As we move toward a cashless society, what happens to financial freedom when banks act as the gatekeepers?
Imagine waking up to find your bank account closed. No warning, no appeal, simply a notice that your access to the financial system has been revoked. Your debit card stops working, direct deposits bounce, and business partners start asking awkward questions. In a cashless, digital-first world, it is economic exile.
This is the reality behind debanking, the practice of financial institutions cutting individuals or organizations off from the banking system. Sometimes it unfolds quietly, driven by regulatory concerns including suspected money laundering. In more visible cases, it erupts into public controversy with politicians accusing banks of censorship, governments freezing protestors’ accounts, or controversial personalities fighting just to retain access to basic financial services.
Fundamentally, debanking is about power and incentives. Banks face intense pressure to minimize risk. Regulators increasingly wield the financial system as a tool of enforcement. And governments can now use banking infrastructure as a shortcut for implementing policy. Caught in the middle are the people (politicians, activists, and ordinary citizens) who come to realize that banking is not a neutral service, but a gatekeeping mechanism that determines who gets to participate in the economy, and who is excluded.
The following will unpack the mechanics and controversies of debanking. From headline-grabbing account closures and cartel money laundering to US legislation on fair access to banking.
US Executive Order Guaranteeing Fair Banking for All Americans
In the United States, the debate over debanking reached the Oval Office. President Donald Trump signed an executive order titled Guaranteeing Fair Banking for All Americans, a document which reframed access to financial services as a matter of civil rights.
“No American should be denied access to financial services because of their constitutionally or statutorily protected beliefs, affiliations, or political views.”
From Sec. 2. Policy, Guaranteeing Fair Banking for All Americans.
Although the statement may seem self-evident, it represented a departure from the traditional framework guiding banking decisions. Banks have long operated within a framework of risk and compliance, focused on assessing whether clients might launder money, finance terrorism, or expose the institution to regulatory penalties. However, this executive order reframed account closures as acts of censorship rather than neutral risk management but as acts of censorship.
It implies that if access to a checking account is linked to freedom of expression or ideology, then banking is no longer merely a commercial service, it has become a vehicle for political participation. The executive order signals that debanking has moved out of the quiet back offices of compliance and into the spotlight of American politics, where financial access is being weaponized along partisan lines.
When Banking Meets Politics: Case of Nigel Farage
The US executive order did not emerge in isolation. Across the Atlantic, a similar controversy unfolded in the City of London. In 2023, the British politician Nigel Farage revealed that his private bank, Coutts, had closed his account. The bank’s parent company, NatWest, initially offered him a standard account, only to later revoke it. When Farage attempted to move his business account elsewhere, he was rejected by seven other banks.
Officially, Coutts cited eligibility: Farage no longer met the minimum wealth requirement of £1 million. However, internal documents painted a different picture. Executives had evaluated his political views, public reputation, and the potential reputational risk of associating the brand with a controversial figure. What appeared at first to be routine client management increasingly looked like political debanking.
After months of public pressure, Farage reached a settlement in 2025, and NatWest issued a formal apology. Yet the case left a lasting impression. When banking access depends on assessments of reputation or ideology, it reveals just how much discretionary power banks hold. For someone as high-profile as Farage, public backlash forced transparency. For ordinary clients without media platforms or political influence, the gates can close just as suddenly, without apology or recourse. The Farage affair echoed Trump’s executive order in spirit. Both framed financial exclusion as a matter of politics rather than compliance.
Politically Exposed Persons and the Cost of Compliance
The case of Nigel Farage’s account closure may seem exceptional, but to bankers these types of decisions fall into a well-defined category known as PEPs, or Politically Exposed Persons. Under anti–money laundering (AML) and counter–terrorist financing (CTF) rules, politicians, their families, and close associates are automatically classified as high-risk. The assumption is not that they are guilty of misconduct, but that proximity to power makes them magnets for corruption.
In many cases, that assumption is not unfounded. Power and access frequently become conduits for profit, sometimes illegally. Recently, a Florida man made hundreds of thousands trading on confidential information passed to him by a close family member in a senior employee role. Shared casually during a July 4th gathering, the tip concerned an undisclosed partnership and investment from Google. The defendant acted quickly, purchasing call options the next trading day and encouraging relatives to do the same. He later pleaded guilty, one of several insider trading convictions that year involving private relationships and privileged access.
These are simply the cases that get caught. For compliance officers, scenarios like these define how risk is calculated. Every client presents a balance of risk and reward. Although a PEP might offer prestige or deposits, they also carry the risk of media scrutiny, regulatory investigations, and multi-million-dollar fines if oversight is judged too lax. More often than not, the safer option is to close the account.
This is where incentives distort outcomes. Banks are not rewarded for nuance, they are punished for mistakes. A risk-averse compliance officer gains nothing by retaining a controversial client. However, they could face career-ending consequences if that client becomes tomorrow’s headline. In such a system, declining the business quietly is often the most rational choice, regardless of whether the individual has broken any law. What began as a rule for politicians spread outward. Dissidents, activists, charities working in conflict zones, and companies in legally gray industries can all find themselves labeled “too risky.” In this sense, debanking is not always ideological or targeted. It is a systemic result of a framework where the incentives make exclusion safer than inclusion.
US Politicians Bipartisan Outcry
The incentives behind debanking (safer to exclude than include) did not remain hidden for long. In the US, the political class began to feel the effects themselves. At the World Economic Forum in Davos, President Donald Trump publicly confronted Bank of America’s CEO Brian Moynihan and JPMorgan’s Jamie Dimon, accusing their banks of shutting out conservatives. What might have once been the silent work of compliance officers was transformed into political theater on a global stage.
The criticism is not limited to the right. Senator Elizabeth Warren, hardly a Trump ally, told the Senate Banking Committee that her staff had identified thousands of debanking complaints over just three years. The majority concentrated among the country’s largest banks. Her conclusion was that “Donald Trump was onto a real problem when he criticized Bank of America for its debanking practices.”
“I’ve led my colleagues in fighting back against debanking, including passing legislation to end the subjective use of ‘reputational risk’ in bank supervision. I am glad to see today’s [Executive Order] which will ensure that no regulator, and no bank, is above the principles of fairness and market access.”
Comment by Tim Scott, Chair of the Senate Committee on Banking.
In an era when American politics agrees on very little, this has been an unexpected convergence. Both left and right recognize that denial of financial access has become a weaponized form of control. Yet the bipartisan concern revealed the paradox at the heart of debanking. Banks exclude clients to protect themselves from reputational damage and regulatory penalties. In doing so, they invite accusations of censorship. Instead of acting as neutral intermediaries, they appear to be gatekeepers of political legitimacy.
In other words, debanking transforms risk management into politics, and politics into risk. The very incentives designed to keep banks out of controversy are now dragging them into the spotlight.
Debanking as Digital Censorship
The controversy did not stop at politicians or their bank accounts. The same incentives spilled into the digital economy, where payment networks and platforms quietly began to act like moderators of speech. For example, the payment processors Visa and Mastercard have refused to handle transactions for certain video games they deemed inappropriate. Disputes with gaming platforms such as Steam reveal how entire categories of legal digital content can be effectively removed. This was the outcome of financial intermediaries unilaterally deciding the content was unacceptable. Their decisions were often driven by vague concerns about “brand risk” or speculative legal liability, not by any actual violation of the law.
In this case, activist groups flagged specific game titles, resulting in payment processors to pressure gaming platforms to remove not just those titles, but entire genres of similar content. Steam later confirm that they were forced to change their content policies after payment processors threatened to terminate their relationship with the entire platform if the flagged games remained available. Faced with the risk of losing access to quasi-monopolistic payment networks, platforms have little choice but to comply.
Under these circumstances, the financial intermediary or bank is no longer simply a financial institution. It becomes a gatekeeper of expression, deciding what types of commerce, culture, or even entertainment is allowed to exist. The pattern mirrors that of social media companies moderating online speech, but in this case, the stakes are even higher. When a post is removed from one platform, it can often be shared on another. On the other hand, when access to payment systems is cut off, the activity often can not continue at all.
In fact, PayPal has even suspended processing transactions for Steam in certain countries. This recent act is consistent with the company history of taking ideological stances on who it chooses to serve. Similarly, the crowdfunding platform Patreon has repeatedly blocked fundraising for specific campaigns, leading to the emergence of niche competitors designed for the audiences and creators excluded from mainstream platforms.
At this point, the line between compliance and censorship blurs. Financial institutions are incentivized to avoid controversy, but their decisions end up shaping what society is able to buy, sell, and support. What began as a compliance officer’s checklist increasingly resembles a moral filter for the digital marketplace.
Soft on Crime, Hard on You
If politicians and protestors can be excluded from the financial system for being deemed “too risky,” one might assume the same level of scrutiny stops organized crime in its tracks. In reality, the picture is far more complex. Criminal networks, from drug cartels to human traffickers, have long exploited the banking system, laundering illicit funds into legitimate institutions. As the book Narconomics [1] makes clear, laundering money through mainstream institutions is often the final and most important step in transforming crime into legitimate profit.
Recent US actions illustrate how deeply rooted the problem remains. In June 2025, the Financial Crimes Enforcement Network (FinCEN) issued orders to prohibit American financial institutions from transacting with three Mexican financial institutions: CIBanco, Intercam Banco, and Vector Casa de Bolsa. The orders were issued after linking these financial institutions to fentanyl trafficking. They ban wire transfers, ACH payments, and even transactions in digital currencies. The legal basis was the FEND Off Fentanyl Act of 2024, which expanded regulatory power to cut off cartel financing at its source.
Yet here lies the double standard. While regulators issue blanket bans on entire institutions, ordinary clients (politicians, activists, or small businesses) can be debanked over far less. Criminal enterprises hide behind layers of legitimacy and know how to disguise themselves as legitimate customers. Profiting from volume, banks may lack the incentive to probe too deeply. Meanwhile, under pressure to avoid liability and lacking incentives to properly assess the nuance, compliance officers find it easier to close smaller accounts preemptively than assess individual circumstances.
The system often punishes the small and visible, while the large and sophisticated find ways to adapt. Debanking may create the appearance of vigilance, but its underlying incentives may lead to abandon nuanced risk assessment in favor of broad, indiscriminate exclusion.
Governments as the Debankers
The clearest indication that debanking has moved beyond corporate risk management came in Canada in early 2022. As trucker convoys brought Ottawa to a standstill in protest of COVID-19 mandates, Prime Minister Justin Trudeau invoked the Emergencies Act for the first time in Canadian history. Under its authority, banks were ordered to freeze the personal and business accounts of protestors, block crowdfunding donations, and deny access to credit. All without court orders. Powers originally designed for countering terrorism and organized crime were suddenly redirected at civil protest.
For many observers, this marked a turning point. The financial system was no longer a neutral utility, it had become an extension of state authority. Private financial institutions traditionally focused on reputational and regulatory risk were now enforcing political decisions. In these circumstances, incentives shift from measured risk assessment to unquestioning obedience, blurring the line between private institutions and state power.
Is Banking an Essential Service?
As societies transition toward cashless economies, the consequences of debanking become more severe. Sweden is expected to become nearly cashless within the next few years. In Norway, a central bank report found that only two percent of people used cash during their most recent in-person purchase, with most people now opting for cards or mobile payments instead. Once the ultimate fallback, physical cash is now disappearing. Losing access to a bank account is now a form of economic erasure.
This shift has renewed debates over whether banking should be treated as an essential utility, such as electricity or clean water. In the US, lawmakers have proposed the Fair Access to Banking Act (S.401), which would require banks to provide clear, impartial, risk-based justifications when denying services. Supporters argue that it would prevent financial institutions from quietly excluding politically unpopular individuals or industries. Critics warn that forcing banks to serve all clients could strip them of discretion and expose them to regulatory or reputational risk.
The question is especially relevant now that financial institutions are more deeply embedded in the public infrastructure. For example, since 2008 JPMorgan Chase has served as the exclusive immigration lockbox provider for US Citizenship and Immigration Services, handling millions of immigration applications and payments every year. Moreover, the same bank announced in 2023 that it has been designated by the US Treasury Department to provide account validation services for federal government agencies. These arrangements worth tens of millions, illustrate how private banks are increasingly responsible for delivering essential government services. Therefore, the outstanding question becomes:
In a digital-first economy, is banking a private service or a public right?
Lessons and Broader Incentives
Why do banks debank? The incentives are perfectly aligned. Regulators impose severe penalties for failures in anti-money laundering or counter-terrorism compliance, making it far safer to cut ties with high-risk clients than to scrutinize them. Reputational pressure also plays a role as no bank wants to make headlines for serving a controversial figure. When the client is small, the potential profit rarely outweighs the compliance burden. From the bank’s perspective, the cost-benefit analysis almost always favors exclusion.
Governments in developed nations have come to see financial denial as faster and more effective than legal action. Freezing an account instantly deprives targets of the ability to operate, protest, or even retain legal counsel. No law needs to be passed, no court ruling obtained. However, the same efficiency that makes debanking so appealing also makes it dangerous. The tools designed to disrupt cartels or sanctioned groups can just as easily be turned against lawful activists, blacklisted businesses, or cultural movements on the fringe. Considering banking is both infrastructure and leverage, once it is weaponized, the line between protecting society and suppressing it becomes dangerously thin.
Who Holds the Keys to the Financial Gates?
In an increasingly digital economy, losing access to banking has become a form of exclusion from society. Without a bank account, wages ca not be received, rent ca not be paid, and even the smallest transactions become unmanageable. Acting on risk and reputation, financial institutions protect themselves by shutting out those considered problematic. Governments, armed with regulatory power, extend that logic to suppress dissents and enforce compliance. Caught in the middle are individuals left without recourse as financial systems outpace their legal safeguards.
The question remains, that if money is the bloodstream of modern society, then access to it must be understood either as a universal right, or as a privilege granted and revoked at the discretion of private gatekeepers. That distinction will determine not only who is included or excluded, but who ultimately holds power in the modern economy.
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Reference
- Wainwright, Tom. Narconomics: How to Run a Drug Cartel. PublicAffairs, 2016.
