The editor takes a look at last week's de-banking report from a US regulator.

In the torrent of news that comes out of Washington DC, one news item will have caught the attention of banks and wealth managers. It is a regulator’s report saying that large US banks unfairly denied services to clients for political, religious or other grounds.

In other words, the thorny topic of “de-banking,” which isn’t just a US matter, is back on the agenda. 

A report came last week from the Office of the Comptroller of the Currency, the organization that is responsible for overseeing this kind of issue. It scolded all nine banks it examined, although they weren’t penalized. 

The regulator examined JPMorgan Chase Bank, Bank of America, Citibank, Wells Fargo Bank, US Bank, Capital One, PNC Bank, TD Bank, and BMO Bank. The OCC said it had carried out a supervisory review after President Donald Trump issued an executive order in August 2025 entitled “Guaranteeing Fair Access to Banking for All Americans.” The OCC said it looked at almost 100,000 complaints regarding OCC-regulated institutions. It worked through about 50,000 documents from the banks. 

“The OCC’s findings show that between 2020 and September 2025, all nine banks had such policies,” it said last week. 

De-banking is a difficult issue because, when it comes to that class of persons such as Politically Exposed Persons (PEPs) for example, banks have been increasingly saddled with the job of enforcing particularly tough anti-money laundering and know-your-client tests. There are also what used to be called ESG (environment, governance and society) considerations that might apply among the more zealous members of staff, putting people working in certain areas such as weapons, fossil fuels or tobacco in difficulty. 

Across the Atlantic, prominent UK politician Nigel Farage was de-banked by Coutts, the UK private bank, causing a political storm and eventually, the resignations of CEOs at Coutts and its UK-listed parent, NatWest Group. There have been other cases where people in the public eye, or related to those who are, struggled with obtaining bank accounts.

How should the financial sector approach this topic? Well, to those who might argue that banks should be able to "fire” unwanted clients in a free market economy, there’s the point that banking is not like other capitalist businesses. It is akin to the circulatory system of a body. That means if you are unable to open or keep a bank account, you are shut out of many areas. It is particularly important in de-banking a client to state the reason or reasons why to the client. And that’s the hard part, given reputational repercussions. Imagine telling a client that he or she has been de-banked because they support particular causes or work in industries such as defense.

Against this point it could be argued that there is a proliferation of bank models today, including several digital ones, so that even someone who is offloaded by a large bank can get an account somewhere else. Still, being frozen out carries reputational costs. If a person is de-banked, that can count against them in other walks of life. Word gets around, particularly in this digital age. If states try to push for single digital IDs, then if a person is de-banked by firm A, it could put off firm B, then a person could also end up on the banking equivalent of a “no-fly list.” And throw AI into the mix, and there's potential trouble.

This debate also highlights how embedded banking, even in a capitalist system such as the US, now is in the machinery of the state. Banks aren’t just under the regulatory scrutiny of the SEC and OCC, for example, but they’re also under the eagle eye, or should be, of the Fed in its role of protecting financial stability. Bank bailouts, as the cases of Silicon Valley Bank and others in 2023 remind us, mean that taxpayers will be upset if the banks being rescued de-bank them for holding unpopular views. 

Recent stories show how the failure to tread carefully with the regulatory codebook can be painful, even if there is no obvious identifiable “victim”. Last week, the US Department of the Treasury imposed penalties totaling more than $1.21 billion on Bank of America for violations of anti-money laundering and sanctions laws. 

One final point is the ever-present theme of AI, as mentioned above. As banks’ regtech systems evolve and AI is used in KYC reviews and so on, there’s also the risk that a person could be de-banked by a machine. There will demands for a human being to legally sign such de-banking off. With de-banking, there is very much a need, surely, for humans who work in banks to stay “in the loop."