I live and volunteer overseas (Middle East) with an American missionary program. My bank, a CU, has denied me access to my own money because I live in a country that has connections to terrorism. When pushed about it they first replied that it was due to the US laws making it illegal to do business there...yet larger banks and financial companies (Visa, HSBC, AmEx, Wachovia/Suntrust, Bank of America, etc) were not being blocked, I know this because I know other Americans that hold accounts with those companies. So I pushed this and they said it was illegal and they were prohibited and couldn't speak for larger banks. I researched the "law" they claimed and it did mention something about financial transactions in said country, but it didn't block it. There was a specific watch list of people and organizations that were blocked but the entire country wasn't. My host country also has a reputation as a hotbed for fraud so that was also mentioned.
In the long run I figured out that the CU just didn't want to take the risk and used some law related to terrorism to block all transactions (legal and legit) to, from, and within this country. I moved all but the min. money from my accounts and opened a new account at an American Mega Bank that does allow business here. If the CU is going to prevent me from having access to my money AND LIE about the reasons they deserve to not have my business. I'd close the account down completely but I've had it for too long.
The financial institution in the story here likely wants to get rid of as much risk as it can and distance itself from companies or individuals the US and other places are upset with.