DEBANKING: A GLOBAL ISSUE, A SWISS PERSPECTIVE
Debanking first began reaching an international audience in 2023 as the British politician Nigel Farage revealed that his long-standing banker, had decided to abruptly close his accounts and show him the way out.
The decision was initially presented as commercially motivated, however, a subsequent subject access request shed light on the real reasons: an internal assessment perceived a misalignment between Farage’s public profile and the values of the institution. In other words, the reasons could be understood as being essentially political.
The episode triggered significant political and regulatory scrutiny in the UK, ultimately leading to high-level resignations and to a broader reflection on the boundaries of risk-based offboarding in modern banking.
But that case was not the only one to come into the public spotlight. In 2021, JPMorgan Chase reportedly terminated its relationship with Donald Trump who contends that the decision was driven by political or reputational considerations rather than individualised risk assessments, and filed a multibillion-dollar lawsuit in early 2026.
But even away from high profile cases, regulators have increasingly identified debanking or “de‑risking” as a structural issue.
The European Banking Authority has documented widespread de‑risking across member states, emphasising its potential to hinder financial inclusion, distort competition and undermine the effectiveness of AML/CFT supervision.[1]
In Asia, the Hong Kong Monetary Authority has repeatedly cautioned against blanket exit strategies, stressing that sound AML/CFT practice requires a proportionate, differentiated assessment rather than wholesale exclusion of entire client categories.[2]
“Debanking” has emerged as a recurring theme in international discourse. High profile cases such as the ones described above have created the perception that the phenomenon primarily targets politically exposed or controversial individuals. In practice, however, such cases represent only a narrow manifestation of a broader phenomenon.
In Switzerland, debanking has also lately become part of the banking landscape. This has been driven by an increase of compliance needs often rendering structures considered complex or otherwise risky, undesirable for Swiss banks. Blanket debanking has also been a part of the Swiss landscape in recent years based on criteria such as geographic location.
Further, trustees and other fiduciaries, or entities in emerging or regulated sectors such as digital assets, precious metals or certain advisory services often find themselves on the wrong side of internal risk balancing.
FATF and the World Bank have raised serious concerns regarding debanking especially when operated by segment or geographic origin. Financial exclusion not only obviously hurts businesses and the economy, but may also favour money laundering instead of working against it.[3]
COMPLEX STRUCTURING: SIMPLE IS BEAUTIFUL
Debanking (or no banking…) has become a risk to take into account when designing complex structures - an additional reason to strive for as much simplicity as possible.
Complexity in structure should remain minimal and have clear reasons to exist when it does, not only for reasons of cost or administrative hurdles.
Institutions must define indicators of increased risk, and regulation expressly cites the complexity of structures as a factor.[4] Where multiple domicile companies, trusts, fiduciary shareholders or opaque jurisdictions are used without a comprehensible economic rationale or for short-term asset placement purposes, higher risk classification follows as a result and the risk of the structure being “de-banked” increases.
The refusal to enter into a banking relationship is another problem that both new and existing structures should consider.
But, beyond, “simple” and “meaningful” structures, it is interesting to explore possible legal remedies in the Swiss landscape.
SWISS PRIVATE LAW: TIMING
The “mandate” contract dominates Swiss banking relationships. Its framework grants banks a broad degree of contractual autonomy to the bank in deciding whether to establish or maintain a client relationship.
On top, general conditions typically allow termination at any time, with or without cause and reserve immediate effect. Such general conditions also routinely specify the right to request documentation at any stage, to limit or suspend services where required documents are not forthcoming, or to decline products that do not align with their internal risk policies.
Importantly, Article 404 of the Swiss Code of Obligations emphasises that a mandate may be terminated at any time by either party. This is one of the shaping provisions of Swiss private law.
That said, even though termination remains possible, it may not take place at an “inopportune time”. This means such termination must always take into account circumstances that may be considered inappropriate in light of the counterparty’s legitimate interests.
While this notion does not restrict the right to terminate, it introduces a temporary remedy: if the time is inopportune and the bank is made aware of the circumstances, stalling the exit of the client will most often be the wisest choice.
Informed clients should aim to negotiate comfortable timeframes that may in theory extend to the moment when an alternative banking solution is found.
A DUTY TO CONTRACT?
Although contractual autonomy remains the base principle, it operates within a broader regulatory and market framework which includes the private law derived “duty to contract”.
According to Swiss case law, if one offers services publicly, those services fulfil everyday needs, alternatives are inexistent or hard to reach and no objective reason to refuse such services exists, then there is an obligation to contract.
In a world without debanking, these principles are hard to apply as if an alternative banking solution would always exist. However, paradoxically, in a context where debanking becomes the norm, especially for a certain category of clients, this principle would gain significant importance.
The burden of proof regarding the lack of alternatives is, in practice, a hard one to meet but the theory is there. Careful institutions will, from their side, base termination of relationships on concrete reasons instead of on considerations of risk that are abstract.
COMPETITION LAW: TOO BIG TO PLAY?
The angle may change again when the bank is so big that it is systemic and its size renders it uniquely able to render specific services.
Swiss competition law specifically provides that when a business enjoys a dominant position or a position of “relative market power” there are limitations in the way it may conduct itself if such actions, among others, consist of the “refusal to maintain commercial relations”. The idea behind the rule is precisely that a dominant actor may exclude parties from the market thus distorting it.
The above becomes important for services that in a given market, such as the Swiss, may be rendered predominantly by banks enjoying such a position given their size. Importantly, according to the Swiss Competition Commission, such services may consist of, among others, services of global custody, international payment services to big companies or companies with special needs, passive asset management, funds, fund creation, real estate funds or fund administration for single investor funds.[5]
It is interesting to note that the notion of “special needs” may include smaller specialised market actors such as trustees or commodity traders.
Practice may come to shape these concepts further should debanking gain further importance in the years to come.
OUR EXPERIENCE
Active on both sides of the spectrum, we see in practice the importance of maintaining an as immaculate as possible track record for clients. It is bad publicity or risky transactions that will often give rise to cases of debanking. Such flaws are more likely to compromise banking relationships even if the institution has not yet taken a decision to debank a segment it considers risky across the board. In such cases, swift and decisive action is necessary to address negative news and their presence in public databases, with recourse to judicial remedies where appropriate.
Simplification of unnecessarily complex, often legacy, structures is of the essence and will usually significantly reduce costs and administrative hurdles: complexity in structuring should serve specific purposes.
In recent litigation led by our Firm, in relation to a provisional injunction in the context of competition law, the satisfaction or not of the burden of proof regarding the lack of alternatives and even the dominant position or the relative market power, was again confirmed to be of the essence.
Appropriate time to find satisfactory banking alternatives where possible will often remain the compromise of choice between the parties.
[1] Opinion of the European Banking Authority on ‘de-risking’ of the 22nd January 2021 and Report on de-risking and its impact on access to financial services EBA/REP/2022/01.
[2] De-risking and Financial Inclusion circular of the 8th September 2016 of the Hong Kong Monetary Authority ; Access to banking services for corporate customers circular of the 27th April 2023 of the Hong Kong Monetary Authority.
[3] FATF; High-Level Synopsis of the Stocktake of the Unintended Consequences of the FATF Standards, 27th October 2021 ; World Bank Group, De-risking in the Financial Sector, 7th October 2016 ; World Bank Group, The Decline in Access to Correspondent Banking Services in Emerging Markets: Trends, Impacts, and Solutions, 2018.
[4] Art. 13 para. 2 let. h AMLO‑FINMA.
[5] Position statement by the Competition Commission pursuant to Article 10(3) of the Cartel Act and recommendations pursuant to Article 45(2) of the Cartel Act of the 25th September 2023, pages 163 and 164.
