The Standing Rock Sioux, whose reservation is just downstream from the pipeline's crossing, fears a leak would pollute the tribe's drinking water. The tribe has led protests that drew hundreds and at times thousands of people who dubbed themselves "water protectors" to an encampment near the crossing.
Tribal members urged the Seattle council to send a broader message to oppose the pipeline and stand with indigenous people.
"You have been a city setting the example to the world and I look to you to do that now," Olivia One Feather, a member of the Standing Rock Sioux tribe, told the council. "When big cities such as this do the right thing, it sparks hope in the world."
Environmental activists across the country have called on a number of banks to stop financing the construction of the oil pipeline as well as on individuals to pull their money out of those banks.
Wells Fargo has said it is one of 17 involved in financing the pipeline and that it is obligated by carry out its credit agreement. The bank is providing $120 million of the $2.5 billion.
"While we are disappointed that the city has decided to end our 18-year relationship, we stand ready to support Seattle with its financial services needs in the future," said Tim Brown, Wells Fargo Middle Market Banking regional manager.
Wells Fargo manages more than $3 billion of Seattle's operating account, processing everything from payroll and vendor payments to revenues collected from city business taxes to city fines.
The legislation passed Tuesday calls out Wells Fargo for a number of enforcement orders issued against it in recent years. Regulators fined Wells Fargo $185 million after employees opened millions of customer accounts fraudulently to meet sales goals.
In the wake of that scandal, California and Illinois announced they would suspend some business relationships with the bank. Also in response, Seattle city officials last October ended negotiations with Wells Fargo over a $100-million bond deal for the city's electric utility.
Some who spoke Tuesday urged the council to look for a nonprofit bank, credit union or other financial institution that aligns with the city's social values when it seeks to replace Wells Fargo.