We have about 100,000 Iranians here in Australia. If the de-banking problem is not addressed, that could create illegal channels and infrastructure which no one could monitor.”
What are the sanctions against Iran?
Australia has had a range of both UN sanctions and autonomous sanctions in place in relation to Iran during the past 16 years.
Between 2006 and 2010, the United Nations Security Council (UNSC) passed five resolutions imposing sanctions on Iran in response to its refusal to suspend its uranium enrichment program.
On 20 July 2015, the UNSC adopted resolution 2231, which endorsed the Joint Comprehensive Plan of Action (JCPOA). Under the Resolution, which took effect on 16 January 2016, previous sanctions were terminated but measures that restrict certain activities were imposed.
Along with the lifting of relevant UN sanctions, the Australian government moved to lift certain autonomous sanctions, effectively ensuring that Australian businesses would not be disadvantaged in pursuing opportunities Iran.
There remain restrictions on the export or supply of certain goods; the import, purchase or transport of certain goods; certain commercial activities; the provision of certain services; providing assets to designated persons or entities; and dealing with the assets of designated persons or entities, as well as travel bans on designated persons.
While the US withdrew from the JCPOA in May 2018, Australia’s official stance has remained unaffected.
However, some Iranian Australians, like Dr Pargoo, allege that the banks’ actions are connected to the close US-Australian relations.
“If the US imposes a sanction and Australian banks do not follow it, they could simply lose the US market, and that is where the core business is,” he said.
Ehsan Jahanandish is a solicitor with a clientele that is mostly based in Iran.
Mr Jahanandish is another who said he received a de-banking letter from the Commonwealth Bank in July 2020, shortly after he said he deregistered some services with AUSTRAC - including foreign currencies exchange services.
“The problem is they don't say openly that we [banks] are following the US sanctions, and this is why we are closing the business accounts of the Iranians here in Australia who are dealing with some people inside Iran,” he said.
Mr Jahanandish is calling for more accountability from Australian banks after he was unsatisfied with the response to his complaint to AFCA.
According to Mr Jahanandish, “About two or three months [after my complaint] AFCA told me that because the bank is a private institute and they have their own regulations, AFCA cannot force the bank to reinstate the accounts. The only thing they could do is to make sure the bank is following their legal requirements in terms of giving us adequate time before the account closure.
“In other words, they can only make sure that the bank is observing its own regulations.”
He said the lack of clarity has affected many lives.
“Even after two years we are still dealing with the consequences. We have had customers who transferred money to our closed accounts, and it took them 14 days to get their money back.
“That caused delays in processing their legal cases because we could not pay the Department of Immigration, accordingly.
That could have a negative effect on their cases and consequently their lives.
The Department of Foreign Affairs and Trade declined SBS Persian's request for an interview.
Source: AAP Image/Steven Saphore NO ARCHIVING
View from Iran
A spokesperson for Iran’s embassy in Australia told SBS Persian that de-banking is “not a widespread problem” for the Iranian community in Australia.
In response to a question about US influence on Australian banks, the embassy spokesperson said, “Some of the largest Australian banks have a high percentage of US shares on the board. Thus, the possibility of influence in this regard is not ruled out, but it is also not provable. We know that for some exchange offices this problem has arisen due to financial transfers.
“Recently, citizens of different countries have experienced Australian banks' reluctance in terms of continuing their operation. These banks usually refer to in-bank business decisions and no other reason is mentioned. Due to the Customer Protection Act, a government agency cannot request an investigation about closure of an individual's account.”
The spokesperson said such bank closures should be considered an “inner-bank matter”.
“Legally, this is not related to sanctions against Iran under Australian domestic law because the sanctions against Iran - as implemented by the Australian Federal Parliament on 16 January 2016, and also according to the response of the Australian government to the Senate in March 2017 in this regard - have been suspended.”
However, Dr Pargoo believes de-banking is a bigger issue than is being widely discussed, and that there is a reason it has not been properly addressed.
“This problem [de-banking] belongs to a certain part of the community in Australia – the Iranian, North Korean, and Syrian communities, and the latter two do not have too many expats here."
Source: AAP Image/Sergio Dionisio
Exploring the options
Saideh Mirzaei is an Australian citizen with Iranian background who owns a currency exchange business.
Ms Mirzaei registered her business with AUSTRAC in August 2020 and opened her first business account with Commonwealth Bank in September of that year.
However, less than three months after opening the bank account, she said she received a letter from her bank advising her that they were no longer able to offer their banking services and she needed to close her accounts.
Her husband and daughter allegedly received the same letter advising them to close their accounts.
Ms Mirzaei, who has a journalism background, said she became frustrated by the lack of answers.
“As a journalist, I always asked and tried to find out the reasons behind anything," she said.
One of the main reasons I decided to migrate to a democratic country like Australia was to be able to raise my questions.
When contacted by SBS Persian, a Commonwealth Bank spokesperson said, “It would not be appropriate to comment on individual customer circumstances. We deal with every customer on a case-by-case basis and consider a range of factors when commencing or ending banking relationships with a customer.”
The bank also reiterated that it does not have a policy or position against providing banking services to Iranian Australians or dual citizens in general.
Ms Mirzaei said she eventually lodged a complaint with AFCA, only to be told she “could” open new accounts and refinance her home loan with another bank, because there was not much that they could do in this matter.
Suanne Russell, the Lead Ombudsmen for Small Business and Transactions at AFCA, told SBS Persian the authority is dedicated to resolving disputes as quickly as possible.
“With regard to de-banking, I really understand the frustration in this space at the moment because we have a fairly narrow remit,” she said.
“What we can do and what we do is that we publish our decisions so that they are available for people to have a look at. If people come to us, we are able to look at whether the financial firm treated them fairly, they did what they committed to doing under their contract with the customer.”
However, there are clear limits to AFCA’s powers.
“What we are not able to look at is to go behind what are the commercial or business reasons and why a particular person may have been told the bank isn't going to offer them services anymore,” Ms Russell said.
She said that if people are not happy with AFCA’s services, they should seek extra advice.
Ms Mirzaei claims, “When I asked them [AFCA] why my six-year-old kid’s account would be closed by the bank, they said they didn't have an answer to that. They [the bank] told me clearly that it was a business decision.”
Prior to opening her business accounts with Commonwealth Bank, Ms Mirzaei and her family had received a home loan from the bank. She claimed the closure of their accounts meant they were not able to make some of their home loan payments and the bank issued her a default notice – something that affected her credit file.
Ms Mirzaei said she is considering legal action against the bank.
