International Emergency Economic Powers Act
Nia v. Bank of America
Date: April 13, 2026
Issue: Whether the district court erred in holding that the International Emergency Economic Powers Act (IEEPA) shields BofA from liability for restricting or closing accounts under sanctions-compliance policies adopted in reliance on federal guidance.
Case Summary: In a unanimous decision, a Ninth Circuit panel affirmed a California federal court’s decision and held that the International Emergency Economic Powers Act shielded BofA from a lawsuit alleging it unlawfully restricted accounts.
As background, the Office of Foreign Assets Control (OFAC) promulgated the Iranian Transactions and Sanctions Regulations (ITSR), which prohibit U.S. financial institutions from providing financial services to accounts held by persons who ordinarily reside in Iran, unless those persons are located outside Iran. The IEEPA authorizes the President to impose sanctions on foreign countries that pose unusual and extraordinary threats and protects good-faith actions.
In August 2021, Mohammad Farshad Abdollah Nia sued BofA, alleging it unlawfully restricted and closed his credit card account under its sanctions compliance policies. BofA adopted these policies to comply with the IEEPA and OFAC regulations. Under the policy, BofA required certain customers, including Iranian citizens, to submit periodic proof of residence outside sanctioned jurisdictions. Nia opened his account in 2015 and initially provided acceptable documentation, but later submitted a Form I-797C, which BofA treated as temporary proof. When he did not provide updated documentation after repeated requests, BofA restricted his account on October 1, 2019, and closed it on October 21. Nia later filed an amended class action complaint alleging BofA violated the Equal Credit Opportunity Act (ECOA) and California Unfair Competition Law (UCL)
Judge Cynthia Bashant of the Southern District of California ruled for BofA on most claims and held that IEEPA’s liability shield protected BofA because it acted in good faith to comply with federal sanctions requirements. The court ruled that through its shield provision, the IEEPA bars liability for actions taken in reliance on sanctions regulations, which defeated Nia’s discrimination and related claims. The court granted summary judgment for BofA on those claims and allowed only a narrow ECOA claim, along with a related UCL claim, to proceed. Nia appealed the district court’s decision.
On appeal, the panel affirmed the district court’s decision and rejected Nia’s argument that IEEPA’s shield provision applies only to actions compelled by the ITSR. The panel clarified that the IEEPA includes actions taken under or based on sanctions laws and guidelines, which permit discretion without compulsion. The panel concluded BofA’s customer risk management policy fell within that protection because it aligned with OFAC regulations and guidance designed to prevent the servicing of accounts tied to sanctioned countries. The panel also emphasized that BofA acted in good faith, noting that any errors in its communications about acceptable documentation did not show bad faith and that BofA repeatedly provided notice of deadlines and the need for updated proof. Thus, the panel concluded IEEPA’s liability shield applied and barred Nia’s claims.
The panel also rejected Nia’s argument that unnecessarily discriminatory actions inherently lack good faith. Nia pointed to two letters from third parties criticizing BofA’s policy as “reliable evidence” of bad faith. Still, the panel found that those letters did not prove BofA acted in bad faith. The panel explained that outside criticism does not determine good faith. The panel also stressed that BofA applied its customer risk management policy based on citizenship, in line with OFAC guidance, which allows financial institutions to consider such factors when managing sanctions risk. As a result, the panel concluded that Nia failed to raise a genuine issue about BofA’s good faith.
Finally, the panel rejected Nia’s argument that seven CFPB complaints proved that BofA’s actions were not taken in good faith. The panel explained third-party complaints do not show bad faith and do not control that analysis. The panel added that even if the complaints could raise a factual issue, a small number of complaints do not show a broader pattern of misconduct. The panel noted that BofA has served about 67,000 Iranian citizen accountholders since 2016, and that a few alleged errors do not show a lack of good faith. The panel thus concluded that Nia failed to raise a genuine issue of material fact on BofA’s good faith.
Bottom Line: The Ninth Circuit confirmed that the International Emergency Economic Powers Act broadly shields banks from liability when they take good faith actions in reliance on sanctions laws and guidance, even if those actions are discretionary and later challenged as discriminatory.
Document: Opinion
