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 US organisation that is responsible for overseeing this area. It scolded all nine banks it examined, although they weren’t penalised. 

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, putting people in difficulty for working in certain areas such as weapons, fossil fuels and tobacco. 

Across the Atlantic, prominent UK politician Nigel Farage was debanked 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 is the point that banking is not like other capitalist businesses. It is akin to the circulatory system of a body: 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 services have been withdrawn. And that is the hard part, given reputational issues. Imagine telling a client that he or she has been de-banked because they support particular causes or work in industries such as defence.

Against this point it could be argued that there is a. proliferation of bank models today, including several digital ones, so that even someone offloaded by a large bank can get an account somewhere else. Still, being frozen out carries reputational costs. If a person is de-banked, it 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, he or she could struggle to move to firm B, ending up on the banking equivalent of a “no-fly list.” And throw AI into the mix, and there is potential for big trouble.

This debate also highlights how embedded banking now is in the state system, even in a capitalist system such as the US. Banks aren’t just under the regulatory scrutiny of the SEC and OCC, for example, but they are also under the eagle eye, or should be, of the Federal Reserve in its role of protecting financial stability. Imagine the annoyance if, say, a bailed out bank such as Silicon Valley Bank later de-banked clients who were also taxpayers. (First Citizens Bancshares later bought most of SVB in 2023.)

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 totalling 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 is also the risk that a person might be de-banked by a machine. There will be demands for a human being to legally sign off such de-banking. With de-banking, there is very much a need, surely, for humans who work in banks to stay “in the loop."