We don’t suntrust you

Banking restrictions in the era of the USA. Patriot Act

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When the Bush administration passed the USA. Patriot Act after the multiple terrorist attacks of September 11, 2001, it very probably did not intend to punish the innocent alongside the guilty. However, a recent experience I had with my American bank, SunTrust, showed me that that goal has been, at best, imperfectly achieved.

The Atlanta-based SunTrust is among the largest banks on the East Coast of the United States, with total deposits of $122 billion. On June 27, I received a letter, dated May 23, informing me that my account at a Washington, DC branch had to be closed by June 23. Management had decided to discontinue financial services to any “individual residing in an OFAC [the Treasury Department’s Office of Foreign Assets Control] sanctioned or other high risk country,” and I live in Lebanon.

Red flag

Because the letter arrived in my mailbox past deadline, the bank had already closed my account. International mail is often delayed, so SunTrust gave clients little or no time to set up an alternative US account. Nor did the bank bother to FedEx the closure letters so they could reach their destinations on time, let alone telephone overseas depositors.

Under the USA Patriot Act, banks are responsible for monitoring accounts deemed potentially threatening with respect to the financing of terrorism. Someone living in the Middle East but also holding an American account puts up an obvious red flag. While the targeted SunTrust depositors were not accused of wrongdoing, their accounts were terminated because they apparently entailed higher banking costs.

There were several aspects of the decision that were disturbing. Banks are entitled to choose with whom they do business, and SunTrust is no exception. However, other than the absurdly short deadline afforded to depositors to close their accounts, the bank engaged in what can only be described as collective punishment. Depositors were effectively told to move elsewhere, without it being adequately explained to them why they had to suffer such humiliation for happening to live in the wrong country.

Risk countries

I’ll wager that not one depositor sent packing by SunTrust was involved in terrorism. Indeed, if the government suspected an account, it probably would have kept it alive to survey all transactions. SunTrust might respond that its decision was based on a calculation of costs and benefits. True, but banks invariably seek out more depositors. That’s why the Treasury Department should realize it is harming the interests of American banks and depositors in “risk” countries, while probably doing little to disrupt terrorists, who must be wise as to how to circumvent restrictions.

A second problem is that Americans will find it increasingly difficult to do business in so-called risk countries. Yet the Bush administration has sent precisely the opposite message. It has urged Middle Eastern states to embrace free markets, which by extension means encouraging American businessmen to invest there. However, if Americans begin seeing their accounts at home closed because they reside in the Arab world, they will conclude not only that they were misled by their government, but that doing further business in the region is far too much of a hassle.

The third problem is that the fight against terrorism can only be won if Americans and Arabs together define common interests in winning that battle. Behavior like SunTrust’s, in stark contrast, only reinforces American insularity vis-à-vis the region. Both for Americans living among Arabs and Arabs wishing to place their money in America, such actions only confirm that the two sides are destined never to agree.

A deeper issue is that stifling globalization is hardly the best way to fight terrorism. Cutting off money flows, encouraging retrenchment, presuming that anyone is a possible terrorist threat – such undiscerning steps only make the world seem a more hostile place. It is in such environments, where the culture of capitalism is denied, that terrorism thrives. SunTrust should have had the good sense to dig deeper than the bottom line.

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years. Send mail