Financial, regulatory, and reputational pressures are prompting many banks to debank certain groups of customers in large numbers, claimed a recent report published by UK’s All Party Parliamentary Group (APPG) on Fair Business Banking. Stating that “debanking is a blunt tool that is often neither effective nor fair”, the study suggested that access to banking facilities should be considered a fundamental right, rather than a discretionary service provision.

The phenomenon of debanking is “most clearly seen in knee-jerk responses to geopolitical events”, affecting members of the diaspora communities of states such as Somalia, Russia, and Iran, whose perceived risk profile rises with every conflict their home states have with the West. Other clients affected include cryptocurrency businesses, jewellers, and yacht brokers.

According to the report, three main factors commonly play into a bank’s decision in whether or not to debank a client: cost, reputation, and potential exposure to financial crime.

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Under cost, the first factor, groups with a perceived risk profile that is “outside the norm” carry extra costs for banks in the form of anti-money laundering checks, and ongoing due diligence and background checks. “set against a profit margin that is minimal at best”, these costs easily “push the relationship into the red for the bank”, wrote the report.

However, by offloading unwelcomed customers, the mainstream banking sector is “simply pushing them into areas that are unregulated and likely to foster risk rather than contain it”. Rejected customers often turn to alternative financial providers or the shadow banking sector.


Under the Financial Crime Thematic Review section of the Financial Conduct Authority’s (FCA) handbook, banks are encouraged to “consider their own reputation, the reputation of their customers, their staff and their industry as a whole, when assessing risk”.

The report argued that the problem with this approach is its subjectivity, pointing out that “an international bank with experience working in different cultures and geographies will have very different tolerances than that of a more parochial, national organisation”, and that “the regulator should not be encouraging banks to dive into such politically charged and stormy waters”.

Financial crime

As “the first line of defence against money launderers, terrorists and other national and international criminals”, “banks have an obligation to fight financial crime”, the report acknowledged. It cited figures from the FCA showing that the volume of customers debanked due to financial crime reasons surged 470 percent between 2018 and 2022.

The number, however, doesn’t tell the full story, wrote the paper. According to respondents surveyed in the study, “financial crime is being used as a fig leaf to cover up debanking that is being done for other reasons”, and that “the default position is to present every decision as one that is about financial crime”.