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Diaspora | TD Cuts Off Financial Services to Iranian Canadians

by SARA MOJTEHEDZADEH

13 Jul 2012 23:44Comments

Unique interpretation of sanctions mandate has "devastating" effect on community.

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Sara Mojtehedzadeh is a journalist currently based in Canada. For three years, she worked on the politics and foreign desks at Sky News in the United Kingdom. In August, she is embarking on a media fellowship in Nairobi, Kenya, where she will work as a reporter for Nation Media Group.
[ comment ] About two months ago, a group of Iranian Canadians received surprising letters in the mail.

The letters, sent on behalf of TD Canada Trust, informed them that their bank accounts were now closed.

According to Canada's second-largest bank, the customers in question had run afoul of Canadian sanctions against Iran. And effective immediately, they were no longer eligible for any financial services offered by TD.

How an as yet unknown number of seemingly ordinary civilians ran afoul of the law -- and subsequently lost their personal accounts, mortgages, and lines of credit -- has confounded Canada's 92,000-strong Iranian diaspora.

"People feel violated," says Eiman Sadegh, a lawyer with Industrial Alliance Securities Inc. "They don't understand why they are being targeted when they have no connection to the Iranian regime. People are scared this will have a domino effect and other Canadian banks will start taking similar measures."

So far, though, those fears have not been realized -- leaving legal experts baffled as to why TD Canada Trust stands alone in its reading of Canada's sanctions against Iran.

"We don't see the same over-zealousness to apply sanctions by other banks," says lawyer Negar Achtari, who sits on the board of the Iranian Canadian Lawyers' Association. "There is no reason why one bank should read the law a certain way and other banks don't."

Canada initiated "special economic measures" against Iran in 2010. Designed to penalize the regime for its controversial nuclear program, the measures targeted individuals and institutions directly tied to that program. In November 2011, prompted by the International Atomic Energy Agency's latest report on Iran, the sanctions were expanded; the new sanctions regime included provisions to cut off almost all financial transactions with Iran.

But Achtari argues that those provisions shouldn't affect the average Iranian Canadian. "There are exemptions in Canada's Special Economic Measures Regulations designed exactly to prevent the type of situation we're seeing with TD bank," she says.

In an email response to a request for information for this article, a spokesperson for Foreign Affairs and International Trade Canada (DFAIT) confirmed that exemptions were permitted in a number of circumstances, including for noncommercial transactions below $40,000. The spokesperson also said that Iranian Canadians could apply to DFAIT for a special permit to conduct transactions that would otherwise be illegal under the current sanctions regime.

But the exemptions set out by DFAIT do not appear to factor in TD Canada Trust's decision making, according to Eiman Sadegh.

"So far the people we have spoken to do not fall into the category of people who should be sanctioned, but are rather those who are acting under the exemptions. The letter these people received doesn't even mention the exemptions." Sadegh believes the bank is "going above and beyond what is required by law."

Negar Achtari agrees. "We don't yet know the number of people whose accounts have been closed, but it seems widespread enough that it would be a stretch to say none of them were exempt." But, she says, "reading the regulations can be very confusing and there is a lack of clarity when it comes to the application of sanctions."

The lawyers are not the only ones who are puzzled. When I went to my nearest TD branch to inquire, staff members appeared genuinely surprised at the news that some Iranian Canadians' bank accounts faced termination. A branch manager later called me, apologizing for the lack of information she could provide and advising me to speak to a central helpline. My call to that number has not yet been returned.

A corporate communications officer at TD Canada Trust headquarters did, however, respond to an email query. Barbara Timmins wrote that the decision to close the accounts was not taken lightly and that all funds -- minus any debts owed to the bank -- would be reimbursed. Mortgages agreed upon before the November 2011 sanctions would not be affected, she said.

But the email remained coy about TD's apparently unique interpretation of Canadian sanctions against Iran. "There are a number of reasons why we might end a customer relationship -- sanctions is one. There are also broader risk, compliance and legal obligations we must meet," Timmins wrote. She went on to stress that TD "valued all customers, of every ethnicity and heritage."

The abrupt way in which their accounts were terminated, however, has left many Iranian Canadians feeling decidedly unvalued. Although Timmins claims TD sought to provide ample warning to affected customers, Eiman Sadegh says that no one he has spoken to received prior notice that their account was at risk or that their financial transactions broke Canadian law.

Sadegh's report is corroborated by Kaveh Shahrooz, a Harvard-trained lawyer who serves as the vice president of the Iranian Canadian Congress. On July 7, the ICC convened a fact-finding meeting concerning the closures; 60 to 70 Iranian Canadians attended. "People received virtually no notice or explanation," says Shahrooz. "There is a real sense of sadness and frustration. People feel like they are being treated as second-class citizens.

"Some people could be transferring money for nefarious reasons and they should be stopped. But many are just buying gifts, sending money to home to family, or selling their property in Iran to immigrate."

Nonetheless, Shahrooz says he believes TD harbored no deliberate intent to harm Iranian Canadians. And with the issue percolating -- a number of major Canadian news outlets have now covered it -- the bank has reached out to Shahrooz and asked for a meeting to discuss the closures. The meeting, scheduled for July 23, will be attended by a "top executive" of the bank.

Shahrooz favors a conciliatory approach and believes calls to boycott the bank or for legal action are premature. But both Negar Achtari and Eiman Sadegh say lawsuits aren't out of the question.

"What if people can't pay off their mortgages because they don't have a bank account anymore?" asks Achtari. "It creates a legal conundrum. I wouldn't be surprised to see legal action."

Sadegh says he has been approached by some Iranian Canadians interested in exactly that.

"It's too early to say whether a case would be accepted, but this has been devastating to Iranian Canadians. Of course we welcome any dialogue with TD. But the fact remains that damage has been done and legal action can't be pushed aside. People are very angry."

Copyright © 2012 Tehran Bureau

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