Questioning Bank Decisions

Mar 30, 2021

Why a bank accepts, or denies, to create a relationship with a company has become a question of considerable concern in the firearms industry. A growing number of companies are coming forward to tell their stories of either being denied service or having their services terminated by their financial services providers.

Yesterday I received more documents from companies that further show how several major banks are cutting ties with gun companies, although they’re doing their best to avoid using the word “gun” or “gun manufacturing” in their reasons for ending or denying relationships.

In one document, a company owner told the story of his company’s banking relationship being terminated by PNC Bank.

“On November 1 2020, I received a letter from PNC Bank advising us that we would be terminated as of November 30, 2020,” he wrote, “when I asked why, I got the answer ‘Our business no longer fits PNG’s business model.’ That was all my PNC Banking Relationship Advisor was told.”

“I tried,” he continued, “via email and conversations, but nothing more was ever forthcoming.”

That, he said, “was when I realized how touchy a topic this currently was.”

His company opened discussions with Chase Bank. Despite the fact they were a former customer, they were denied by the risk management department.

Discussions with TD Bank were going well, until they received a questionnaire asking about how “we track the customers of the dealers that we sell firearms to.”

“Realizing this was going nowhere,” he wrote, “we moved on.”

He moved on, but shared the questionnaire. The initial requirements for opening commercial accounts were standard: Tax ID, incorporation papers, signors information, legal addresses, and such.

Then came this notation:

“As I stated, Gun sales is a restricted industry for credit card processing. I will need the following information for TD Bank to consider reviewing your application for Merchant Services.”

It went on to outline requirements that included estimates of credit card volume, sales breakdowns by firearms, ammunition, services and peripherals, sales volumes for web, retail and wholesale..and then this:

“How are Web sales to Federally Licensed Dealers controlled?

- How do you validate dealers

- How do you verify who you are shipping to?

- How do you monitor the dealers?

- Do you have any systems in place to monitor who the dealers are selling to?”

Similar questions followed for web sales and retail. In both instances, PNC bank expected the company to monitor their customers, and their customers’ customers.

They found another bank, after recommendations from another firearms dealer.

Information we’ve received from other companies indicate the same kind of “restricted industry” treatment from a considerable number of banks. More than originally indicated in our “Behind Closed Doors” feature on Thursday, March 25.

Since then, we’ve received a “whitepaper” from PNC that discusses- at length- the idea of responsible investing (RI).

It includes a list of “ethically questionable” industries. Those include “alcohol, tobacco, casinos and gaming, and firearms, among others.

It also states clearly that “an all-encompassing definition” for responsible investing is “nearly futile” due to the desires of investors to proactively “support certain values or causes.”

Under that interpretation, “among others” could rapidly be expanded to cover any “disfavored” company or industry. Absent universally applied standards, there’s no way to determine if your business will be serviced - or fired by your service provider.

In 1964, Supreme Court Justice Potter Stewart was describing his standard for what constituted pornography in Jacobellis v. Ohio.

Like the rest of the Court, Stewart admitted he couldn’t precisely define what constituted “hard-core” pornography, writing: “I shall not today attempt further to define the kinds of material I understand to be embraced….but “I know it when I see it.” (Emphasis added)

Most overlook the fact that Justice Stewart, in fact, wasn’t copping out on his answer. He, in fact, had a better than average understanding of the difference between a dirty movie and hard-core pornography. His clerks called his definition the “Casablanca Test”.

As a naval officer in World War II and watch officer for his ship, Stewart had his men bring back locally produced pornography. He knew the difference between most of what came to the Court versus the hardest of hard core pornography, because he had seen it.

That, sadly, does not appear to be the case for the most decision makers in the banking industry. They appear to lack a baseline understanding of the existing regulations, federal laws and standards under which gun companies and gun sellers operate.

Rather than view “the gun industry” by those standards and then judge the associated risk, they are driven by public opinion or personal conviction. Recognizing the significant differences between the two is essential whether evaluating a business or maintaining business relationships which require mutual trust.

It’s difficult to trust your banker when you realize others have already walked away from long-established, fundamentally sound banking relationships.


If an organization you supported was being investigated and an officer of that organization was deposed, you wouldn’t think that unusual, would you? After all, depositions are a normal part of the fact-finding and case building steps of any investigation.

So what would you think if you learned that one of your organizations’ officers, when asked to verify his signature on a legal filing, plead the Fifth Amendment rather than answering?

Just asking.

As always, we’ll keep you posted.

— Jim Shepherd