Author: Jeremy Clifton, CRCM, CAMS
On August 7, 2025, President Trump issued an executive order entitled Guaranteeing Fair Banking For All Americans. The EO outlines the administration’s road map for governing and reigning in what is defined as, “politicized or unlawful debanking”. The EO defines politicized or unlawful debanking as “an act by a bank, savings association, credit union, or other financial services provider to directly or indirectly adversely restrict access to, or adversely modify the conditions of, accounts, loans, or other banking products or financial services of any customer or potential customer on the basis of the customer’s or potential customer’s political or religious beliefs, or on the basis of the customer’s or potential customer’s lawful business activities that the financial service provider disagrees with or disfavors for political reasons.”
We know this as debanking or derisking which is generally utilized when a client has a risk profile that does not align with a financial institution’s risk tolerance. Many times, the FI does not have staffing, resources, or expertise to properly mitigate the risks certain clients.
The debanking could happen for appropriate reasons, such as:
Most community FIs that we service are not debanking outdoor or gun shops, or “persons participating in activities and causes commonly associated with conservatism and the political right”, or targeting P2P transactions with terms like “MAGA”; however, we still see some risks that can be somewhat mitigated. The EO orders each Federal banking regulator to identify FIs that have engaged in unlawful debanking and to take appropriate remedial action, so we would expect this to be a possible test point for FIs in the near future.
Action Steps for FIs:
On August 7, 2025, President Trump issued an executive order entitled Guaranteeing Fair Banking For All Americans. The EO outlines the administration’s road map for governing and reigning in what is defined as, “politicized or unlawful debanking”. The EO defines politicized or unlawful debanking as “an act by a bank, savings association, credit union, or other financial services provider to directly or indirectly adversely restrict access to, or adversely modify the conditions of, accounts, loans, or other banking products or financial services of any customer or potential customer on the basis of the customer’s or potential customer’s political or religious beliefs, or on the basis of the customer’s or potential customer’s lawful business activities that the financial service provider disagrees with or disfavors for political reasons.”
We know this as debanking or derisking which is generally utilized when a client has a risk profile that does not align with a financial institution’s risk tolerance. Many times, the FI does not have staffing, resources, or expertise to properly mitigate the risks certain clients.
The debanking could happen for appropriate reasons, such as:
- The customer may be in an industry that the Board of the financial institution has chosen not to bank (e.g., crypto exchange or ATM, marijuana, MSB, PEP).
- The customer has been subject to multiple SAR filings.
- The customer has participated in fraud, money laundering, or other illegal activity.
- The customer has not provided applicable or standard CDD or CIP information necessary to mitigate ongoing risk and/or open the account.
Most community FIs that we service are not debanking outdoor or gun shops, or “persons participating in activities and causes commonly associated with conservatism and the political right”, or targeting P2P transactions with terms like “MAGA”; however, we still see some risks that can be somewhat mitigated. The EO orders each Federal banking regulator to identify FIs that have engaged in unlawful debanking and to take appropriate remedial action, so we would expect this to be a possible test point for FIs in the near future.
Action Steps for FIs:
- Update BSA/AML policy to include debanking and include a statement prohibiting “politicized or unlawful debanking”.
- Understand what rights your account agreement provides for account closure.
- For industries that the FI has determined to be prohibited ensure a documented rationale as to why those industries (e.g., crypto exchange or ATM, marijuana, MSB, PEP) are prohibited.
- Ensure that the FIs SAR program includes possible account closure as a result of continued suspicious activity.
- Ensure that the FIs CDD & EDD program includes expected initial due diligence and ongoing due diligence expectations for higher risk industries.
- Ensure that the FIs CDD & EDD program includes guidance, for instances when expected due diligence is not provided including closing the account within a reasonable timeframe.
- Ensure that the FIs CIP program includes guidance, for instances when required documentation is not provided including closing the account within a reasonable timeframe.
- Ensure that any action taken from a periodic loan review (freezing lines of credit, utilizing demand clauses, etc.) is in line with the loan agreement and bank policy.
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