TCF Financial (TCB) in Wayzata, Minn., continues to take heat over efforts to comply with U.S. laws that govern transactions with Iran.
The $18.2 billion-asset company recently received a letter from roughly a dozen members of the faculty at the University of Minnesota who threatened to move their money elsewhere after the bank notified some Iranian students by mail that it would close their accounts unless they could verify transactions the bank had flagged.
The faculty members "had their own thought processes as to why they wanted to leave and felt that we might be discriminating against the Iranian students," TCF spokesman Jason Korstange told American Banker Thursday. "We replied back that we indeed we weren't, that we're simply following the rules,"
The flap surfaced in December when some students notified university officials that the bank was threatening to close their accounts. The bank had flagged the accounts as part of routine efforts to comply with anti-money laundering rules and restrictions on transactions with Iran.
Korstange says representatives of TCF met with "a number of" students who received the letters, which the bank sends out periodically as part of its effort to monitor accounts. The bank was able to keep some accounts open after hearing from students although it had to close others. "Even though they came in with all the information we had to close their accounts because of the transactions that were going on," Korstange said. "It's not like we have a choice."
University spokeswoman Patty Mattern says that neither the students nor the bank have any obligation to tell the university about the status of the accounts, but she adds that the bank has "worked hard" to address the students' concerns.
The row comes amid a series of steps by TCF to tighten controls that govern transactions. On Jan. 25 the bank agreed to pay $10 million to settle a probe by the Office of the Comptroller of the Currency into alleged money-laundering lapses as part of a settlement that obligates TCF to review procedures for collecting information from customers when they open an account.
TCF has a prominent presence at the university, which has an enrollment of 52,000 students in the Twin Cities alone. The bank supplies the university's U-Card, which doubles as both identification and debit card for roughly 35,000 students who have signed up for it, and pays to put its name on TCF Bank Stadium, the roughly 51,000-seat home of the university's football team.
William Beeman, a professor of anthropology and one of the faculty members who signed the letter, said TCF overreacted to the government probe. "It is tempting to conclude that the bank panicked and just tossed out their Iranian students just for good measure to show their bona fides," Beeman said in an email. "The students who contacted the bank were subjected to an extensive, invasive and insulting questionnaire about financial and family matters."
"All accounts we examined had no irregularities whatever," he added.
Korstange says the bank is doing what it can to preserve the accounts. "We're following the rules and the regulations that have been given to us by our regulators and we will continue to do that," he said.