It’s a regulatory requirement. Banks don’t do these things just to piss off their customers.
But banks can comply with requirements without botching the process.
It's just a culture of pass-the-buck, bad middle management, and a lack of investment in quality customer service.
Send 'em a dodgy-looking letter and freeze the account isn't the only way to accomplish the goal.
The point is that a bank can randomly freeze your money, and they don't need a regulatory reason to do it.
Outside of political signalling, there's only two realistic reasons:
1) The auditors told them this is the cheapest and least expensive way to become compliant with the laws. All the other options are even worse PR or more expensive. Its interesting the decision of how to remain legal was made by a 3rd party accounting consultant but ALL the pr backlash is directed at the bank. Its almost a tradition in American customer service for angry customers to take it out on people who are utterly uninvolved with the decision, from the most trivial supermarket issue to something like this.
2) For financial reasons, investigative journalism only happens to local businesses who fail to invest the correct amount of money in legacy media advertising; odd how the local business scandal of the week is always some independent retailer or contractor who doesn't pay for advertisement, never a profitable chain franchise or a car dealer who buys tons of advertising. So I pull the BoA 2018 1st quarter SEC 10-Q filing, and its RIGHT THERE on page 50, marketing expense 2017 $456M and 2018 $381M. Whoopsie. What we have here is a simple $75M extortion racket; "sure would be a shame to see this story make the front page of the legacy media no one reads anymore or believes in; we could make that PR 'nightmare' go away if you'd just pay up the $75M you 'owe' us based on last years budget". Its pretty blatant extortion in this situation. Something similar happened to Toyota WRT "unintended acceleration" IIRC a couple years back. Yeah yeah I know, no one "does" legacy media anymore, so why bother buying advertising, well, its not like they're gonna take that sitting down, they're gonna fight back. And some suit at BoA figured the PR cleanup would be cheaper than the $75M of protection money they were being charged, so ... here we are.
There is no need to give them the benefit of the doubt.
Really? Do you have a citation to that regulation?
lists some of the various sources of sanctions. The regulatory parts are e.g. from the 2012 Executive Order (EO13599):
All property and interests in property of the Government of Iran, including the Central Bank of Iran, that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, including any foreign branch, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.