German court rebukes bank over U.S. sanctions compliance
A long-standing customer relationship turned into a test of international sanctions law in Frankfurt, where the Higher Regional Court has ruled that a German bank wrongly closed the accounts of a man placed on a U.S. blacklist. The plaintiff, a German national of Iranian descent, had banked with the institution for more than three decades. When the U.S. Treasury’s Office of Foreign Assets Control added his name to its sanctions list in 2020, the bank swiftly terminated all of his accounts.
On appeal, the 10th Civil Senate of the Frankfurt OLG (case 10 U 137/23) ruled on 27 June 2025 that the plaintiff is entitled to compensation for the wrongful termination of account contracts. The OLG found that the terminations in November 2020 were in violation of Article 5 of the EU Blocking Regulation, because of the tight chronological connection between the plaintiff’s listing and the account closures.
The judges concluded that this action breached the EU’s Blocking Regulation, which forbids European firms from complying with certain extraterritorial U.S. sanctions. The timing was critical: the bank acted almost immediately after the American listing, making it “indicative of an intent to comply” with Washington’s measures rather than with EU law. By shutting down his private accounts, securities holdings and credit cards without an independent basis, the bank violated his rights under European regulations.
The court awarded the customer compensation, marking one of the clearest affirmations yet that EU protections are enforceable against domestic banks. The ruling also dismissed the bank’s claim that an internal “Iran policy” dating back to 2007 justified its actions, noting that the relationship had remained intact for years until the U.S. designation triggered the sudden termination.
Yet the court also drew limits: a second round of account closures in March 2022 was upheld as lawful, since by then the plaintiff had already been removed from the U.S. list.