Trump’s Executive Order on Depoliticizing Banking: Why MSBs Should Temper Expectations

On August 7, 2025, President Trump signed Executive Order 14135, “Guaranteeing Fair Banking for All Americans.” The order is framed as a sweeping response to concerns about “politicized” or “unlawful” debanking, directing federal regulators to prevent financial institutions from denying access to accounts and services based on a customer’s political or religious beliefs, or because of lawful business activities that a bank disfavored for non-risk reasons.

At first glance, the language may seem encouraging for industries such as Money Services Businesses (MSBs), which have long faced steep hurdles in securing and maintaining banking relationships. But as with many issues in financial regulation, the reality is more nuanced. While the Executive Order makes a strong policy statement, it is unlikely to meaningfully alter banks’ willingness to serve MSBs in the near term. The challenges that drive banks’ caution; compliance costs, risk appetite, regulatory scrutiny, and operational burdens, remain firmly in place.

This article explores what the Executive Order says, what it does not change, and why MSBs should avoid expecting a wave of new banking opportunities.

What the Executive Order Actually Says

Executive Order 14135 prohibits financial institutions from restricting access to services on the basis of politics, religion, or lawful business activities that the bank disfavors for non-risk reasons. It requires that decisions be based on “objective, risk-based, and individualized” analysis rather than vague concepts such as “reputation risk.”

The order directs regulators, including the OCC, FDIC, and Federal Reserve, to strip references to reputation risk from their manuals and guidance where such references could enable or justify politicized debanking. Regulators are also tasked with reviewing past and current policies that might have influenced banks to engage in politicized denials of service. If violations are found, agencies are authorized to take remedial actions.

In addition, the Small Business Administration must review lending practices, identify clients who were denied access to SBA-related services because of politicized debanking, and reinstate them where appropriate. The Department of the Treasury, in consultation with the National Economic Council, is charged with developing a government-wide strategy to prevent politicized debanking going forward.

The intent of the EO is straightforward: financial decisions should be made on risk, not politics or social pressure. But for MSBs, this does not resolve the fundamental barriers that have always existed.

Why MSBs Remain a Unique Challenge for Banks

The underlying problem is that banking MSBs is expensive, resource-intensive, and carries inherent risk exposure. Even if “political” considerations are taken off the table, the compliance framework surrounding MSBs does not change. Banks must still comply with the Bank Secrecy Act (BSA), Anti-Money Laundering (AML) rules, Office of Foreign Assets Control (OFAC) sanctions programs, and suspicious activity monitoring requirements.

MSBs, whether check cashers, money transmitters, or other non-bank financial service providers, often operate in areas that regulators already identify as higher risk. Their business models frequently involve large volumes of cash, cross-border transfers, or customers who may have limited identification or documentation. Each of these factors heightens the scrutiny a bank faces when taking on MSB clients.

The EO does not relieve a bank of these responsibilities. It does not reduce the filing burden for Currency Transaction Reports (CTRs) or Suspicious Activity Reports (SARs). It does not ease FinCEN’s expectation that banks apply enhanced due diligence (EDD) to MSB accounts. And it certainly does not reduce the liability banks face if an MSB client is later found to have facilitated money laundering or sanctions violations.

In short: the EO removes politics from the equation, but the compliance calculus remains.

The Cost of Compliance

A bank that chooses to serve MSBs must make significant investments in compliance infrastructure. These costs include:

• Hiring and training staff with expertise in MSB oversight.

• Implementing transaction monitoring tools capable of capturing unusual activity within high-volume datasets.

• Building out procedures for Know Your Customer (KYC) and ongoing customer due diligence.

• Conducting on-site visits and file reviews at MSBs to verify compliance.

• Managing periodic independent reviews and audits.

For large national banks with extensive compliance teams, these costs can be absorbed, though many still choose not to serve MSBs because of the reputational exposure. For small and mid-sized banks, the cost can be prohibitive, especially when the revenue generated from MSB accounts is relatively modest compared to the risk.

The EO does not subsidize or offset these costs. Nor does it create a safe harbor for banks that onboard MSBs in good faith. Banks remain fully accountable for any compliance failures, even if those failures originate at the MSB. As long as this imbalance exists, many institutions will continue to conclude that banking MSBs simply does not fit their risk profile.

The Role of “Reputation Risk”

One of the EO’s most high-profile directives is the elimination of “reputation risk” as a justification for debanking. For years, regulators have cited reputation risk as a factor in assessing banks’ exposure to MSBs and other industries.

Formally removing this concept may change the tone of examination manuals. But reputation risk is not going away in practice. Bank boards, auditors, and senior management cannot ignore the reality that publicized failures, even if rare, can do serious damage to a financial institution’s standing with customers, investors, and regulators. If a bank’s MSB client is linked to fraud or illicit activity, the consequences extend far beyond the immediate compliance issue.

Thus, while the EO narrows regulators’ ability to cite reputation risk, banks themselves will continue to factor it into their decision-making. The underlying concern remains intact.

Why This Won’t Open the Floodgates

Taken together, these realities suggest that the EO will have limited impact on MSB banking access:

• The risk profile of MSBs remains unchanged. Banks must still demonstrate to examiners that they understand and manage the risks inherent in MSB relationships.

• Compliance costs remain significant. Without financial incentives or safe harbors, many banks will not find it economically worthwhile to expand into MSB banking.

• Banks can justify denials on risk grounds. The EO prohibits denials based on politics, but not those based on documented risk assessments. That leaves a wide door open for banks to continue declining services to MSBs.

• Implementation takes time. Regulators have 180 days to revise manuals and processes, and banks will likely move cautiously until new supervisory expectations are clarified.

For MSBs, this means the status quo largely continues. The EO may prevent some clearly politicized denials, but it will not usher in a new era of easy access to banking.

What MSBs and Compliance Officers Should Do

Rather than waiting for regulatory changes to improve their situation, MSBs and compliance officers should focus on strengthening their own compliance posture. The best chance of securing stable banking relationships comes from demonstrating robust internal controls, transparency, and a willingness to work with banks on risk management.

That means maintaining up-to-date compliance manuals, conducting independent reviews, documenting due diligence on customers and transactions, and investing in systems that make monitoring more effective. MSBs that can show they operate at the same level of compliance rigor as their banking partners are far more likely to gain and keep access.

Consultants and third-party compliance experts can also play a critical role. By bringing a broader view of industry practices and regulatory expectations, they provide “another set of eyes” that banks value. Demonstrating that your MSB is guided by independent compliance expertise can make a meaningful difference in a bank’s decision to engage.

Conclusion

Executive Order 14135 represents a strong statement against politicized debanking. It directs regulators to remove subjective considerations like reputation risk from formal guidance and requires that decisions be based on objective, risk-based criteria.

But for MSBs, the challenges are not political, they are structural. The burden of compliance, the cost of oversight, and the inherent risks tied to cash-intensive and high-volume transactions remain in place. Banks will continue to make risk-based decisions, and for many, the equation still points away from broad MSB engagement.

MSBs should not see the EO as a breakthrough but rather as a reminder that the path to banking access lies in rigorous compliance, transparency, and partnership with institutions willing to make the investment.

To discuss how this Executive Order may affect your business and how ComplyCheck can help position you for stronger banking relationships, contact us today.