Dear customer

The late Russian dissident Alexei Navalny said in 2020 that the Russian government had blocked and emptied his family’s bank account. In 2023, the Russian director Yevgenia Berkovich and the playwright Svetlana Petriychuk were arrested on seemingly bogus charges, after which authorities permitted them only to withdraw 10,000 rubles per month. Also last year, the Russian Supreme Court labeled the “international LGBT movement” as “extremist,” meaning Russian authorities can now freeze the bank accounts of anyone suspected of belonging to it.

It’s perhaps not a matter of great surprise that people living in autocracies would experience having their bank accounts closed for political reasons. In recent years, however, there’ve been a number of high-profile cases of people living in advanced democracies claiming effectively the same thing has happened to them. In 2022, for instance, the Canadian government invoked emergency laws to freeze the bank accounts of hundreds of people linked to protests against Covid-19 vaccine mandates.

In the United Kingdom, Coutts & Co. closed the bank accounts of Nigel Farage, now the leader of populist-right party Reform UK and a member of Parliament, after it found that his values “do not align with the bank’s.” As Coutts elaborated, “At best he is seen as xenophobic and pandering to racists, and at worst, he is seen as xenophobic and racist.” It triggered a wide-ranging scandal: The bank’s CEO resigned while parliament tasked regulators with looking into the matter. Their finding? That there was no evidence any bank reported they had closed bank accounts “primarily due to someone’s political views”—but that they would need to make further inquiries, particularly in more opaque “reputational” cases.

In the United States, Melania Trump said she and her son Barron had their accounts frozen shortly after the Capitol Hill riot on January 6, 2021. Several organizations sending humanitarian aid to Gaza have had their bank accounts closed, as financial institutions have managed the risks of sanctions compliance. And in late November, the investor Marc Andreessen triggered a national controversy when he claimed the Biden administration had been cutting off tech executives from their bank accounts because of their political views. How common is all this?

Victoria Barnes is a reader of commercial law at Queen’s University Belfast. Barnes says, much more common than it used to be. But that’s generally not because banks have become the agents of governments—or otherwise more political as such themselves. It’s because they’ve always put a premium on managing their reputations—since they compete for the same customers with more or less the same services, they rely heavily on their reputations for advantage—and in an age of social media and partisan polarization, customers’ political views and involvements have increasingly integral to how banks look at reputational risk …

Gustav Jönsson: How does debanking work, to start with?