U.S. Banking Regulator Warns Wall Street on ‘Debanking,’ Claims Practices ‘Unlawful’

President Donald Trump’s drive against U.S. debanking of controversial industries, such as digital assets, has led to a new report from the Office of the Comptroller of the Currency that further confirms the past practice and warns of potential punishment for the banks allegedly involved.

The OCC is directing banks to heed President Donald Trump’s executive order issued in August that called for a halt to debanking and to punish those who’ve unfairly severed legal customers from the banking system. Trump’s order had demanded regulators probe for firms under their supervision that are guilty of debanking and go after them, “including levying fines, issuing consent decrees or imposing other disciplinary measures against any financial institution subject to the jurisdiction of such Federal banking regulator.”

In the brief OCC report examining nine of the largest U.S. national banks, the OCC concluded that “between 2020 and 2023, the banks maintained public and nonpublic policies restricting certain industry sectors’ access to banking services, including by requiring escalated reviews and approvals before providing access to financial services.” It said that some of the big banks erected more difficult entries for controversial or environmentally sensitive businesses, or on activity that was contrary to the bank’s own values.

The banks — including financial giants JPMorgan Chase & Co., Bank of America and Citrigroup Inc. — are highlighted with links to their own past public policies, especially on environmental issues.

“The OCC intends to hold these banks accountable for any unlawful debanking activities, including by making referrals to the attorney general,” the report said, though it’s unclear what specific laws the activity may have violated. While Trump’s earlier executive order cited laws governing unfair competition in commerce, the first among them exempts banks. It also cited a law against unfair consumer practices.

But the report didn’t make such citations, and an OCC spokesperson didn’t respond to a CoinDesk request for information on how legal breaches could be forwarded for prosecution.

At the very end of Trump’s previous term, the OCC under his watch had quickly finalized a rule that would have compelled banks to measure any prospective customer on measurable risk factors rather than rejecting whole categories of business, such as firearms makers, adult entertainment, payday lenders, coal mines or crypto firms. But it was shoved aside at the start of the administration of former President Joe Biden, leaving the question open.

Instead, this report referenced OCC bulletins, the agency’s work to strike “reputational risk” as a consideration in supervising financial institutions and Trump’s order. The presidential order isn’t, itself, a law, but was a directive from Trump to his administration’s regulators, not the banks directly.

Though Republican lawmakers and conservative groups have pushed for a backlash against the kind of debanking that crypto businesses and their executives have decried, the OCC’s report didn’t take enough responsibility to please everybody.

“While the OCC broke down cases of debanking, it failed to mention some of the most well-known causes of debanking,” said Cato Institute Policy Analyst Nicholas Anthony, in a statement. “The report criticizes banks for severing ties with controversial clients, but it fails to mention that regulators explicitly assess banks on their reputation.”

Last week, Republicans in the House of Representatives released a report implicating U.S. banking regulators in the debanking saga of recent years.

Read More: Top U.S. Banking Regulator Gould Says Crypto Debanking ‘Is Real’