Trump Order to Require Banks to Collect Citizenship Info ‘In Process,’ Bessent Says. Here’s What to Know
Treasury Secretary Scott Bessent He said there is an Executive Order requiring banks to collect civics Quotation from customers is currently “in process”.
talk with Semaphore In an interview published Monday, Bessent said he did not believe such a requirement would be “unreasonable” because: Why don’t we have information about who is in our banking system? I have a place in the UK; They want to know who lives in each apartment. “So how do we know this isn’t part of a foreign terrorist organization?”
Asked for more information about the decision, a White House official told TIME: “The administration continues to explore ways to protect our banking system from unacceptable credit risks and ensure that banking services remain accessible and affordable for all Americans.”
The administration did not confirm details about what citizenship information the Executive Order requires banks to collect.
The impact of such a requirement could be widespread, potentially creating hurdles for the U.S. banking system, non-citizens, and millions of American citizens who do not have ready access to documents proving their citizenship.
Read more: Trump Continues to Intimidate Non-Citizen Voting. Research Shows It Is Extremely Rare
It is unclear whether the potential order would go so far as to require banks to close existing customers’ accounts if they fail to produce such documentation, or how such a mandate would be implemented. Experts said the executive action would likely face legal challenges.
Here’s what we know about the “in progress” Executive Order and how it could impact both banks and various populations in the United States
What we know so far about the potential Executive Order
Multiple sales points First reported In late February, quoting familiar sources, he reported that the Administration was considering imposing such a requirement on banks.
The action in question Wall Street Magazine It has been reported that banks looking to open a bank account in the US may require both new and existing customers to provide certain documents, such as a passport.
REAL IDs Do not prove a person’s citizenship and do not qualify as appropriate documents, Semaphore reported.
At the time, outlets reported that multiple potential avenues were being evaluated to meet the requirement. It was unclear whether the enforcement action would require banks to close the accounts of customers who cannot provide documentation verifying their citizenship or simply collect more citizenship information. Washington Post.
A White House spokesperson told news outlets in February: “Any reports regarding potential policymaking that has not been formally announced by the White House are unsubstantiated speculation.”
Current “know your customer” regulations, Bank Secrecy Act And USA Patriot Act Preventing money laundering and the financing of terrorist activities requires financial institutions to collect basic information from customers. But requiring customers to provide citizenship information would be unprecedented.
Republican Sen. Tom Cotton of Arkansas expressed strong support for the potential executive action, which was reportedly being considered in February.
Cotton posted on social media a letter he sent to Bessent in October to mailHe called on the Treasury to “comprehensively review existing rules that allow illegal aliens to obtain financial services”. The Arkansas Senator also said he will soon introduce legislation that would ban undocumented immigrants from accessing U.S. banks.
A month later, Cotton American Know Your Customer ActIt would require U.S. banks and credit unions to verify customers’ citizenship or legal immigration status and would make it a federal crime for “any person not lawfully present in the United States” to open or maintain a U.S. bank account.
“Access to the American banking system is a privilege that should be reserved only for those who respect our laws and sovereignty,” the senator said in a statement.
But critics of the potential requirement have argued that it could be costly to financial institutions and the U.S. economy more generally, potentially denying some American citizens access to banks and raising privacy concerns for customers.
How might the order affect banks and their customers?
Requiring banks to collect documents from customers verifying their citizenship could create barriers for tens of millions of people across the country. The exact number of noncitizens with bank accounts in the United States is unknown. But 2023 report A report from the Federal Deposit Insurance Corporation (FDIC) showed that 96 percent of U.S. households, roughly 128 million households, are banked; This means that at least one member of the household has a checking or savings account at a bank. A. report Meanwhile, according to an estimate from the Census Bureau, 46.2 million people (almost 14 percent) living in the country by 2022 are foreign-born, and nearly half of them are not naturalized.
Efrén Olivares, vice president of litigation and legal strategy at the National Immigration Law Center, notes that the American economy could also take a hit if noncitizens cannot access U.S. banks because of the potential new requirement.
“A lot of people who are not citizens, who are here on business visas, on tourist visas, on investor visas, who are not citizens, who are not permanent residents, are bringing millions and millions and probably billions of dollars into the economy of this country,” Olivares told TIME.
He adds that if such an obligation is imposed, some of the American citizens may be excluded from banks.
2023 Brennan Center for Justice questionnaire It found that approximately 21.3 million voting-age citizens (or 9.1 percent) do not have easy access to documents proving their citizenship.
“Depending on how this Executive Order is read, it could actually prevent a lot of U.S. citizens who don’t have a passport, who don’t have a driver’s license, who don’t have a valid ID from opening a bank account,” he adds.
The potential order could also raise concerns about customers’ privacy, says Eric Rodriguez, senior vice president of policy and advocacy for UNIDOS, a Latino civil rights organization.
“We have already seen the government exceed its authority in collecting and requesting private and confidential information about individuals across government agencies,” he says. “And if they can require banks to do some form of solicitation and hold a lot of people’s private personal information, that raises the possibility that the government could go after that and misuse it to track and harass people in communities.”
The Trump Administration has faced criticism for its moves toward data sharing among federal agencies. Trump has sought to increase this data sharing since the beginning of his second term and signed an agreement. Executive Order It was a law passed last March that seeks to ensure that agency heads have “full and prompt access to all declassified agency records,” with the intention of eliminating “information silos” and stopping “waste, fraud, and abuse.”
Immigrant advocacy groups have been especially alarmed about information-sharing agreements signed between Immigration and Customs Enforcement (ICE) and other agencies. Centers for Medicare and Medicaid Services (CMS) and Internal Revenue Service (IRS) in the midst of Trump’s immigration crackdown. These agreements are the subject of ongoing legal challenges.
Rodriguez said the potential order was “almost de facto [banks] in some way in a position to enforce immigration laws.”
If users’ private banking information is accessed by the federal government, banks could be held liable for violating laws protecting customers’ personal information, Rodriguez says. Gramm-Leach-Bliley ActFor example, it requires financial institutions such as banks to disclose their information sharing practices and protect customers’ sensitive data. It also requires banks to explain to their customers their right to opt out of sharing information with third parties.
The US banking industry itself reportedly pushed back It also opposes the potential need. Reports evaluating enforcement action met with opposition from banking industry representatives. defended requirements will be impractical and costly. Even some long-time Treasury staffers have called for a less stringent version of the action being considered. Bloomberg.
Bessent dismissed the industry’s reported concerns while speaking at a CNBC event on Tuesday.
“If Treasury and banking regulators say it’s their job, that’s their job,” Bessent said. said outlet Sara Eisen.
“Our bank managers’ job is to know your customer. How do you know your customer if you don’t know whether he or she is legal or illegal, whether he or she is a U.S. citizen or a green card holder?”
