The #RacistBanksMustFall movement in South Africa has urged urgent legislative reforms following the announcement of a new US executive order that seeks to ban banks from closing accounts based on political or religious views.

As reported by Business Report, the group praised the decision by US President Donald Trump to address what is known as “debanking” – a practice where banks withdraw services from individuals or organisations for ideological reasons. The executive order, expected to be signed soon, directs US regulators to discard the “reputational risk” clause often used to justify such closures. Trump alleges that institutions like JPMorgan and Bank of America discriminated against him and his supporters.

Debanking, broadly defined, refers to banks refusing services to customers for a variety of reasons. In the US, there is no legal right to a bank account, and banks often cite regulatory or compliance concerns.

In an interview with CNBC, Trump accused major lenders of rejecting his deposits post-presidency, asserting: “They told me, ‘I’m sorry sir, we can’t have you. You have 20 days to get out’.”

In South Africa, the debate around debanking has intensified, with local institutions, particularly Nedbank, under scrutiny. Nedbank’s 2023 annual report revealed the closure of nearly 200 accounts, a move critics claim disproportionately affects politically vocal individuals and businesses.

One of the most high-profile cases involves the Sekunjalo Group, which argues that its account closures are politically driven attempts to silence dissent.

#RacistBanksMustFall campaign leader Crown Prince Adil Nchabeleng said South African banks are guilty of similar discriminatory practices. He cited the example of businessman and media mogul Dr Iqbal Survé, whose companies have had accounts closed over perceived “reputational risk” linked to his political influence and media ownership.

Nchabeleng called Trump’s executive order a “positive development” and urged South Africa to implement similar safeguards. “For long now, the banks have been doing as they wish,” he said.

He further alleged that banks are targeting politically inconvenient individuals and that this practice also impacts society’s most vulnerable.

“Local banks have unilaterally bankrupted families and auctioned off homes without sufficient cause,” said Nchabeleng, who believes the process violates constitutional protections for access to financial services.

He added: “It is high time the banking institution stops its discriminatory practices.”

Current South African regulations require banks to give notice and allow customers to respond before closing accounts. Legal precedent set in Bredenkamp v Standard Bank allows terminations on reputational grounds but has faced multiple legal challenges.

Cosatu parliamentary coordinator Matthew Parks weighed in, stating that in a globalised economy, access to banking is essential. “Consumers have the right to take any bank to court and many have done so and won,” he said. He also urged stronger support for the Banking and Consumer Ombudsman, especially for low-income citizens.

The Financial Sector Conduct Authority is developing the Conduct of Financial Institutions (COFI) Bill to establish fair account closure procedures. Parliament previously criticised the FSCA for its weak response to arbitrary account closures.

Meanwhile, the Zondo Commission’s final report recommended legislative changes to ensure that account closures follow fair procedures and give clients a chance to be heard.

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