U.S. banks may soon collect citizenship data from customers
Banks in the US may not like the idea of being forced to collect customers’ citizenship data, but Treasury Secretary Scott Bessent says they’d better be prepared for the task.
“If Treasury and banking regulators say it’s their job, that’s their job,” Bessent told CNBC’s Sara Eisen. Invest in America Forum Tuesday in Washington, D.C.
The executive order, which has been discussed for months, moved one step closer to reality in a speech by Bessent earlier this week. report He said Semaphore and EO were “in process”.
The planned EO is another important step in President Donald Trump’s broader efforts to collect more information about immigrants in the United States.
Citizenship documents are not required to open a bank account in the USA. Banks need to verify identity.
The United States, like many countries, uses “Know Your Customer” rules for bank accounts to prevent money laundering and other types of financial crimes, verify customer identities, assess risks, and monitor transactions to prevent fraud. Laws such as the Bank Secrecy Act (BSA) and the USA PATRIOT Act also support efforts to verify customers. Banks collect Social Security numbers or Individual Taxpayer Identification Number (ITIN), names, dates of birth, and addresses, among other documents.
But this does not satisfy Bessent. “Why can unknown foreign nationals come and open a bank account?” he said at the CNBC event. “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?”
Abroad, citizenship information is more often required for banking access, but there is no universal entitlement. Bessent told Eisen: “Every country does this. Every country does it. … There should be stricter rules.”
Republicans have voiced their support for the idea.
Senator Tom Cotton (R-AK) introduced a bill In March, it will require FDIC- or NCUA-insured banks and credit unions to verify that anyone opening an account is a U.S. citizen, permanent resident or has a valid visa in the country, along with an additional verification check on legal status.
Bessent previously said Real IDs will not be accepted as legal documents under this new executive order.
Last October Cotton wrote a letter to the Treasury “Urging the Treasury Department to review current rules that allow illegal aliens to obtain financial services and access the U.S. banking system.”
Aside from the legal questions, some policy experts and banks have also warned of the potential for huge increases in banks’ administrative costs, as well as damage to the economy, if people are denied access to the banking system and deposit accounts.
Allowing noncitizens, including undocumented immigrants, to legally open bank accounts using documents such as ITINs means they can pay taxes and avoid becoming part of the “unbanked” segment that exists in an all-cash economy. Not having a bank account is often associated with a reduced ability to move up the social ladder and contribute to economic growth.
Center-right think tank American Action Forum for banks estimated A citizenship verification requirement could result in 30 million to 70 million hours of paperwork and costs between $2.6 billion and $5.6 billion. “Confirming new The accounts are the tip of the iceberg; Lack of details makes it difficult to estimate verification costs available account holders,” he wrote in a March analysis.
Bessent told CNBC that illegal immigrants “have no right to be in the banking system.”
