House Bill 1597

AN ACT TO BE KNOWN AS THE GUARANTEEING FAIR BANKING FOR ALL MISSISSIPPIANS ACT; TO DECLARE THE PUBLIC POLICY OF THE STATE; TO URGE CONGRESS AND THE PRESIDENT TO STOP GOVERNMENT FROM WEAPONIZING FINANCIAL INSTITUTIONS; TO AMEND TITLE 81, MISSISSIPPI CODE OF 1972, TO CODIFY STANDARDS FOR FAIR ACCESS TO FINANCIAL SERVICES CONSISTENT WITH EXECUTIVE ORDER 14331; TO PROHIBIT STATE REGULATORS FROM COERCING FINANCIAL INSTITUTIONS INTO TERMINATING CUSTOMER ACCOUNTS BASED ON NONQUANTITATIVE FACTORS; TO REQUIRE THE DEPARTMENT OF BANKING AND CONSUMER FINANCE TO REVIEW AGENCY GUIDANCE; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. This act shall be known and may be cited as the "Guaranteeing Fair Banking for All Americans".

SECTION 2. (1) The Legislature finds that:

(a) President Donald Trump, through his August 7, 2025, Executive Order 14331, Guaranteeing Fair Banking for All Americans, and United States Senator Tim Scott, Chairman of the Senate Committee on Banking, Housing and Urban Affairs, and United States Representative French Hill, Chairman of the House Committee on Financial Services, are working to stop federal regulators from leveraging their authority to pressure banks to debank individuals and businesses;

(b) The complexity of federal laws and regulations and broad discretion of regulators have allowed federal regulators to weaponize banks for far too long;

(c) Banks are required by their regulators to manage risk, to know their customers, and to help detect and deter financial crimes, including money laundering, drug trafficking, human trafficking, and terrorism financing;

(d) Regulators require banks to file suspicious activity reports (SARs) if they suspect suspicious activity involving specific transactions and are prohibited from communicating this to customers;

(e) If examination findings indicate that a bank is not adequately managing risk, has not implemented an effective system to detect and deter financial crimes, or is not in compliance with regulations when closing accounts, the bank can face significant monetary penalties and costly lawsuits, and potentially criminal charges;

(f) The current regulatory environment has allowed federal regulators to put intense pressure on banks that can result in financial institutions managing risk by severing their relationships with businesses and individuals to minimize regulatory risks and costs;

(g) Examples of federal regulators taking advantage of this leverage include: Operation Choke Point in 2013, where several high-ranking bureaucrats attempted to pressure banks to stop doing business with ammunition and gun sellers, payday lenders, and other industries and Operation Choke Point 2.0 in 2022, and where the Federal Deposit Insurance Corporation (FDIC) sent letters to banks that called for a "pause" on bank-crypto activity;

(h) Federal banking agencies used reputational risk to limit access to lawful businesses and law-abiding citizens to financial services in 2018 when the Federal Deposit Insurance Corporation acknowledged that the agency used reputational risk reviews to limit access to financial services by certain industries, commonly known as "Operation Choke Point"; and

(i) Reputational risk has never been used as a risk category by the Department of Banking and Consumer Finance (DBCF) nor has DBCF utilized reputational risk to prevent financial institutions from providing access to financial services to lawful industries or law-abiding citizens.

(2) Although the above stated cases are instances of over-reach by federal regulatory agencies, the intent of this act by the Mississippi Legislature is to emphasize the commitment of the State of Mississippi to guaranteeing fair banking for all Mississippians.

(3) The Legislature therefore finds and declares it to be the public policy of this state that:

(a) Fair and equal access to financial services is essential for the economic viability of Mississippi citizens and businesses;

(b) No Mississippian should be denied access to financial services because of their constitutionally or statutorily protected beliefs, affiliations, or political views;

(c) It is the policy of the State of Mississippi to ensure that no Mississippian should be denied access to financial services because of their constitutionally or statutorily protected beliefs, affiliations, or political views, and to ensure that politicized or unlawful debanking is not used as a tool by regulators to inhibit such beliefs, affiliations, or political views;

(d) When federal regulatory agencies pressure banks to stop doing business with certain industries, it has a chilling effect that is ultimately a direct assault on free market capitalism, which created the most prosperous nation in history;

(e) Such inappropriate pressure by regulators undermines public trust in banking institutions and their regulators, discriminates against lawful businesses and law-abiding citizens, and weaponizes a politicized regulatory state;

(f) Banking decisions must be made solely on the basis of individualized, objective, and risk-based analyses, and Mississippi state-chartered banking institutions should continue to make decisions regarding access to services based solely on sound business reasoning;

(g) It is the purpose of this act to align Mississippi regulatory standards with the Federal Executive Order "Guaranteeing Fair Banking for All Americans," ensuring that state regulators do not encourage or direct the "debanking" of lawful industries or individuals; however, this act does not exempt banks from complying with applicable state and federal laws and regulations or any future executive orders where reputational risk categories are used as a measure of compliance.

(h) Given the use of reputational risk by federal banking agencies, the Legislature desires to affirmatively preclude the potential use of reputational risk to prohibit financial institutions in the State of Mississippi from providing access to financial services to lawful industries or law-abiding citizens in the future; and

(i) The State Legislature and the Governor of Mississippi urge Mississippi's members of the U.S. House of Representatives and U.S. Senators to modernize anti-money laundering (AML) laws to better focus banks and law enforcement on potential criminal activity rather than the normal banking activity of law-abiding customers, and to ensure that there be increased transparency and accountability for regulators and bank examiners to better balance legitimate concerns relating to AML while mitigating impacts to the ability of law-abiding citizens to access financial services.

SECTION 3. For the purposes of this act, the following words have the meanings as defined in this section:

(a) "Department" means the Mississippi Department of Banking and Consumer Finance (DBCF).

(b) "Commissioner" means the Commissioner of the Department of Banking & Consumer Finance.

(c) "Financial Institution" means any bank, trust company, savings bank, or other financial entity chartered or regulated under the laws of this State.

(d) "Quantitative Risk" means a measurable financial risk, including credit history, debt-to-income ratio, insufficient collateral; or regulatory compliance features including, but not limited to, Anti-Money Laundering (AML) or Know Your Customer (KYC) requirements.

(e) "Reputational Risk" means the potential that negative publicity or negative public opinion regarding a financial institution's business practices, whether true or not, will cause a decline in confidence in such institution or a decline in the customer base, costly litigation, or revenue reductions, or otherwise adversely impact the financial institution.

SECTION 4. (1) The Department, the Commissioner, and any examiner or employee thereof, shall not:

(a) Direct, pressure, or encourage a financial institution to terminate, restrict, or refuse service to a customer or group of customers based on "reputational risk" or any other nonquantitative factor, provided the customer is engaged in a lawful activity; or

(b) Discriminate against a financial institution during the examination process based on the political or religious affiliations of the institution's customers.

(2) Nothing in this act shall restrict the Department from enforcing applicable state or federal laws or regulations regarding safety and soundness, fraud prevention, terrorism financing, or money laundering, or other unlawful activities.

SECTION 5. (1) Within ninety (90) days of the effective date of this act, the Commissioner shall review all agency guidance, manuals and examination procedures.

(2) The Commissioner shall rescind or revise any guidance that requires financial institutions to deny service to industries or individuals based on subjective "reputational risk" rather than demonstrable financial safety and soundness concerns, fraud prevention, terrorism financing, money laundering, or other applicable state or federal laws.

(3) The Department shall ensure that its examination standards explicitly affirm that financial institutions are free to serve any customer engaged in lawful activity, consistent with ordinary principles of risk management, such that "reputational risk" will not be taken into consideration by the Department when examining and supervising a financial institution.

SECTION 6. Nothing in this act shall be construed to create a private right of action, a claim for damages, or a basis for civil liability against a financial institution, its officers, or its employees in any court of this State.

SECTION 7. The Secretary of State shall send copies of this act to each of Mississippi's members of the U.S. House of Representatives and U.S. Senate, as well as to appointed officials leading the Federal Reserve, the Office of the Comptroller of the Currency, and the FDIC.

SECTION 8. Nothing in this act shall be construed to impair or otherwise affect the authority granted by law to the Department, the Commissioner, and any examiner or employee thereof.

SECTION 9. This act shall take effect and be in force from and after July 1, 2026.