The Canadian government has extensive economic sanctions against Iran, which are meant to pressure the country to halt its suspected nuclear weapons program.
However, some banks are applying those sanctions to ordinary people who come to Canada to work or study.
Khodadadi told CBC News he received an error message last month, when he tried to transfer money from his chequing to his savings account.
He phoned customer service, which passed him on to his branch manager.
"He told me that we are closing your account because … your passport is Iranian," Khodadadi said.
"I was shocked, and I think it was an act of discrimination. It's not acceptable."
Khodadadi said that when he asked for an explanation, he was told it was "CIBC's policy."
The 25-year-old is pursuing his master's in engineering and computer science at Concordia University on an international student visa.
He said he's always been careful to make sure everything he does is legal and above board, which made it all the more shocking when his account was blocked without notice.
There was only $700 in the account, which Khodadadi said he used mostly to buy groceries and deposit his paycheques from his part-time job in Montreal.
He said he never used the account for anything remotely suspicious. Khodadadi said he had never even wired money to or from Iran with his CIBC account.
"I always follow the law. I don't do anything that is illegal. My situation in Canada is completely legal. I work legally.… I don't have any connections with any major things in Iran."
CIBC calls account closure an error
CBC News contacted CIBC about the story, but the bank refused an interview.
Kevin Dove, the head of CIBC's external communications, provided the following statement: "This situation is not consistent with our procedures, and we are currently reviewing this matter. We are also reaching out to our client to apologize for this error."
That statement was issued last Thursday. Khodadadi has not yet received an apology.
He received his money back from CIBC after closing his account and has moved on to another bank.
Federal sanctions too vague, advocates say
Khodadadi isn't the first person with this type of banking problem.
In 2012, several Iranian-Canadians came forward after TD Bank abruptly closed their accounts.
Kaveh Shahrooz, a Toronto lawyer and an Iranian-Canadian community activist, met with representatives from TD Bank at the time to encourage them to review their approach.
"We thought that this story had gone away. It's very disappointing to see that another bank seems to be doing the same thing," Shahrooz said.
Canada's Special Economic Measures Regulations against Iran state that "it is prohibited for any person in Canada and any Canadian outside Canada to … provide or acquire any financial services to, from or for the benefit of, or on the direction or order of Iran or any person in Iran."
Shahrooz said it seems that some banks are interpreting the sanctions harshly, essentially applying them to anyone who has a connection to Iran — be it a residence, citizenship or even travel.
"That's a fairly aggressive reading of the legislation. It actually captures people who I don't think Canadian legislators ever intended to capture," he said.
Shahrooz said the government should do more to clarify the intent of its sanctions.
Lawyer knows of 13 similar 'horror stories' in Montreal
Eiman Sadegh, a Montreal business immigration lawyer, said he's heard of at least 13 similar cases in Montreal alone — all with major banks.
"There's a lot of cases, a lot of horror stories," Sadegh said.
He said sometimes people have a few weeks' notice, or sometimes they find out their card is blocked while they're using an ATM.
"You go to sleep one night, you wake up the next morning, and you have to basically refinance everything."
Sadegh said people could take their cases to court, but it's a David-and-Goliath battle.
"Practically speaking it's an uphill fight. You could challenge the banks, you could ask for injunctions to keep accounts open … but there hasn't been a single person who's been able to reverse this decision that's been made by the banks, judicially speaking."
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