Counter-Islamophobia Project

Islamophobia Reports

Civil Rights Report 2017: Bank Account Closures

Bank Account Closures

In the last several years, CAIR has witnessed a marked increase in the incidence of closure without genuine cause of personal and business banking accounts maintained by American Muslims with American banks.

In many of these incidents, banks, when pressed, have cited unspecified security or “risk” concerns. CAIR believes these bank account closures may be discriminatory in nature because they appear to be the byproduct of risk investigations of customers based on their identifiably Muslim names, or business and personal connections with Muslim majority countries, and not on any actual connection to illegal activities.

In CAIR’s experience, the situation usually involves the person in question receiving a letter in the mail from their bank which states that their account has been, or will be shortly, closed. A check in the amount of the balance is mailed when the account is closed. Some letters provide a brief response describing the reasons for closing the account in generic and vague terms, such as, for “business reasons,”” security,” or “risk profile.” Other letters cite bank policy which states that any account may be closed at any time for any reason. Most frequently, however, they cite no reason whatsoever. The average targeted consumer has conducted no unusual transactions and has often possessed the same account with the same financial institution for many years.

In one case, Citigroup closed a bank account which was held by a Muslim American in California for more than a decade. The bank sent the individual a letter informing them of the closure which contained only a vague reference to “security reasons.”

Lack of Information and The Legal Gap

Addressing the issue of discriminatory bank account closures affecting American Muslims is particularly challenging. There exists a severe lack of factual justification provided by the banks for their actions, and, because of this, it is difficult to discern whether there are any patterns in the data which would assist in determining the ultimate cause, such as the targeting of any particular geographic area, the identity of the banks involved, the nature of the customers’ particular transaction history, or the degree of contact between the customer and other Muslim customers, local or abroad.

Additionally, efforts through litigation are hindered by the current state of federal law on the subject. Several federal laws make it illegal for financial institutions to discriminate on the basis of religion in credit transactions, such as mortgage lending. For example, the Equal Credit Opportunity Act prohibits discrimination against credit applicants on the basis of their race, religion, national origin, sex, marital status, or age, and the Fair Housing Act provides for similar protections for those seeking a mortgage loan. However, there is a gap in existing federal civil rights statutes, which currently fail to protect consumers from religious discrimination in non-credit banking activities, such as maintaining a checking or savings account.

Remedies

For this reason, CAIR has chosen to focus on regulatory and legislative remedies for this issue. In August, CAIR launched a nationwide initiative to gather data from the American Muslim community in order to comprehensively assess the extent, nature, and cause of the phenomenon. It created a special intake form on its website to acquire detailed information from those whose bank accounts were closed without forewarning or adequate explanation.

As CAIR continues to gather facts about the situation, it will simultaneously consider pushing relevant federal agencies to investigate the problem and issue a report summarizing the nature of the complaints on a nationwide basis, including the factual justifications provided by the various banks involved to understand the complete background of these incidents. This information is not routinely disclosed to the consumers affected. 

CAIR may also pursue efforts to support changes to federal civil rights laws which would enable victims of discriminatory account closures to successfully litigate their cases in federal court.

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