JPMorgan Chase under investigation for ‘debanking’
“My View” host Lara Trump discusses the alleged “debanking” scandal involving JPMorgan Chase, describing how conservative individuals and organizations, including her family, were targeted for political views.
There have been recent reports that the Trump administration is considering an executive order or Treasury Department action requiring banks to collect customers’ citizenship information. This may include collecting documents such as passports for existing customers, not just new account holders. That is not ‘tightening the rules’. It’s a major expansion of federal data collection that will raise costs for banks and customers, reduce access to basic banking services and throw more operations into the shadows.
The intention may be to tackle illegal immigration and strengthen enforcement, but this approach treats banks as a substitute for a functioning immigration system. Washington’s struggle to consistently enforce immigration policy does not justify shifting the burden to financial institutions and law-abiding Americans. Expanding government reach into private financial relationships is not a solution to immigration failures. Improving immigration policy is. Shifting enforcement costs to the banks is just another way for politicians to pass the blame and hide the price tag.
Banks already operate under serious identity verification mandates. The Federal Customer Identification Program requirements under 31 CFR 1020.220 require banks to collect identifying information and use risk-based procedures to verify identity so that they can form a “reasonable belief” that they know the customer’s true identity. Identity verification is already the law. This proposal adds a new, separate layer: citizenship classification at scale.
That means unforeseen costs imposed on people who are already following the law. Banks will need new systems, new staff training, new suppliers, new audits and new processes for handling exceptions for customers who cannot immediately meet the new requirements. Compliance costs do not remain with the bank. They are reflected in higher costs, fewer cheap accounts and poorer service.
It also means more friction just to participate in the modern economy. A “citizenship information” mandate would make it harder for people to open accounts and could impose extensive new documentation requirements on existing customers. Simply put, this is a regulatory landmine. When regulators increase penalties for doing it wrong, banks are forced to become more conservative about who they can serve, and at higher costs.
That’s how debanking gets worse. President Trump’s executive order – Guaranteeing Fair Banking for All Americans – sought to address the root cause of this problem by reducing government regulatory overreach that has led to the closure of accounts at financial institutions across the country. A new nationwide citizenship data mandate would only reinforce the same dynamic that forces banks to close accounts rather than risk encountering compliance failures.
Now the privacy issue. This proposal would require financial institutions to collect and transmit large amounts of highly sensitive personal information. The larger the data set, the larger the goal. More collection and more transfer create more points of failure, along with greater risk of breach, internal abuse and mission creep. Once the federal government builds the pipeline, it will not be limited to its original justification.
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Conservatives have for years opposed government interference in personal financial matters, including mandates that force private disclosure to the government. The battle over beneficial ownership reporting under the Corporate Transparency Act is a recent example of how quickly “anti-crime” justifications spiral into a broad surveillance architecture. Requiring banks to collect citizenship information on hundreds of millions of customers would be an even broader expansion of federal data collection than what small businesses have been told to accept.
And the burden will not be evenly distributed. Many Americans do not have passports or easy access to formal documentation. The Washington Post reports that about half the population does not have a passport, and banking industry experts warn that this requirement could limit access to financial services and push people toward more expensive options. Seniors, rural residents and people with lower incomes are at the greatest risk of getting into trouble. For rural communities, the challenge is greater because documentation offices and support services are further away and more difficult to reach.
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That leads to the most self-defeating outcome of all: forcing people out of traditional banking. When compliance barriers increase, people don’t stop earning, spending and saving. They walk through the system. This means more activities that cost a lot of money and more informal transactions, making financial crime more difficult to detect and reducing transparency. This is why heavy-handed financial mandates often backfire. They can drive legitimate activity away from institutions where patterns can be monitored and into channels where law enforcement sees less, not more.
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This is not an argument for weak enforcement of existing legislation. It is an argument for doing enforcement the right way, using targeted tools that target bad actors, and not by building an ever-expanding registry through the banking system that swallows up everyone else. Banks exist to secure deposits and allocate capital, not to become a nationwide citizenship checkpoint.
If Washington wants a safer and more lawful system, it must start with policies that increase compliance where it matters and reduce compliance burdens where it does not. This proposal does the opposite: it punishes those who play by the rules, expands the government’s reach, and makes the system less transparent by pushing people away from it.
