Debanking Under Fire

Why regulators, banks, and customers are zeroing in on bank account closures — and how AI can prevent discrimination before it starts.

"Debanking" refers to the practice of financial institutions closing accounts, refusing services, or altering service terms for customers — at times without giving a full explanation — because the bank believes the customer poses some kind of risk. That risk might be regulatory, reputational, or tied to specific business activities; in other cases, it might be because the customer’s views or activities are seen as controversial or at odds with perceived institutional values, according to a nonpartisan analysis by the Congressional Research Service.

Concerns about debanking aren’t new. They date back to the 2008 financial crisis, when regulators created rules to discourage banks from lending to businesses viewed as high risk.

Recent Stories: Bank of America & Regulatory Action

What has brought debanking under fire? One current flashpoint: Bank of America has come under scrutiny for a rule in its code of conduct that allowed account closures based on religious "viewpoint." Bank of America closed a Tennessee minister’s church and charity accounts in 2023 under a policy against servicing small-business customers operating abroad. It became a flashpoint for critics, who have argued the closures reflected bias, while the bank said the closures were tied to business-type restrictions and compliance requirements, not religion, according to the Wall Street Journal. Under public pressure, Bank of America is reported to have revised its code in late June 2025 to include language forbidding discrimination based on religious viewpoint in account-closing decisions, according to the New York Post.

This comes in the context of a sweeping new executive order signed last month, Guaranteeing Fair Banking for All Americans, which directs federal banking regulators to investigate institutions for politicized or unlawful debanking. The order requires banks to stop using "reputational risk" as a reason to limit banking services and mandates reviews of past practices. Regulators are charged with enforcing this, including possible fines or other disciplinary actions.

The Stakes & Who’s Affected

Debanking doesn’t just affect high-profile political figures. It can hit small nonprofits, religious organizations, and even individuals like the minister, when their accounts fall into categories that banks deem high risk, such as overseas business operations or debt collection. Some banks avoid cryptocurrency customers, citing the industry as high-risk, unregulated, and lacking accountability. Others have pulled back from coal mining, pointing to long-term business risks as demand declines. Critics argue that the lack of transparency — banks not disclosing reasons for account closures, for example — compounds the harm, according to a recent online post at the Cato Institute, a libertarian think tank.

The upshot is that the regulatory climate is shifting. Laws and guidance are being examined or rewritten. Concepts like reputational risk are now under close scrutiny; vague or subjective risk metrics may no longer carry the same weight.

How HarmCheck Can Help

That’s where technologies such as HarmCheck come in. Our AI-driven solution is designed to identify discriminatory or harmful language in written statements and communications — including those that might be used to justify account closures or alterations in service. Because HarmCheck is trained to detect discrimination against all protected groups, including white communities and rural populations, it can help institutions ensure they aren’t unintentionally engaging in explicit discriminatory banking, lending, housing, or workplace practices.

Using HarmCheck, financial institutions can proactively scan policies and internal documentation to uncover possible bias before regulators or litigants do. In this environment, that’s not just good for compliance — it’s essential for maintaining trust and avoiding costly enforcement.

Bottom Line

Debanking is no longer a distant concern — it’s a live issue, with significant regulatory momentum behind it in the wake of the new executive order. For financial institutions, staying ahead of this requires more than good intentions. It requires practical tools like HarmCheck to detect and eliminate discriminatory risk now.

Book a free demo of HarmCheck today: http://harmcheck.ai/demo

Julian Guthrie is the CEO and founder of Alphy.

HarmCheck by Alphy is an AI communication compliance solution that detects and flags language that is harmful, unlawful, and unethical in digital communication. Alphy was founded to reduce the risk of litigation from harmful and discriminatory communication.