President Donald Trump has signed an executive order requiring banks and federal regulators to take a closer look at the citizenship status of customers, expanding the administration's immigration enforcement efforts into the financial sector.
The order instructs regulators and government departments to assess whether individuals without legal immigration status are opening bank accounts, taking out loans, or obtaining credit cards, according to the Associated Press. It frames the issue as a financial stability concern, arguing that lending to individuals who could be deported may create credit risks if debts go unpaid following removal from the country.
The directive stops short of requiring banks to collect citizenship or immigration status from all customers, a step that had been considered in earlier drafts but faced pushback from the banking industry over compliance costs and administrative burden, according to Reuters.
The order builds on a series of recent policy moves by the administration that link immigration enforcement with financial oversight. Treasury Secretary Scott Bessent has previously argued that banks should apply stricter "know your customer" rules, questioning how institutions can assess risk without understanding a client's legal status, the AP report said.
Industry groups had been lobbying against proposals that would have required mandatory collection of citizenship information, warning that such a system would create heavy compliance costs and additional paperwork for financial institutions. Banking representatives argued that existing account-opening procedures already include identity verification requirements under anti-money laundering and fraud prevention rules, according to Bloomberg coverage.
The executive order also references concerns that lending exposure could increase if borrowers without legal status were deported, potentially affecting repayment of mortgages, credit cards, and other loans. A prior analysis cited in the AP report noted that borrowers using Individual Taxpayer Identification Numbers or ITINs, have limited access to mortgages, with lenders already cautious about extending credit in such cases.
The financial industry's exposure to undocumented borrowers is difficult to quantify, as banks generally do not collect citizenship or immigration status when opening accounts, leaving no comprehensive data on the scale of lending or account ownership among undocumented residents.
Immigration advocates have warned in past policy debates that requiring citizenship verification for banking services could discourage some individuals from using formal financial systems, potentially increasing reliance on cash-based transactions. However, the current order focuses on regulatory assessment rather than imposing direct requirements on banks to collect additional personal data.
