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The Bank of Hawaii announced on Tuesday that it had reinstated access to accounts for Iranian nationals who had seen them frozen due to U.S. sanctions on Tehran.
The bank said that it unfroze these accounts following a pressure campaign by the National Iranian American Council (NIAC), a pro-Tehran advocacy group long suspected of lobbying on behalf of the Iranian regime.
These Iranian accounts had been frozen in the first place as part of an effort by the bank to comply with tightening U.S. sanctions on Iran. However, these sanctions have been loosened in recent months in accordance with the interim nuclear deal, which will provide Tehran with billions in cash relief.
NIAC, which has long lobbied to relax U.S. sanctions on Iran, said in a statement on its website that it had worked with the Bank of Hawaii and the Treasury Department to ensure that the accounts were unfrozen.
"Bank of Hawaii, in consultation with its technology providers, regulators, and advocacy groups such as the National Iranian American Council (NIAC), has developed a solution to allow it to once again make accounts available to Iranian residents” in the United States, the bank said in a statement posted to NIAC’s website.
A Treasury Department official told the Washington Free Beacon that it “is aware of the Bank of Hawaii’s recent action” and that “Treasury does not prohibit U.S. financial institutions from doing business with Iranian-Americans.”
Bank of Hawaii said that it initially froze the accounts of Iranian nationals residing in the United States “to ensure compliance with U.S. sanctions regarding Iran, in particular those prohibiting access to U.S. bank accounts by persons in Iran,” according to the statement.
Seventeen customers saw their accounts closed as a result of the bank’s crackdown. Bank of Hawaii will now contact each of them to assist in reopening their accounts.
"We plan to contact the 17 customers whose accounts were closed and to provide them with information about restarting their banking relationships with Bank of Hawaii in the next week or so,” the bank said, noting that certain restrictions will remain in place.
“As part of the solution, areas where access will need to be restricted are banking-by-mail and transactions over the telephone,” the statement said. “Access through debit cards, checks, ATMs, and over the internet will be available while the customers are in the United States.”
Bank of Hawaii went on to thank NIAC “for its outreach and efforts to help” unfreeze these accounts.
The bank maintains that despite reopening these Iranian accounts it is still complying with U.S. sanctions on Iran.
One senior Senate aide involved in sanctions criticized the Obama administration for claiming in public that it would crack down on sanctions violators while taking no concrete action to back up these works.
“The president said he would come down on banks, like Bank of Hawaii, like a ton of bricks if they engaged in sanctionable activity,” the source said. “I guess the bricks are still on back order.”
A Bank of Hawaii spokesman confirmed to the Free Beacon that the 17 Iranian accounts had been "closed as a result of U.S. sanctions orders and regulations issued to apply pressure on the Iranian government."
U.S. sanctions regulations bar U.S. banks from providing service to any individual "whose primary residence is in Iran," according to the Bank of Hawaii spokesman.
However, "there are many Iranian citizens legally in the U.S. attending schools or for other reasons, and there is an exception in the sanction rules for those situations," the spokesman explained. "If the person returns to Iran and leaves the account open, the financial institution is required to immediately restrict access to the account."
The bank was ultimately advised by the Office of Foreign Assets Control that it would be in violation of the law if Iranian account holders returned to the county "even for short return visits," the spokesman said.
"We are caught here between trying to serve our customers and being in compliance with U.S. regulations," the spokesman explained. "To avoid violating the law, we had chosen to close the accounts."
The Iranian accounts have been unfrozen because the Bank of Hawaii apparently has found an appropriate workaround, the spokesman said.
These customers will have access to their debit cards, checks, ATMs, and Internet services while they are in the United States. Banking-by-mail and telephone transactions will not be available.
"Persons who ordinarily reside in Iran and who open accounts with the bank will be asked to confirm that they will not try to access their accounts from Iran, which would be a violation of the U.S. sanctions," according to the spokesman.
Sanctions on Iran have significantly loosened in recent months following the signing of the interim nuclear accord. Another $550 million in unfrozen assets made their way to Tehran just last week.
As a result, Iran’s economy has been on the upswing, benefiting from greater trade relations and a bump in oil revenue.
Iranian exports of crude oil have jumped above the 1 million barrels a day mark. The White House has said that it will not interfere in these sales over the next several months.
Experts have expressed concern that because the White House is giving Iran cash assets with no strings attached, the money could go to fund terrorism or weapons shipments like the one that was broken up by Israeli authorities last week.
President Barack Obama’s grandmother Madelyn Dunham served as Bank of Hawaii’s vice president for 16 years until her retirement in 1986.