On August 7, 2025, President Donald Trump signed an executive order aimed at prohibiting financial institutions from denying or restricting services based on political beliefs, religious beliefs, or lawful business activities. The move is in response to recent calls for protections against debanking, when a bank refuses to provide financial services because of the political or religious beliefs held by the customer or business that is denied service. According to the executive order, “banking decisions must solely be made on the basis of individualized, objective, and risk-based analyses.”
The order issues several directives targeted at the federal banking agencies, Small Business Administration, and the U.S. Department of the Treasury, which are outlined below.
Under the order, the federal banking regulators must make all attempts to remove “reputation risk” and equivalent concepts from their guidance, examination manuals, and other materials within 180 days of the order date. This is consistent with the regulatory agencies taking proactive steps to eliminate reputational risk from their examination manuals earlier this year. Furthermore, existing regulations that potentially give rise to politicized or unlawful debanking are called to be amended or rescinded. Despite the removal of references to reputation risk, institutions are expected to remain diligent in adhering to prudent risk management practices across the organization.
The order also instructs the federal banking regulators to review financial institutions for past or current policies encouraging politicized or unlawful debanking and to take enforcement action, including fines, consent orders, and other supervisory action. Additionally, the federal banking regulators must review supervisory and complaint data for instances of unlawful debanking on the basis of religion and refer such cases to the Attorney General.
The Small Business Administration (SBA) has 60 days from the order date to notify all institutions for which it guarantees loans to identify and reinstate customers denied service through a politicized or unlawful debanking action. Financial institutions then have 120 days from the order date to identify and reinstate previous or potential customers denied services or access to payment processing under SBA section 7(a) and provide an accompanying reinstatement notice.
The Secretary of the Treasury, in consultation with the Assistant to the President for Economic Policy, are called to develop a comprehensive strategy debanking activities, which could include developing laws and regulations. The federal banking agencies are expected to move quickly to fulfill the requirements of this executive order and examinations could begin in short order.
Final Thoughts
Institutions should be prepared for examination or audit of credit and payment policies and procedures to ensure alignment with objective, apolitical standards. Legal and compliance teams should review and verify policies and processes reflect apolitical, risk-based criteria. Banks may want to review the documentation of customers that have had their accounts closed or for whom services were denied to determine whether the documentation can withstand regulatory scrutiny. Furthermore, future training should reinforce these concepts. Employees should be clearly informed that decisions made during account opening and ongoing monitoring must be based solely on legitimate safety and soundness risks, specifically those related to Bank Secrecy Act (BSA) compliance or illegal activity. No consideration should be given to a customer’s industry, religious beliefs, or political affiliations. These factors must not influence risk ratings or account eligibility. It is critical that staff understand the legal, ethical, and reputational risks of incorporating such non-financial criteria into banking decisions.
Forvis Mazars is here to help you stay ahead. Our team is closely monitoring developments and stands ready to help you navigate this evolving regulatory landscape.