Beyond Debanking: Unravelling the Future Implications

Long gone are the days in the UK when we could confidently assume that anyone who wished to have a bank account could do so. Lately, anything from following controversial political opinions to affiliating with the wrong kind of groups to making ‘anti-woke’ statements online can become grounds for financial isolation.

But what exactly transpires when one finds themselves shut off from their bank account, a phenomenon that’s come to be known as ‘debanking’, or being ‘debanked’? TechRound investigates the harmful repercussions that can come from this experience.

TechRound’s Founder and Editor-in-Chief discussed this recently on GB News – see below.

The Debanking Phenomenon

As reported by TechRound earlier this year, several people, spanning from high-profile celebrities to non-famous individuals, reported having their bank accounts closed for behaviour not related to their monetary movements.

While the suspension of social media accounts for various reasons was a more common occurrence (a topic for another discussion), concerns escalated when news emerged about the widespread global closure of bank accounts.

Notable financial institutions such as Tide, Wise, PayPal, JPMorgan Chase and Lloyds Bank faced accusations of ‘debanking’ individuals without any apparent breach of financial regulations.

To partially explain this, unlike other things we are entitled to, there is no longer an inherent ‘right’ to a bank account. So, legally speaking, debanking occupies a grey area as banks may close an account at their own discretion.

However, it’s generally assumed that such closures would be a result of individuals violating a bank’s financial regulations, which would be a legitimate reason for account closure.

The issue at hand is that banks are increasingly closing accounts for non-financial and arguably unjustifiable reasons, raising questions about where society should draw the line regarding consequences for controversial views and statements.

Even banks seem split on the matter, with some institutions asserting that this falls within their jurisdiction and others openly expressing their disagreement with the practice.

When Banks Close Their Doors: The Debanking Story

Numerous individuals, especially those with a public platform, have shared their encounters with debanking. By delving into these experiences, we can uncover the core of the debanking narrative.

While not the inaugural report of debanking (this practice can be found throughout the past decade) one of the earliest and most notable stories involved Andrew Tate, a social media influencer and former kickboxing champion, who gained global attention primarily due to his contentious viewpoints.

Tate swiftly earned a reputation for his professed extreme misogyny and has subsequently faced allegations related to rape, human trafficking, and the sexual exploitation of women.

In an interview with Patrick Bet-David for Valuetainment, Tate explained his experience of being debanked: “Every single one of them just goes, no, delete, delete, delete, delete, delete…UK-based banks as well, high street banks, but I can name Santander, HSBC, Barclays etc, send some letters to close accounts. They take all your banking to take your payment processing.”

Tate’s controversial views and actions led to his arrest in December of the last year. However, his account of being debanked introduced what would soon become the typical experience of debanking:

Often there is no prior warning or explanation that your account will be closed, with minimal to no explanation or support afterwards on the reason for this action and how to proceed. It has become common for banks to adopt a bandwagon attitude of moving within a hard mentality. In other words, if one bank shuts you off, you can probably expect others to soon follow suit.

Nigel Farage, former leader of the United Kingdom Independence Party, reported on GBNews in July: “Coutts had closed my business and my personal accounts and had not given any reason whatsoever.”

Mr Farage continued to make headlines when he revealed that, following his rejection by Coutts, no fewer than ten banks turned down his account application.

The former UKIP leader later acquired dossiers indicating his account was shut by Coutts because it had found his public statements did “not align” with its values.

Once again, we witness banks closing accounts with vague or minimal explanations, with these closures occurring in the absence of apparent financial rule violations, little to no post-closure support, and a trend of multiple banks following suit by closing their doors to the account holder.

It’s the same old story.

In another incident, London-based e-money institution Wise suspended the account of a member of CitizenGO, the pro-life Christian group, citing a violation of its “Acceptable Use Policy.”

In September 2022, PayPal also made headlines for shutting down the accounts of the Free Speech Union, a British organisation advocating for freedom of speech.

Adam Edwards also reported on the financial website MoneyMagpie: “The practice of banks closing people’s accounts has become widespread in North America”

“[This] made global headlines after Canadian banks closed the accounts of ordinary men and women who donated money to anti-lockdown protesters fighting vaccine mandates in the Canadian truckers’ convoy.”

Enough examples have surfaced for us to get a good idea of the experience people go through when they are debanked due to their political opinions and personal beliefs.

This narrative brings us to two questions: It can (and arguably should) be argued that something must be done to prevent the circulation and incitement of hate and violence, but surely banks are overstepping their mark in this regard. Is this effectively a war on free speech waged by financial institutions?

And secondly, what happens at the end of this story?

If you’re debanked the obvious repercussion is that your account will be closed and your financial freedom will diminish, it being practically impossible to operate without access to a bank account. But what wider effects ricochet from the debanking practice?

Debanked? What Happens Next

Our society now pushes individuals from being account holders to outcasts: so, what’s next?

For a debanked business or individual, there can be severe consequences. They may struggle to receive income or funds from customers, face challenges in handling transactions, and encounter difficulties meeting financial obligations like paying employees and bills.

But, for individuals and businesses subjected to debanking, the ramifications go beyond the immediate financial inconveniences.

Puts Data at Risk

Spiked journalist Molly Kinglsey has referred to the debanking practice as “Big Tech’s war on free speech”. What is alluded to here is that the other treasure trove banks have access to in our digital age: our data.

In today’s predominantly online banking environment, financial institutions can access everything from transactional data to behavioural insights, creating a detailed profile of individuals or businesses.

The concern is that this data, including the reasons for debanking, might be shared with other financial institutions. This may cause one financial ostracisation to become systemic and impact our ability to open accounts or secure loans elsewhere.

This could explain why the debanking phenomenon often follows a bandwagon effect, where one bank’s actions prompt others to follow suit.

Damaging Attitudes and Trust

As debanking expands beyond a few fringe cases that have occurred within the last decade, we may anticipate a rise in lawsuits and regulatory measures aimed at tackling this distinctively modern form of discrimination.

The idea that banks are scrutinising personal data for comprehensive assessments and possibly sharing it will understandably damage the trust between individuals and banks.

Moreover, it might discourage people from considering opening accounts with banks that have garnered attention in the news for debanking individuals, such as Coutts.

High-Net-Worth Individuals (HNWIs)

While everyone faces some level of risk, HNWIs affiliated with political, social, and personal views that a bank considers unacceptable have more reason to be concerned.

For HNWIs, potential consequences include diminished access to competitive financial products, hesitancy from investors, and increased scrutiny from regulators and tax authorities. Nigel Farage’s situation serves as evidence supporting the notion that safeguarding one’s financial reputation is as crucial to wealth as managing tangible assets.

The connection between personal wealth and professional reputation is inseparable. Failures in ethical and transparent financial management, whether intentional or inadvertent, can lead to a significant loss of personal and professional esteem.

Perceived improprieties can thrust a highly regarded individual into a headwind of inquiries and declining public opinion.

Thwarting Business and Trade

Startups, crucial drivers of economic innovation and growth, may hesitate to establish themselves in environments where there’s a perceived risk of debanking, such as the UK.

The clear stance taken by banks on this issue can create an unwelcoming atmosphere for entrepreneurs, discouraging them from launching new ventures.

This apprehension has the potential to impede the establishment and growth of businesses, disrupting day-to-day operations and potentially thwarting international trade.

The Perfect Climate for Financial Crime

Granting institutions the flexibility to establish their debanking policies creates a greater possibility of differences in interpretation and judgment. This lack of standardised criteria can result in inconsistencies in how debanking decisions are made, potentially leading to unfair practices.

Debanking, as a practice, promotes a lack of transparency, plunging us into an obscure and perplexing state. Banks operating in this murky environment create conditions that are ripe for unjust financial activities to flourish.

The absence of clear standards and guidelines can turn the financial landscape into a breeding ground for opaque transactions and questionable financial movements. This not only undermines the integrity of the financial system but also hinders efforts to combat illicit financial activities effectively.