OffshoreCorpTalk

In 2025, small and medium-sized enterprises (SMEs) around the world are confronting a challenge that rarely makes headlines but has profound consequences: the gradual withdrawal of banks from their business. Accounts are being closed, transfers blocked, and entire industries quietly abandoned. This process, known as 'de-risking,' has shifted from being an obscure compliance strategy to a defining feature of the global financial system.

An analysis of online financial communities, including OffshoreCorpTalk, shows a dramatic rise in discussions between 2023 and 2025 about bank account closures and the search for alternatives. The experiences documented by small businesses, consultants, and freelancers illustrate how compliance-driven banking policies are reshaping the everyday realities of commerce.

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Figure 1: Growth in EMI vs. Bank Closure Mentions (2023–2025)

The Origins of De-Risking

The roots of today's crisis can be traced back to the global financial crisis of 2008. In its aftermath, regulators across the world imposed stringent measures designed to prevent a repeat of systemic failures. The Financial Action Task Force (FATF) expanded its global standards on anti-money laundering (AML) and counter-terrorist financing (CTF). Banks were required to implement more comprehensive due diligence, know-your-customer (KYC) checks, and transaction monitoring.

While these reforms strengthened oversight, they also introduced new costs. For multinational corporations, the burden was heavy but manageable. For SMEs and individuals, however, the equation was starkly different. The cost of compliance often outweighed the revenue generated by small accounts, making them unattractive clients in the eyes of major banks.

The term 'de-risking' emerged to describe this practice: institutions reducing their exposure to certain clients or regions, not necessarily because of proven misconduct, but because the compliance effort was deemed too great.

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Figure 2: Top EMI Providers Mentioned (2024–2025)

Human Costs and Business Realities

Behind the technical language of compliance are real-world stories of disruption. A European exporter with decades of history suddenly lost access to trade finance when its bank announced a restructuring of its compliance portfolio. A Latin American retailer reported delays of several months in receiving payments from international suppliers. A technology consultancy in Asia struggled to pay staff salaries after its account was unexpectedly terminated.

Freelancers and digital nomads face similar hurdles. Without stable banking, international clients hesitate to sign contracts, fearing that payments may not clear. Even retirees relocating abroad have found their pensions delayed when cross-border transfers are flagged for review.

These stories reveal that the impact of de-risking is not confined to a single sector or geography. It is a global phenomenon that undermines both economic activity and personal security.

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Figure 3: Reported Reasons for SME Account Closures (Sample)

Regional Perspectives

In Europe, SMEs tied to international trade report growing scrutiny of cross-border transactions. Portuguese exporters and British fintech firms alike have noted how even low-value transfers can trigger compliance reviews. In Africa, banks under pressure from international correspondent partners have cut ties with small local institutions, effectively isolating businesses from global markets. In Asia, particularly in emerging economies, de-risking has disrupted the ability of SMEs to participate in the digital economy.

This patchwork of exclusion means that SMEs in developing regions face a double challenge: already limited access to capital, compounded by the withdrawal of mainstream banking services.

The Rise of Fintech Substitutes

As traditional banks withdraw, fintech platforms and electronic money institutions (EMIs) are stepping in. They offer rapid onboarding, multi-currency wallets, and global reach. For many SMEs, EMIs have become indispensable lifelines.

Yet these substitutes have limitations. They often charge higher fees and may lack deposit insurance or central bank backing. Their stability depends on venture funding and market confidence rather than systemic guarantees. For SMEs with long-term obligations such as paying suppliers, managing payroll, or securing trade finance, this creates uncertainty.

Moreover, reliance on EMIs fragments the financial ecosystem. A company may need multiple EMI accounts to manage operations across jurisdictions, increasing administrative burden and transaction costs.

Systemic Risks and Economic Implications

The exclusion of SMEs from traditional banking channels has systemic implications. SMEs account for more than 90 percent of businesses worldwide and provide over half of global employment. Their marginalisation threatens innovation pipelines, supply chains, and economic resilience.

There is also a paradox at play. De-risking was intended to reduce global financial vulnerabilities. Yet by pushing SMEs into less regulated or informal channels, regulators may inadvertently create the very risks they sought to eliminate. Reports from online forums already indicate experimentation with peer-to-peer payments and decentralised finance solutions, raising questions about oversight and consumer protection.

Policy Debates and Reform Options

Policy debates now centre on how to reconcile regulatory objectives with financial inclusion. Proposals include:

1. Harmonised KYC frameworks: Streamlining requirements across jurisdictions to reduce duplication and cost.
2. Tiered compliance regimes: Allowing lower-risk clients simplified onboarding while maintaining scrutiny for higher-risk entities.
3. Public-private partnerships: Encouraging regulators to work with EMIs and fintechs to extend protections and stability.
4. Regional hubs: Creating specialised banking centres designed to support SMEs in sectors deemed low-risk.

So far, however, reforms have been piecemeal. Many SMEs continue to face uncertainty, caught between banks that do not want them and fintechs that cannot fully support them.

Conclusion

The de-risking dilemma illustrates how well-intentioned regulation can generate unintended consequences. Banks, under pressure to comply with complex global rules, are abandoning SMEs that form the backbone of the global economy. Fintechs and EMIs are filling the gap, but without equivalent protections or systemic stability.

Unless harmonised standards and inclusive frameworks are implemented, millions of businesses and individuals risk becoming collateral damage in the era of compliance-first banking. The consequences will reverberate far beyond balance sheets, shaping international trade, innovation, and social trust.

These findings, based on discussions from OffshoreCorpTalk between 2023 and 2025, provide a rare lens into this evolving landscape. They show not only the scale of the problem but also the urgency of reform if global finance is to remain accessible to those who depend on it most.