In an attempt to mock former President Donald Trump, the writers of Saturday Night Live made fun of his use of the term “de-bank” during a campaign rally. However, for many people who have experienced their financial accounts being frozen or shut down, de-banking is no laughing matter.
The issue came to light when Trump stated at a New Hampshire event that he would not allow banks and regulators to close people’s accounts, a practice commonly referred to as de-banking. In response, Colin Jost of Saturday Night Live made a joke about not understanding the term and suggested that Trump might need medical attention. While the audience found it funny, many Americans did not share the same sentiment.
Unfortunately, being removed from the financial system is a real problem faced by many Americans. In 2023, The New York Times highlighted several stories of individuals in the United States whose bank accounts were closed without any explanation. One customer described the experience as feeling like a criminal and expressed the need for an explanation.
Cryptocurrency users are also familiar with the issue of de-banking. Nic Carter of Castle Island Ventures referred to it as “Operation Choke Point 2.0” in early 2023, explaining that the U.S. government was using the banking sector to crack down on the crypto industry. Government officials were pressuring banks to cut ties with cryptocurrency users, leading to the closure of cryptocurrency services.
While Saturday Night Live may have found the term de-banking amusing, it is not a topic commonly discussed among the general public. The financial surveillance under the Bank Secrecy Act regime in the United States is rarely brought up in popular discourse, partially because it is designed to be discreet.
The targeted nature of financial controls makes them difficult to observe in action. Unlike instances of police brutality, which quickly spread across social media, the impact of financial controls is felt when victims are notified by their banks that they no longer have access to their finances.
Howard Anglin, former deputy chief of staff for Canadian Prime Minister Stephen Harper, pointed out that the anonymous nature of financial enforcement makes sweeping repression hard to detect. In 2022, Canadian Prime Minister Justin Trudeau froze the bank accounts of hundreds of protestors, highlighting the challenges of monitoring such actions.
Furthermore, U.S. law prohibits individuals from knowing when banks report their information to the federal government. The process is confidential, leaving customers in the dark, even if their concerns are the reason behind their account closure.
Complicating matters further, being the subject of a report or a closed account does not mean that someone is a criminal. Banks file suspicious activity reports for reasons such as suspicions about the source of funds, transactions below $10,000, and transactions with no apparent economic purpose.
Recently, South Carolina Senator Tim Scott expressed concerns about the Financial Crimes Enforcement Network (FinCEN) urging private financial institutions to surveil customers’ transaction-level data using politically charged search terms. These concerns do not provide concrete evidence of wrongdoing.
It is important to note that banks may have valid reasons for closing accounts, such as inactivity, violations of terms and conditions, frequent overdrafts, or restructuring. In these cases, banks should be free to act within the law. However, if de-banking is motivated by political pressures and compliance costs, it underscores the urgent need for financial privacy reform in the United States.
While Trump may have coined his fair share of terms, de-banking is not one of them. It is a real issue that affects individuals’ financial stability and privacy.