Financial institutions used to close customer accounts or refuse to open customers’ accounts based on subjective reasons such as:

• Mitigating risks related to regulatory compliance
• Money laundering
• Fraud
• Terror financing
• Operational risks
• Religious or political views
• Avoiding reputational damage to the bank
• High-risk or politically sensitive industries

In 2011, federal regulators began issuing informal guidance encouraging banks to consider these subjective standards. This practice gave regulators great latitude to be biased against certain industries which they considered to be too risky and to warn banks against doing business with them.

Banks are heavily regulated and can only operate when in good standing with the regulators. Banking regulators are more than a strong influence on bank operations. They can direct and control bank activities.

President Trump’s August 7, 2025, Executive Order, “Guaranteeing Fair Banking for All Americans” (EO 14331), requires banks to ensure that decisions to restrict or terminate accounts (debanking) are based on individualized, documented, objective, and risk-based criteria, rather than political or religious beliefs.

Key Details of the Executive Order and Implementation

• Purpose: To eliminate “politicized or unlawful debanking” by financial institutions
• Requirements: Financial institutions must base decisions on documented, objective, and risk-based analyses
• Regulatory Actions: Federal regulators (OCC, FDIC, Fed, NCUA, CFPB) are instructed to review institution policies, take remedial action (fines, consent decrees) against those engaging in illegal debanking, and remove “reputational risk” as a justification for terminating accounts
• Scope: Protects against discrimination based on political views, religious beliefs, or lawful business activities
• Enforcement: The OCC (Office of the Comptroller of the Currency) announced actions to enforce this order, including reviewing bank performance under the Community Reinvestment Act (CRA)

Legislative Efforts

Congress passed the Ensuring Fair Access to Banking Act to further solidify these requirements into federal law. This law places restrictions on certain banks, credit unions, and payment card networks if they refuse to do business with a person who complies with the law. Restrictions on financial institutions for violations include prohibiting the use of electronic funds transfer systems and lending programs, termination of an institution’s depository insurance, and specified civil penalties. It establishes the right for a person to bring a civil action for a violation of this bill.

Government officials used to encourage banks to debank customers primarily to mitigate perceived risks related to money laundering, terrorism financing, and fraud. Using initiatives like “Operation Chokepoint” and “Know Your Customer” (KYC) rules, regulators have pushed banks to close accounts for high-risk or politically disfavored industries (such as gun manufacturers, crypto, and energy companies) under the guise of “reputational risk”.

Neither the Constitution nor any Congressional statute grant powers to the regulators to decide which lawful businesses deserve access to banking services. If you have been the victim of debanking, please consult the lawyers at Corporate Securities Legal LLP to review your rights and protect your financial reputation.

On Thursday, December 27, 2018 the Securities and Exchange Commissionbegan operation within its plan during a federal government shutdown. They say they have “staff available to respond to emergency situations involving market integrity and investor protection.” That meansthat out of the 4,426 active staff employees of the SEC, 175 will be retained to protect life or property, 110 of them, who are engaged in law enforcement, will continue working, and only one employee will be working part time on investor protection.The SEC”will be available to answer questions about fee calculations for filings during the partial shutdown, but they will not respond to other questions.”

The Investment Adviser Registration Depository system will continue to accept filings but the Division of Investment Management will not be available to provide advice. Certain SEC systems, which are contracted out to third parties, will remain in operation, including EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system that allows companies to electronically file initial public offerings and other crucial documents. The shutdown will have no impact on those services, but with the SEC not responding to those filings, it could cause a delay in several IPOs, as well as a lasting impact on the state of the IPO market in 2019.Smaller businesses, particularly those in need of an infusion of capital to continue operating, will bear the brunt of any IPO delays.

These limited and curtailed services will affect different investors in different ways, depending on their needs and objectives. The most critical harm to all investors could be that the SEC will only retain a few staff employees to review complaints from investors, but they will not be in a position to respond to those complaints, questions, or requests for information.

Market Watch reports that If the shutdown were to continue for a prolonged period, companies could end up with financial statements that have gone stale. That means they have reached a point where the quarterly financials included have become so old that the issuer needs to provide numbers for the subsequent quarter. Those numbers need to be audited to be included in a prospectus, creating another potential holdup.

However, the weak stock market in late 2018 and early 2019 signals that investors are being cautious, which may force new IPOs to devalue their prices.Also, the delay in IPO approvals may be a blessing for some IPOs, because, as the stock market strengthens, going into spring, the values may increase.

Navigating the securities markets can be difficult and confusing for those who do not work in it constantly. Without available help from the SEC, it can be more of a challenge.Fortunately, the law office of Wilson, Bradshaw & Cao will not be shutdown, but will be available to assist investors and business owners with professional legal advice on the securities market.