In the absence of active enforcement by federal banking regulators, many financial institutions are choosing this moment to take a second look at their compliance policies and procedures. Recent administrative actions implicating access to financial services may particularly require financial institutions to reevaluate their Consumer Due Diligence (CDD) procedures and Consumer Identification Program (CIP).

Since taking office, the Trump administration has significantly curtailed the CFPB’s rulemaking and enforcement activity. Recently, Congress and federal courts have been grappling with what that means for CFPB employees and the rules the CFPB has enacted and enforces. On April 9, 2025, the United States House of Representatives voted to pass a joint resolution disapproving a CFPB rule that would make certain large payment companies subject to Regulations E and Z. The same day, the Court of Appeals for the D.C. Circuit heard oral arguments to resolve a TRO that would maintain the existence of the CFPB as it stood before the administration change. What does this mean for you and your clients? 

On March 6, 2025, Senate Banking Committee Chairman Senator Tim Scott (R-SC) introduced the FIRM Act, a bill that would prohibit financial regulators from considering reputational risk as a factor in their assessment of financial depository institutions. On April 8, Congressmen Andy Barr (R-KY) and Ritchie Torres (D-NY) introduced a companion bill to the House of Representatives. The bills are a response to bipartisan concern about improper “debanking,” the practice of banks shutting down accounts of or refusing services to high-risk customers. While banks have broad discretion over customer accounts, some policymakers believe that banks have unfairly restricted access to financial services for certain groups and industries out of concern about their associated reputational risk.