For years, some Americans have lived with the uneasy possibility that their access to banking could be revoked, not for breaking the law but for holding the wrong politics. That practice—known as debanking—has quietly expanded the power of unelected regulators, turning banks into tools for political control. But a new executive order from the Trump administration promises to shut the door on abuse by barring regulators from using vague standards such as “reputational risk” to justify cutting lawful customers off from their own money.
The order strikes at the heart of a system long tilted toward bureaucratic discretion. Current law requires that banks manage risk, verify their customers, and help prevent financial crimes such as money laundering, human trafficking, and terrorism financing. But regulators have stretched those mandates far beyond their purpose, using them not only to pursue criminals but to police thought and punish what Orwell once called “wrongthink.” Their tool of choice has been the “suspicious activity report” (SAR), a notice filed whenever a transaction looks questionable. Worse still, these reports are hidden from account holders, leaving customers in the dark and unable to contest the suspicion.
The penalties for resisting federal direction are severe. In 2024, TD Bank faced a whopping $3 billion penalty for “BSA and AML compliance failures.” The result is a climate of fear in which financial institutions are coerced to protect themselves from this retribution by severing relationships with businesses and individuals, sometimes without explanation, simply to comply with the demands of federal regulators.
History shows this pattern is no accident. Victims have often been deliberately targeted. In 2014, congressional investigators revealed “Operation Choke Point,” a directive from the Obama administration’s Department of Justice to pressure banks into blacklisting lawful industries such as firearms and payday lending. Nearly a decade later, critics charge that “Operation Choke Point 2.0” has targeted the cryptocurrency sector, once again using financial oversight as a political weapon. What was once sold as risk management has evolved into an end-run around democratic accountability, leaving those impacted with few places to turn.
Debanking reaches beyond individual livelihoods or specific industries. It strikes at the very foundation of American freedom. Citizens can be stripped of financial access not because they broke the law, but because regulators—or the president—disapproved of their activities. In a nation built on open markets and equal rights, that is an intolerable inversion of principle.
The recent executive order represents a positive new precedent for everyone, whether left, right, or center. Banking should not be used as a weapon against political enemies by whichever party happens to occupy the White House.
To further protect Americans’ financial freedom, Congress should modernize anti–money laundering laws. These reforms should refocus enforcement efforts on true financial crime while safeguarding the innocent banking activity of law-abiding citizens. Greater transparency and accountability are needed to ensure oversight does not turn bureaucrats into gatekeepers deciding who can and cannot bank. By restoring balance, lawmakers can preserve both the integrity of the financial system and the right of every citizen to access it without risking ideological persecution.
Taylor Walker is the State Affairs Associate at the Goldwater Institute.
