JPMorgan hints at why it shut down Trump’s bank accounts after getting smacked with a $5B lawsuit. Is ‘debanking’ against the law in America?

The firm was quick to respond, stating, in part, “we believe the suit has no merit … Our company does not close accounts for political or religious reasons (2).”

Although the brief press release published on JPMorgan’s website doesn’t elaborate on exactly why this working relationship was suspended, it does drop what may be a hint: “We do close accounts because they create legal or regulatory risk for the company.”

The framing could indicate that legal risk, rather than a political agenda, was the driving force behind the bank’s action. It also highlights how tightly regulated the financial services sector is and why freezing or suspending bank accounts is fairly common, even for ordinary customers.

Trump’s legal troubles

Trump’s entanglement with legal challenges dates back decades. In fact, the U.S. Department of Justice sued Trump and his father for racial discrimination in 1973 (3). Since then, the now-politician has faced and filed hundreds of lawsuits, many of which are currently active. As of February 2026, the Trump administration faces 228 active legal cases, according to Lawfare’s live tracker (4).

It’s perhaps easy to see why Trump would be considered a high-risk customer for a notoriously risk-averse industry.

Banks operate in a highly regulated environment where anti-money laundering (AML), know your customer (KYC) and customer due diligence (CDD) rules are among those that are core to compliance.

Financial institutions could face sanctions, fines or legal liability for failing to comply with these regulations, which creates “incentives for banks to file millions of Suspicious Activity Reports and, in some cases, designate customers as ‘high risk’ even if their actual likelihood of criminal activity is low,” according to the Bank Policy Institute (5).

Banks can also often be legally prohibited from disclosing the reasons for account closure to the customer, notes the BPI.

Simply put, closing a suspicious bank account without clarification is not only legal, but in some cases legally required. In fact, this could impact you, even if you’re a law-abiding customer.

Could your bank account be shut?

High-profile, multibillion-dollar cases grab headlines, but account closures can happen to anyone.

Even legal transactions can raise red flags. For instance, most banks won’t provide services to cannabis-related businesses although medical cannabis has been legalized in 47 states, according to the American Bankers Association (6). Crypto or large cash transactions could also raise red flags, according to the ABA Banking Journal (7).

Fraud victims could also see their accounts frozen because of suspicious activity (8).

To avoid sudden account closures, it’s important to keep a close eye on your account to detect and report any suspicious activity right away.

Keep all your details updated and make sure you’re not missing any repayments or pending charges.