South Carolina has banned large financial institutions in the state from engaging in “debanking” amid allegations that some large banks have cut off financial services to individuals and organizations based on their political and religious beliefs.
South Carolina Republican Gov. Henry McMaster signed House Bill 5538, also known as the Guarantee Banking Act, into law Tuesday. The measure passed without opposition in the Republican-controlled South Carolina House of Representatives. Only two members of the Republican-controlled South Carolina Senate voted against it.
The legislation is scheduled to take effect at the start of the new year and prohibits financial institutions from taking actions that “discriminate in the provision of financial services to a person.”
It defines discrimination as “taking an adverse action against a customer” based on the customer’s “exercise of religion that is protected by the First Amendment to the United States Constitution, federal law, or the Constitution or laws of this state, including all aspects of religious observance and practice, as well as belief and affiliation.”
The law also defines discrimination as taking adverse action against a customer based on the customer’s “speech, expression, opinions, expressive activity, or association that is protected by the First Amendment to the United States Constitution, federal law, or the Constitution or laws of this State, including the lawful preservation of privacy regarding those activities, such as declining to disclose contributions or political activity beyond what is required by applicable state and federal law.”
Banks with more than $100 billion in total assets, as well as credit card companies and payment processing platforms, are subject to the new law. Examples of prohibited adverse actions include closing checking and savings accounts or terminating access to money transfers, loans and credit cards.
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