Complainant

Respondent

Anonymised Parties

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 21 Equal Status Act, 2000

CA-00011549-001

24/05/2017

The complainant was a customer of the respondent for five years and he is claiming that he was subject to discriminatory treatment on the race ground in relation to the provision of a service. He said that there were restrictions placed on his bank account because he is an Iranian national. The respondent submitted that the restrictions were necessary and could be objectively justified because it was obliged to comply with national and EU legislation in relation to anti-money laundering/ combating financing terrorism and the requirement to comply with sanctions against Iran.    

The complainant is from Iran. He came to Ireland as a student and has held a bank account with the respondent for the past 5 years. He set up a small medical data analysis company with his wife in 2014. In December 2017, he was contacted by his bank and asked to provide details of his income, verification of his address and supporting documentation. He said that he provided the documentation required. In March 2017, he received an email seeking the same documentation, querying three transactions on his bank account in 2016, and a request to sign a declaration form. The complainant emailed back to say that he had already provided the documentation, that the transactions on his account were his wages from his company and raised a number of queries about the declaration form he was asked to sign. He received a response which he said was not satisfactory. He said that he was asked to sign a declaration form concerning the Bank’s sanctions policy, containing the following clauses which he alleges are discriminatory on the race ground:

" By affixing my signature below, I confirm, declare, agree and irrevocably undertake to the following; -

That the information provided herein is true and accurate and that the Bank may seek to rely on such information unless and until otherwise notified in writing

I acknowledge that the bank will not provide financial services to customers resident in, incorporated in, or trading with the following countries (Iran, Sudan, Syria or North Korea) or where the Bank is on notice that customer funds either originate in or are ultimately destined

for use in such Countries. This includes inbound and outbound transactions in any currency and applies to both commercial activity and personal remittances.

I declare that all funds relating to my existing or any such future trade with Iran, Sudan, Syria or North Korea or with any natural or legal person resident in, incorporated in, or trading with such countries and all funds originating in or ultimately destined for use in such countries will be at

all times segregated from any Bank account.

I will indemnify the Bank against any direct or indirect losses or damage it may suffer as a result of my breaching any of these undertakings.

I will produce evidence of my identity, current permanent address, source of funds lodged or proposed to be lodged to my Bank account(s) as and when this information is required by the Bank; - I will provide the Bank the following information upon demand so to allow the Bank fulfil its legal and regulatory obligations: - (a) Proof of my identity and address; (b) How I source funds

intended to be lodged to my Bank account(s); (c) Facts about the person, business or group to whom I wish to transfer funds from my Bank account(s) and (d) any other such pertinent information as may be required by the Bank from time to time;

Before I commence transacting on my Bank account(s), I may be asked to show the Bank (and

allow the Bank to copy) proof of my identity for example, a passport or photo driving licence in order to minimise the risk of fraudulent activity on my Bank account(s);

Notwithstanding the provisions of Clause 22.2 of the Personal Current Account Terms & Conditions, the Bank may close my Bank accounts immediately or block any payments to or from my Bank accounts if required to do so by law, regulation or direction from an authority it has a duty to obey;

I will not transfer/attempt to transfer funds from my Bank account(s) to Iran, Sudan, Syria or

North Korea or transfer/attempt to transfer funds ultimately destined for use in such countries;

I will not lodge/attempt to lodge funds to my Bank account(s) which said funds originate in Iran, Sudan, Syria or North Korea;

I will obey any instruction the Bank give me concerning the operation of my Bank account(s) so as to ensure that said account(s) aligns at all times with Bank’s Sanctions Policy.

I have been advised by the Bank of my right to seek independent legal advice prior to executing this document. I have elected to waive that right and sign this document freely and without duress, coercion or undue influence."

The complainant said that he had no difficulty in providing the documentation about proof of his address and his identity, the sources of the funds in his account, and copy of his passport. He said that he could not sign the declaration form because he would be required to indemnify the bank against any losses if he breached any of the terms. He said that the declaration form was very limiting. He has family in Iran who he wished to visit and also intended doing some research work there in connection with the business. He said that if he signed the form he could no longer use his account for any purpose relating to Iran such as to buy airline tickets for holidays in Iran, to give   cash presents to his family or do any business with Iran. He did not sign the form and he was informed by the Bank if he did not do so his account would be closed. He then transferred his money to another bank and he was not asked to sign any such indemnity form and he can use his account without any restrictions.

The complainant submits that the respondent discriminated against him on the grounds of his Iranian nationality. He said from his personal enquires that he could not find any other person of a different nationality who was asked to sign such a declaration form.

The respondent submitted that the complainant became the subject of enhanced due diligence following transaction on his account in April, June and December 2016. The complainant was rated as a high risk customer because of his Iranian nationality and for this reason he had to be subjected to enhanced due diligence. The respondent contacted the complainant and requested information and documentation in order to meet the regulatory requirements for enhanced due diligence.   The following information was required: confirm his status and purpose of his account with documentary evidence; the source of his funds and the source of wealth with documentary evidence; completed signed declaration form; standard address verification; a copy of his visa and the beneficiary and purpose of 3 transactions on his account in 2016.

The respondent established from the complainant through an email of the 12th March 2017, that he had graduated in October 2016 and that he was now self-employed having established a software consultancy business with his wife. The transactions on his account were his wages being paid into his account from his business. He told the respondent that he had already provided the documentation requested and that before signing the declaration form he wanted to know the legislative basis for the form. In a response of the 14th of March 2016, the respondent informed the complainant that they were entitled to seek information about the current status of his account in line with the banks terms and conditions and that the additional information was required to comply with regulatory and legal obligations. If he did not comply with the requirements including signing the declaration form it may impact on the respondent’s ability to provide him with a banking service.

The respondent then received a letter of complaint from the complainant dated the 14th of March 2016, and a further letter of the 30th of March 2016, enclosing a notification form ES.1 under the Equal Status Act alleging that he was being treated differently than other customers at the bank and set out a number of reasons for this claim. He alleged that the declaration form was discriminatory on the race ground. He requested information regarding the target recipients of the form, the reason he was selected and the specific EU or Irish law or regulations on which the form was required.

In a letter dated the 12th of April 2017, from the respondent’s complaints department, the questions raised by the complainant were responded to. He was informed the Bank was obliged to apply an enhanced level of due diligence pursuant to the provisions of the Criminal Justice Act (Money Laundering & Terrorist Financing) Act 2010 as well as for reasons connected to a number of legal and regulatory obligations required for countries under sanctions including Iran. It is for these reasons and as part of the due diligence process that the of the sanctions declaration form is necessary in the circumstances. He was informed that his complaint had been investigated and that there was no evidence found of discriminatory treatment.          

It was stated that the bank is subject to EU regulations called the Iran Regulations as well as the US laws and regulations regime in relation to sanctions. There respondent’s Head of Sanctions stated that all customers are risk assessed, but the sanctions declaration form is only given to customers who have affiliations with any of the four countries (Iran, Sudan, Syria and North Korea) subject sanctions.   She said that the Bank had assessed these countries and looked at the associated risks and made a decision that enhanced due diligence will be applied to customers from these countries. She said that the respondent had no appetite for dealing with customers who had affiliations with Iran. The effect of signing the declaration was that the customer could not use money from his account to purchase goods or services destined for Iran and he was also prohibited from putting money into his account which originated in Iran. For example, if the complainant wanted to purchase an airline ticket for Iran he would have to remove the money from his account and put it in another Bank.   The purpose of the declaration form was to transfer the risk associated with the sanctions regime to the customer. If the Central Bank fined the respondent in connection any breaches in relation to the account, the respondent can pass on the fine to the customer. The respondent has a branch in the US and for this reason they are caught by the sanctions. While the US sanctions do not prohibit financial transactions, they can fine Banks if they deem the financial transactions are against US national interest.

Legal Submission

The respondent’s Senior Counsel submitted the following: the Criminal Justice Act 2010 as amended provides at section 25 that a designated person is a person who is inter alia, a financial institution and the legislation places obligations and on all financial institutions to engage in certain due diligence and enhanced due diligence.     Section 39 goes further and allows the national institutions to apply additional measures to prevent or detect money laundering or terrorist financing.  

Section 39 provides

“(1) Nothing in this chapter prevents a designated person from applying measures in relation to a customer or beneficial owner that are additional to those specified in this Chapter, for the purposes of preventing or detecting money laundering or terrorist financing.

(2) Without prejudice to circumstances in which a designated person may apply such additional measures, the designated person may do so when that designated person considers that there is a heightened risk of money laundering or terrorist financing.”

Section 54(1) of the CJA 2010 states the respondent must adopt policies and procedures

“A designated person shall adopt policies and procedure, in relation to the designated persons business, to prevent and detect the commission of money laundering and terrorist financing.”

Section 54(2) particularises this further stating that “a designated person shall adopt policies and procedures to be followed by persons involved in the conduct of the designated person’s business, that specify the day designated persons applications under this Part including-

(a)    The assessment and management of risks of money laundering or terrorist financing, and

(b)    internal controls, including internal reporting procedures for the purposes of Chapter 4”

It was submitted that section 54(3) makes it clear that:

“the policies and procedures referred to in subsection (2) include policies and procedures dealing with-

(a) the identification and scrutiny of complex or large transactions, unusual patterns of transactions that have no apparent economic or visible lawful purpose and any other activity that the designated person has reasonable grounds to regard as particularly likely, by its nature, to be related to money laundering or terrorist financing, and

(b) measures to be taken to prevent the use for money laundering or terrorist financing of transactions are products that could favour or facilitate anonymity.”

Section 54(4) also mandates that:

“The designated person shall also adopt policies and procedures in relation to the monitoring and management of compliance with, and the internal communication of, the policies and procedures referred to in subsection (2).”

Section 54(5) further mandates that:

“In preparing policies and procedures under this section, the designated person shall have regard to any relevant guidelines applying in relation to the designated person that have been approved under section 107.”

Section 52(6) states: “A designated person shall ensure that persons involved in the conduct of the designated person’s business are—

(a) instructed on the law relating to money laundering and terrorist financing, and

(b) provided with ongoing training on identifying a transaction or other activity that may be related to money laundering or terrorist financing, and on how to proceed once such a transaction or activity is identified.”

Section 54(8) provides for the punitive measures applicable to the failure to comply with the provisions of Section 54 and underscores the importance of the bank governance to prevent and detect the commission of money laundering and terrorist financing. Failure to comply with the section can lead to criminal sanctions on summary conviction including a fine or a term of imprisonment, or on conviction on indictment, to a fine or imprisonment of up to 5 years.

It was further submitted that EU and international law is also applicable. Council Regulation (EU) No. 267 2012 of the 23rd of March 2012 (“The Iran Regulation”) as inserted by Council Regulation EU1263/2012 concerns restrictive measures against Iran. The Iran Regulations imposes restrictions on all EU National’s and entities incorporated or constituted under the laws of EU member states, as well as any foreign individuals or entities conducting business, wholly or partly, within EU territory, from either entering into transactions with EU designated Iranian persons (persons and entities and which special restrictions, such as asset freezes, have been imposed) or contracts in specific sensitive sectors. The Iran regulation also imposes further restrictions on certain types of goods which are listed in its annexes.

Subsequently, Council Regulation EU number 42/2014 of the 20th January 2014 (OJ L15 20.12014, p18) amended the Iran Regulation to increase the authorisation thresholds in relation to the transfer of funds to and from Iran and provided for an exemption for the release of funds or economic resources to the Ministry of Petroleum in Iran. In addition, the 2014 Regulations temporary suspended certain restrictive measures specified in the Iran Regulation around the provision of insurance and reinsurance and a number of other goods and services.

It was submitted that certain US law and the US regulatory regime is applicable to non-US persons and entities these include: The Comprehensive Iran Sanctions, Accountability and Investment Act 2010; The National Defence Authorisation Act for fiscal year 2012; executive order 13599 and executive order 1295. The US regulations also include The Iranian Transactions and Sanctions Regulations, International Emergency Economic Powers Act and Trading with the Enemy Act. It was submitted that these were all relevant because they all prohibit the clearing of relevant Iranian transactions through the US financial system.

It was also submitted that the agreement (the Joint Comprehensive Plan of Action) (JCPOA) reached with Iran by Europe, US, China and Russia on their nuclear programme resulted in the lifting of some the sanctions. On the 16th of January 2016, known as Implementation Day, the EU and the US lifted nuclear related sanctions which had targeted inter alia Iran’s financial sector. The EU lifted restrictions on the transfer of funds between the EU and Iranian persons. The US, who had both primary and secondary sanctions against Iran, applied narrower relief from the sanctions. The majority of the primary sanctions remained in place after the implementation day. The secondary sanctions, which apply extraterritorially, i.e. beyond the US borders and to non-US persons do not prohibit transactions outright, but merely allow the US to impose penalties in response to transactions that are deemed harmful to its national interest.   This means that non-US entities, such as the respondent which has a branch in the US, are subject to penal sanctions if they breach any of the US regulatory sanctions regime against Iran. The respondent is fully aware and alive to the fact that the United States continues to have extraterritorial sanctions in place and they expect EU persons and entities to ensure that they do not provide material support to, and are not conducting significant transactions with individuals or entities which continue to be the subject of secondary sanctions.

Furthermore, the US President refused to re-certify Iran’s compliance with JCPOA and this may lead to the reintroduction of secondary sanctions lifted as well as imposing further sanctions.

In addition to the above, Title 1 of the recently implemented Countering America’s Adversaries through Sanctions Act titled Countering Iran’s Destabilising Activities Act 2017 (“CIDAA”) is designed to combat support of terror organisations, and restrain Iran’s continued missile tests nuclear advancements, human rights abuses also impose sanctions on Iran in relation to their ballistic programme and the terrorist related activities of the Islamic Revolutionary Guards.

Therefore, as a result of all of the above, and due to the complications regarding the US sanctions and the risks that exist even after the easing of the EU sanctions, the respondent decided not to change its Sanction Policy post Implementation Day. It is only by performing enhanced due diligence on all new and existing customers, which may require in certain circumstances the signing of the Sanctions Declaration form, (re Iran, Syria, Sudan, and North Korea) that the respondent can ensure that it is fulfilling its obligation.   Failure to do so may result in a potential breach by the Bank of the US laws and Regulations and could result in the imposition of significant fines. The Bank operates internationally and within the US and is under an obligation to ensure it does not violate the US Iranian sanctions regime. Significant fines have been imposed on international banks by the US Regulator for breaches of the sanctions.

The Department of Finance issued guidelines under the CJA Act 2010, in February 2012, on the prevention of the use of the financial system for money laundering and terrorist financing and the application of due diligence to customer accounts. It contains guidance relevant to country and geographic risk for money laundering and terrorist financing. This is an aid in identifying higher risk customers. It sets out factors that a designated person can rely on in making decisions about high risk customers, such as information on countries subject to UN or EU sanctions, embargoes or countries identified by credible sources, for example, FATF (Financial Action Task Force, an intergovernmental body), the EU Commission or other recognized bodies. These countries may be lacking in money laundering laws or provide funding or support to terrorist activities corruption or other criminal activity. If the designated person (the bank) concludes that the customer is a higher risk enhanced customer due diligence (ECDD) must be applied to the customer’s account.

FATF, an intergovernmental body which sets standards for combatting money laundering, terrorist financing and related threats to the integrity of the international financial system have issued public statements in relation to Iran in 2016 and 2017. While Iran has made some high level political commitments to address its deficiencies in relation to money laundering and financing terrorism, FATF states Iran remains a threat and advises its members to continue to apply enhanced due diligence to business relationships and transactions.

It was further submitted that the Central Bank can fine Banks for breaches of the legislation concerning money laundering and financing terrorism. The Bank has recently been the subject of an investigation by the Central Bank and was fined for significant breaches of the anti-money laundering and counter terrorist financing controls from July 2010 to December 2015. The breaches related to failures in relation to risk assessment, suspicious transactions reports and customer due diligence. The respondent is therefore very much alive to the need to ensure it is in continuous compliance with its money laundering, counter terrorist financing and strict sanctions obligations.

The respondent has a Group Regulatory Compliance & Operational Risk Committee which has approved the Group Sanctions Policy Standard which provides inter alia minimum standards to comply with sanctions regulations the process through which it manages its exposure to risks associated with sanctions regulations. The policy states that “there are comprehensive sanctions against Iran, Sudan, Syria, and North Korea (collectively categorized as Prohibited countries). Accordingly, it remains outside the risk appetite of the Group to provide financial services to customers resident in, incorporated in, or trading with any of the prohibited countries or where the Group is on notice that the customers funds either originated in or are ultimately destined for use in those countries.”

Customers of the Bank who are from one of these countries may have an account in the respondent’s bank, but any money either destined for or originating in one of the prohibited countries had to be segregated from the account in the bank.

It was submitted that the complainant could continue having her account with the bank provided she signed the Sanctions declaration form and did not use the account for any reason connected with Iran.

It was submitted that Irish persons and other nationals from outside Iran are also subjected to enhanced due diligence arising out of the Iran sanctions regime applicable. If Irish nationals are trading or dealing with sanction countries or where the Bank is on notice that customer funds either originate in or are ultimately destined for use in such countries, they may be required to complete the said Sanctions Declaration Form.

The respondent accepts that the measures complained of herein are more likely to affect nationals and or citizens from Iran. It is submitted that any complaint of indirect discrimination on grounds of nationality is rebutted by reasons of business efficacy and the requirement to perform enhanced due diligence to comply with the regulatory requirements as outlined above.

It was submitted that the complainant is a national of Iran, one of a small number of countries subject to a restrictive sanctions regime and sanctions legislation which applies globally.   Once certain transactions were highlighted on the complainant’s account in late 2016, she was identified for enhanced due diligence. The measures proposed were proportionate to ensure compliance with the respondent’s obligations and the Sanctions Declaration form is a necessary element of enhanced due diligence in circumstances where funds may be transferred to persons on the sanctions list applying to Iran. The respondent has a zero tolerance for breaches of the sanctions regulations. The public statements of FATF concerning the necessity to apply enhanced due diligence to any relationship and transactions with natural and legal persons from Iran.

In those circumstances, the use of the declaration form is objectively justified and a fair and proportionate anti-money laundering, anti-terrorist financing measure to meet any threat to the integrity of the bank’s financial system.

The complainant, who is an Iranian national, claims that he was discriminated against on the race ground in relation to the conditions placed on his bank account contrary to the terms of the Equal Status Act 2000.

 Section 2 of the Equal Status Acts as amended states that:  ''service'' means a service or facility of any nature which is available to the public generally or a section of the public and, without prejudice to the generality of the foregoing, includes --

(a) access to and the use of any place,

(b) facilities for --

(i) banking, insurance, grants, loans, credit or financing,”

Section 3(1) provides: For the purposes of this Act discrimination shall be taken to occur— (a) where a person is treated less favourably than another person is, has been or would be treated in a comparable situation on any of the grounds specified in subsection (2) or, if appropriate, subsection (3B), (in this Act referred to as the ‘discriminatory grounds’) which—

(i) exists,

(ii) existed but no longer exists,

(iii) may exist in the future, or

(iv) is imputed to the person concerned,

(b) where a person who is associated with another person—

(i) is treated, by virtue of that association, less favourably than a person who is not so associated is, has been or would be treated in a comparable situation, and

(ii) similar treatment of that other person on any of the discriminatory grounds would, by virtue of paragraph (a), constitute discrimination, or

(2) As between any two persons, the discriminatory grounds (and the descriptions of those grounds for the purposes of this Act) are:…………………

 (h) that they are of different race, colour, nationality or ethnic or national origins (the “ground of race”),

Section 5(1) states: "A person shall not discriminate in disposing of goods to the public generally or a section of the public or in providing a service, whether the disposal or provision is for consideration or otherwise and whether the service provided can be availed of only by a section of the public." The burden of proof is set out in Section 38A which provides:  38A. -- (1)" Where in any proceedings facts are established by or on behalf of a person from which it may be presumed that prohibited conduct has occurred in relation to him or her, it is for the respondent to prove the contrary.

(2) This section is without prejudice to any other enactment or rule of law in relation to the burden of proof in any proceedings which may be more favourable to the person.”

It is a matter for the complainant in the first instant to establish a prima facie case of discriminatory treatment.

The complainant, an Iranian national, had a Bank account with the respondent for 5 years. In 2016, there were 3 transactions on his account which brought the account to the attention of the respondent’s authorities dealing with anti-money laundering. He was deemed a high risk customer because of his Iranian nationality and therefore subject to enhanced due diligence. In accordance with the respondent’s procedures in relation to countries subject to sanctions he was asked to sign a declaration form which the complainant’s claims is discriminatory.

The net effect of the form is that the complainant had to give an undertaking to no longer use money from his account which was ultimately destined for Iran and neither could he lodge money to his account which originated in Iran. The complainant was also required to indemnify the bank against any direct or indirect losses or damage it may suffer as a result of any breaches of the terms.

The respondent submits that the form is a necessary requirement to comply with the statutory and regulatory requirements to combat money laundering, terrorist financing and to comply with the sanction legislation and regulatory requirements in place against Iran.

The first matter I must decide is whether section 14 of the ES Act applies;

14.—(1) Nothing in this Act shall be construed as prohibiting—

(a) the taking of any action that is required by or under—

(i) any enactment or order of a court,

(ii) any act done or measure adopted by the European Union, by the European Communities or institutions thereof or by bodies competent under the Treaties establishing the European Communities, or

(iii) any convention or other instrument imposing an international obligation on the State,”

The declaration the complainant was required to sign contained a description of sanctions, the sanction regulations, their origins and the application of a comprehensive sanctions regime to Iran, Sudan Syria and North Korea. According to the declaration, it was outside the risk appetite of the bank to provide financial services to customers whose funds either originate in or are ultimately destined for use in any of these countries. The form then requested the complainant to declare if she had any affiliations or business activities with any of these countries and to provide details. By signing the form the complainant had to agree to the following;

" By affixing my signature below, I confirm, declare, agree and irrevocably undertake to the following; -

a. That the information provided herein is true and accurate and that the Bank may seek to rely on such information unless and until otherwise notified in writing

b. I acknowledge that the bank will not provide financial services to customers resident in, incorporated in, or trading with the following countries (Iran, Sudan, Syria or North Korea) or where the Bank is on notice that customer funds either originate in or are ultimately destined

for use in such Countries. This includes inbound and outbound transactions in any currency and applies to both commercial activity and personal remittances.

c. I declare that all funds relating to my existing or any such future trade with Iran, Sudan, Syria or North Korea or with any natural or legal person resident in, incorporated in, or trading with such countries and all funds originating in or ultimately destined for use in such countries will be at

all times segregated from any Bank account.

d. I will indemnify the Bank against any direct or indirect losses or damage it may suffer as a result of my breaching any of these undertakings.

e. I will produce evidence of my identity, current permanent address, source of funds lodged or proposed to be lodged to my Bank account(s) as and when this information is required by the Bank; - f. I will provide the Bank the following information upon demand so to allow the Bank fulfil its legal and regulatory obligation:- (a) Proof of my identity and address; (b) How I source funds

intended to be lodged to my Bank account(s); (c) Facts about the person, business or group to whom I wish to transfer funds from my Bank account(s) and (d) any other such pertinent information as may be required by the Bank from time to time;

g. Before I commence transacting on my Bank account(s), I may be asked to show the Bank (and

allow the Bank to copy) proof of my identity for example, a passport or photo driving licence in order to minimise the risk of fraudulent activity on my Bank account(s);

h. Notwithstanding the provisions of Clause 22.2 of the Personal Current Account Terms & Conditions, the Bank may close my Bank accounts immediately or block any payments to or from my Bank accounts if required to do so by law, regulation or direction from an authority it has a duty to obey;

i. I will not transfer/attempt to transfer funds from my Bank account(s) to Iran, Sudan, Syria or

North Korea or transfer/attempt to transfer funds ultimately destined for use in such countries;

j. 1. I will not lodge/attempt to lodge funds to my Bank account(s) which said funds originate in Iran, Sudan, Syria or North Korea;

k. I will obey any instruction the Bank give me concerning the operation of my Bank account(s) so as to ensure that said account(s) aligns at all times with Bank’s Sanctions Policy.”

The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 as amended, implementing EU Directives, requires the respondent to have measures in place to combat money laundering and financing terrorism. S. 33 provides that the respondent carries out due diligence on customers and the documents and other measures required to establish the identity and the beneficial owner of the account. S.39 cited above allows the respondent to apply enhanced due diligence where it is believed that there is a heightened risk of money laundering or terrorist financing. However, S.39 does not specify the type of measures which can be applied.

Having examined the above sanctions Declaration document, I am satisfied that the requirements at e,f,g, and h are requirements under an enactment, the CJA Act 210 and the EU Directives on ML/TF, and accordingly are covered by virtue of S.14 cited above. The respondent submitted that the requirements at b, c, d, i, and j were required to carry out enhanced due diligence in accordance with regulatory requirements.    

The enhanced due diligence put in place by the respondent was the aforementioned declaration form which required the complainant to declare if she had any affiliations with Iran and to give undertaking that she would not conduct transactions on the account destined for Iran or would not put funds originating in Iran into her account.   Having examined the CJA 2010 as amended and the EU Directives, the Council Regulation 267/2012 the “Iran Regulations” Council Regulation 2015/1861 amending Regulation 267/2012 concerning restrictive measures against Iran the requirements at b, c, d, and j imposed by the respondent as enhanced due diligence are not requirements of an enactment under Irish or EU law.

I note the respondent states that all new and existing customers are subject to due diligence but only customers who have affiliations or business activities with Iran, Sudan, Syria and North Korea are required to sign the declaration form.

The complainant submitted that only Iranians were asked to sign the declaration and his Irish and European colleagues were not asked to sign it. He said that if he signed the declaration and had to comply with the requirements therein he could no longer used her account, for example, to buy airline tickets to Iran, use money in his account in connection with Iran, carry out medical research in Iran for his company or deal with companies in Iran. For this reason, he transferred his money to another bank where no restrictions in connection with Iran were applied.

The respondent said that the requirement applied to all customers of the bank regardless of their nationality if the customer had either business or personal financial connections to Iran.

I am now going to consider the matters complained about at b, c, d, i and j under Section 3(c) of the ES Act in relation to indirect discrimination. The Act provides that discrimination shall occurs:

“3 (c) where an apparently neutral provision would put a person referred to in any paragraph of section 3(2) at a particular disadvantage compared with other persons, unless the provision is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.”

The Supreme Court in the case of Nathan v. Bailey Gibson & Others [1996] ELR vol. 7 set out the tests to be applied in considering cases of indirect discrimination. This was a case under the Employment Equality Act, 1977 concerning indirect discrimination on the grounds of sex and marital status. The Supreme Court set out the following principle which were followed by the High Court in the case of Conlon v University of Limerick [1999] ELR vol. 10.

“In such a case the worker is not required, in the first instance, to prove a causal connection between the practice complained of and the sex of the complainant. It is sufficient for him or her to show that the practice complained of bears significantly more heavily on members of the complainant’s sex than on members of the other sex. At that stage the complainant has established a prima facie case of discrimination and the onus of proof shifts to the employer to show that the practice complained of is based on objectively verifiable factors which have no relation to the plaintiff’s sex.”

The complainant submitted that the policy put him at a particular disadvantage as regards using his bank account, in that he had to sign a declaration that she would have to indemnify the bank if it suffered losses if he breached any of the conditions, compared to Irish and European nationals, who did not have to sign such declaration. I note that in order to comply with the declaration, the complainant would have to segregate money in his bank account and transfer it to another financial institution in order to conduct any financial transactions with Iran and this did not apply to Irish customers who had no business or financial dealings with Iran. While the complainant has not produced any statistical evidence to support this contention, the respondent accepts that the measures complained about affected a much higher number of customers from Iran or the other countries mentioned than Irish customers. I am satisfied therefore that the requirements impacted disproportionately on customers of the complainant’s nationality than it did on the respondent’s Irish customers and this raises an inference of discrimination in accordance with S. 38 of the Act. I find therefore that the complainant has established a prima facie case of indirect discrimination on the race ground.

It is a matter for the respondent to rebut the prima facie case of indirect discrimination and to objectively justify the requirements. It is a defence for the respondent under S. 3(2) if it can be established that the measures put in place are objectively justified.   The three limbs to the test are:

(i) whether it’s a legitimate aim (ii) whether the means of achieving that aim is appropriate and necessary.

The aim of the respondent’s policy is to prevent the respondent’s bank being used for money laundering or financing terrorism as well as ensuring there were no breaches of the US sanctions regime in place against Iran.

In relations to sanctions, it was submitted, that the respondent’s Regulatory Compliance & Operational Risk Committee approved the Group Sanctions Policy Standard which sets the minimum standards and procedures to minimise exposure to risk and in order to comply with sanctions across the jurisdictions in which the respondent operates. Under the JCPOA agreement, the EU lifted nuclear related sanctions including sanctions on Iran’s financial, energy and the shipping sector and lifted limit restrictions on the transfer of funds between the EU and Iranian persons and allowed EU banks to establish subsidiaries in Iran and Iranian banks (not on sanction lists) to establish banking relationships and offices in the EU.   Certain EU sanctions are still in place.

The US has both primary and secondary sanctions on Iran. The primary sanctions which apply to US persons prohibits transactions with Iran which have a direct connection to the US including US dollar payments by either by US or non-US persons. The vast majority of these sanctions have remained in place following the JCPOA agreement. The secondary sanctions apply extraterritorial and to non-US persons.   While these sanctions do not prohibit financial transactions outright, penalties may be imposed if the transactions with Iran are deemed harmful to the national interest. It was submitted that the respondent has a branch in the US and is open to fines if there is a breach of the sanctions by the bank and International Banks have had substantial fines imposed by the US for breaches of sanctions.

The FAFT public statements in 2016/17 states that Iran’s measures on AML/CFT are deficient and they remain concerned about the risks of money laundering and financing terrorism and advised its members to continue to advice their financial institutions to apply enhanced due diligence to business relationships and transactions with Iran. The respondent has recently been fined by the Central Bank in respect of anti-money laundering and terrorist finance compliance failures.

For these reasons, the respondent had no “appetite” for having any financial dealings with Iran; the declaration form was introduced for reasons of business efficacy and is a necessary element for the performance of enhanced due diligence to ensure compliance with the respondent’s global legal and regulatory obligations and the very strict global sanctions regime in place, particularly in the US. It is an indemnity for the respondent in circumstances where funds could be transferred to persons or entities on the sanctions list and where such fund transfers could potentially be in breach of the sanctions regime in place against Iran. It was further submitted that it was objectively justified and a proportionate anti-money laundering, anti-terrorist financing measure to meet any threat to the integrity of the bank’s financial system.  

While the policy in question pursues legitimate aims, it was designed so that the respondent would have no responsibility in relation to managing any risk that might arise in relation to customers such as the complainant who have affiliations to Iran. I am not satisfied that the measures to achieve the aims were either appropriate or necessary. The respondent has to look at other measures which would not result in denying the complainant all the services available to him as an account holder in the bank. The respondent’s policy required the complainant to transfer money from his bank account, where he was a customer for 5 years, to another bank if, for example, he wanted to buy airline tickets to Iran or spend money in Iran.   I note it also required the complainant to indemnify the bank if it suffered any losses, either direct or indirect resulting from any breach of the terms of the policy. I consider these are very onerous conditions and it was unreasonable to expect the complainant to sign up to such conditions. It was not an appropriate method to achieve its aims particularly given the EU had lifted sanctions and restrictions on the transfer of funds between the EU and Iran in January 2016. Furthermore, it was not an appropriate restriction to put on the complainant’s customer relationship with the bank given the length of time he had the account there without any problems arising in his financial transactions. I note the complainant provided an explanation for the transactions on his account in 2016 and had no difficulty in providing document to verify the reasons for the transactions and the source of his funds.

In determining whether the policy was necessary to achieve its aims, it is clear that the respondent did not consider any alternative measures.   I am of the view that alternative methods to counter money laundering/terrorist financing and US sanction breaches were open to the respondent. These include the implementation of robust IT systems and procedures, customer advice/guidance and information systems and or a helpline as part of the process to monitor account activities. I am of the opinion this would be a more proportionate method of pursing the respondent’s aims. I note that the respondent’s current systems have the capabilities given that the complainant’s account was identified as high risk when he made a number of transactions in 2016.   I am satisfied that the respondent’s policy was neither appropriate nor necessary to achieve the respondent’s stated aims and therefore was not objectively justified. For these reasons, I am satisfied that the respondent has failed to rebut the prima facie case of indirect discrimination raised by the complainant.   I find therefore, that the respondent indirectly discriminated against the complainant on the race ground in relation to the provision of a service contrary to Section 3(c) of the Equal Status Act 2000.

For all the foregoing reasons, I find that the complainant has established indirect discriminatory treatment on the race ground contrary to the Equal Status Acts.  Under section 27(1) of that Act redress may be ordered where a finding is in favour of the complainant. Section 27(1) provides that:

"the types of redress for which a decision of the Director of the Workplace Relations Commission under section 25 may provide are either or both of the following as may be appropriate in the circumstances:

(a) an order for compensation for the effects of the prohibited conduct concerned; or(b) an order that a person or persons specified in the order take a course of action which is so specified."

 Under the above Section the maximum amount of compensation I can award is €15,000. In considering the amount of compensation that I should award I have taken into account the effects of the discriminatory treatment had on the complainant including the stress caused to him and inconvenience of having to change banks. I order the respondent to pay to the complainant the sum of €8,000 (eight thousand euro) for the discriminatory treatment.

In accordance with Section 27(1)(b) of the Equal Status Acts, I order that the respondent carry out a review of their procedures for enhanced due diligence and to amend accordingly to ensure compliance with the terms of the Equal Status Act.

Equal Status Act, race ground, provision of a service, bank account, indirect discrimination.