The global divide on 'de-banking': US, UK, and EU approaches to risk

The Growing Issue of De-Banking and Its Global Implications

Imagine waking up one morning and trying to access your bank account, only to find that everything is frozen—your cards don’t work, standing orders have stopped, and your savings are inaccessible. A brief message appears: “We are closing your account. Please make alternative arrangements.” This scenario isn’t rare anymore. Across the globe, more individuals and businesses are being “de-banked,” meaning they are cut off from basic banking services.

This practice, known in the financial industry as “de-risking,” involves banks cutting ties with clients or entire sectors to avoid regulatory or reputational risks. While it may seem like a niche compliance issue, de-banking sits at the crossroads of financial crime prevention, political rights, trade flows, and everyday access to money. Different countries approach this issue in unique ways, with the United States, the United Kingdom, and the European Union each taking distinct stances.

The US Approach: Concerns Over 'Woke Capitalism'

In the United States, concerns over de-banking have taken on a political tone. Earlier this year, President Donald Trump signed an executive order aimed at preventing banks from denying services based on political or religious beliefs. The order prohibits the use of “reputational risk” as a justification for closing accounts and directs regulators to review banking practices within 180 days.

Supporters argue that the move protects freedom of political expression and prevents discrimination against conservatives, who claim they have been disproportionately targeted. Critics, however, warn that this could force banks to continue serving clients engaged in activities that pose real financial crime or security risks.

Trump’s interest in this issue stems from personal experiences. He accused JPMorgan Chase and Bank of America of refusing his business after his first term as president due to his conservative views. He claimed JPMorgan gave him 20 days to close his account, while Bank of America refused a large deposit. Both banks have denied any politically motivated actions.

Another high-profile case involved the National Council for Religious Freedom (NCRF), an organization that supports politicians who combine politics with religion and oppose bills like the Equality Act. When NCRF's accounts at JPMorgan Chase were suspended, the bank stated the closure was due to incomplete compliance documentation—not political reasons. However, the group used the incident to criticize “woke capitalism” and push for policies that focus solely on quantifiable risks.

The new executive order has created challenges for banks, requiring them to review past account closures, document decisions more thoroughly, and possibly reinstate customers they previously cut off.

The UK Perspective: Farage, Coutts, and Public Outrage

In the UK, the debate around de-banking was intensified by the 2023 Nigel Farage–Coutts affair. When the high-end bank closed the Brexit campaigner’s account, internal documents revealed that political views played a role in the decision. The controversy led to government promises to increase transparency.

From a compliance and commercial standpoint, Coutts’ decision may have been within standard risk management practices. Farage, as a Politically Exposed Person (PEP), requires enhanced due diligence under anti-money laundering rules. This includes detailed checks on sources of wealth, transaction monitoring, and ongoing assessments for potential links to corruption or financial crime.

However, reports suggested that Farage’s account had fallen below Coutts’ minimum financial thresholds for certain services. When a client no longer meets profitability benchmarks but still demands high levels of compliance oversight, a private bank may choose to part ways.

Despite this, the incident dominated headlines and influenced de-banking policy in the UK. In 2024, complaints to the Financial Ombudsman Service about account closures rose 44%, with a higher proportion upheld in favor of consumers. Over 140,000 business accounts were closed in 2023, raising concerns for small businesses and non-profits.

Since then, UK banks must provide at least 90 days’ notice before closing an account and offer more detail on the reasons for termination. However, the conversation remains focused on high-profile, politically sensitive cases rather than the broader economic implications of de-risking.

The EU Approach: Technical Challenges and High Stakes

In contrast, the European Union has treated de-risking as a long-standing, largely technical policy challenge. For years, EU institutions have issued guidance to ensure financial inclusion while enforcing anti-money laundering and counter-terrorism financing (AML/CFT) rules.

Roger Kaiser, Head of Tax & Compliance at the European Banking Federation, explained that EU banks face a difficult balance. They must comply with strict AML/CFT requirements, which often means ending relationships with high-risk clients, while also ensuring access to banking services for legitimate customers.

According to the EBF, most European banks focus on individual, case-by-case de-risking, paying particular attention to red flags such as unverified identities or unclear beneficial ownership. Banks must weigh whether the risks can be mitigated enough to comply with regulations and protect their reputation, and whether managing those risks would be worth the time, money, and effort.

“In the EU, de-risking is increasingly recognized as a significant consumer issue, though it is neither a new concern nor one that fully mirrors the priorities of the Trump administration,” Kaiser said. “For years, EU institutions have issued guidance aimed at safeguarding financial inclusion and ensuring that legitimate customers are not unfairly excluded from the banking system.”