Trump orders banks to take a closer look at clients’ citizenship in new immigration enforcement move
WASHINGTON (AP) — President Donald Trump signed an executive order Tuesday requiring banks to more closely examine the citizenship of their customers; This is a new measure in his administration’s crackdown on people living in the country illegally.
order directs bank regulators and government agencies to look for signs that people without legal status are opening accounts or obtaining loans or credit cards. But the order was less aggressive than banks expected, as earlier reports suggested the White House was drafting an order that would mandate the collection of customers’ citizenship information.
In the decision, the White House framed the decision that banks would face credit risks if one of their customers was deported and the loans could no longer be repaid. The White House said it “will not allow the expansion of credit or financial services to unacceptable and removable foreign populations to pose risks to our financial system.”
Because banks never collect information about their customers’ citizenship or immigration status, there are no reliable, publicly available figures on how much of a risk these customers pose to the financial system.
A study conducted by left-leaning people Urban Institute It is estimated that between 5,000 and 6,000 mortgages were issued to customers with Individual Taxpayer Identification Numbers (ITINs). These ITINs are often used by undocumented workers in place of a Social Security Number. The Urban Institute predicted that banks are very reluctant to provide loans to individuals with ITINs. Fannie Mae and Freddie Mac are also generally reluctant to allow borrowers to insure mortgages with ITINs, making ITIN holders even less likely to get a mortgage.
The White House has been signaling for weeks that it was planning some kind of executive order covering how banks would handle their undocumented customers. Treasury Secretary Scott Bessent said last month that “there should be stricter rules” on opening bank accounts.
“Why can unknown foreign nationals come and open a bank account?” Bessent said.
Claiming that bank managers must “know your customer,” he said, “So how will you know your customer if you don’t know whether he has legal or illegal status, whether he is a US citizen or a green card holder?” he asked.
In response, the banking industry has been aggressively lobbying for months for the White House to issue an executive order requiring customers to obtain citizenship status, arguing that it would be expensive and require vast amounts of paperwork. Because the order only offers banks guidance rather than instructions, it appears the banks have succeeded in winning over the White House.
Immigration advocates have previously said that any order ordering banks to collect citizenship information would likely result in an exodus of undocumented immigrants from the financial system and increase the number of “unbanked” individuals.
The White House has taken other measures to prevent undocumented workers from using the financial system. Treasury announced last November that it would reclassify some refundable tax credits as “federal public assistance”; This prevents some immigrant taxpayers from receiving these credits even if they file and pay taxes and otherwise qualify.
Tax experts said immigrants, recipients and immigrants with Temporary Protected Status who were brought to the U.S. illegally by their parents, known as Deferred Action for Childhood Arrivals, or DACA, would be greatly affected by the planned change.
