US appeals court judgment on IEEPA liability shield

16 April 2026

Mohammad Farshad Abdollah Nia v Bank of America, No. 24-6187 (9th Cir. Apr. 13, 2026). The US Court of Appeals for the 9^th Circuit dismissed an appeal against a District Court judgment holding that a bank’s internal sanctions compliance policy is protected by the liability shield in the International Emergency Economic Powers Act (IEEPA), even where that policy goes beyond what US sanctions regulations strictly require.

Mr Nia, an Iranian citizen living in the US, opened an account with Bank of America in 2015. Bank of America operated a Consumer Residency Monitoring (CRM) policy requiring Iranian nationals to provide proof of US residence in order to comply with the ITSR. In 2019, the Bank mistakenly told Mr Nia that his application for permanent residency meant he no longer had to submit proof of residency. When the Bank later asked for further proof of residency Mr Nia ignored it (believing the follow-up request to be a mistake given what the Bank had told him before) and the Bank then closed his account.

Mr Nia brought proceedings against the Bank for discrimination on the basis of national origin and citizenship. The Bank relied on the IEEPA “liability shield” which protects persons from suit for anything done “in good faith in connection with the administration of, or pursuant to and in reliance on” IEEPA or any regulation issued under it (50 USC §1702(a)(3)). Mr Nia argued this provision applied only to actions required by OFAC’s Iran sanctions regulations, whereas the Bank’s CRM policy went beyond what the ITSR strictly required because the ITSR targets people ordinarily resident in Iran, and does not require monitoring or account closures based on nationality or citizenship. The District Court rejected this argument, and the 9th Circuit upheld that decision saying:

• The liability shield is deliberately broad: the text covers actions taken “pursuant to and in reliance on” IEEPA regulations, which does not mean compelled by them. The Bank’s CRM policy, built around the demands of the ITSR, fell within the shield’s ambit.

• OFAC’s Economic Sanctions Enforcement Guidelines expressly permit banks to treat nationality or citizenship of a comprehensively sanctioned country as a risk factor in their compliance programmes (listing “non-resident aliens” and “foreign customers” as “high-risk customers”), so the Bank’s citizenship-based policy was “pursuant to and in reliance on” an OFAC regulation or direction even if not required by the ITSR.

• The liability shield only applies to actions taken in good faith which the Bank’s actions were.

Therefore, the Bank’s reliance on the IEEPA liability shield was upheld, and Mr Nia’s claim was dismissed.