Trump Signs Executive Order on Bank Citizenship Checks

President Donald Trump signed an executive order that requires banks to examine the citizenship status of their customers more closely. This is part of the administration’s efforts to crack down on individuals living in the United States without authorization.

The order directs bank regulators and government departments to look for signs that unauthorized individuals are opening accounts or obtaining loans or credit cards. While initial reports suggested that the White House was drafting a more stringent order requiring the collection of customers’ citizenship information, the final order is less aggressive than expected.

The White House argues that banks may face credit risks if a customer is deported and unable to repay a loan. “We will not permit risks to our financial system from extending credit or financial services to inadmissible aliens subject to deportation,” stated the White House.

Banks have not historically collected information about citizenship or immigration status, resulting in a lack of reliable public data on the financial risks posed by these customers. An Urban Institute study estimated that between 5,000 and 6,000 mortgages are issued to clients with Individual Taxpayer Identification Numbers (ITINs), often used by undocumented workers instead of Social Security numbers. Fannie Mae and Freddie Mac, major mortgage companies, are generally reluctant to insure mortgages for borrowers with ITINs, further reducing the likelihood of these individuals obtaining a mortgage.

The administration had signaled plans to introduce an executive order addressing how banks deal with unauthorized clients. Treasury Secretary Scott Bessent noted the need for stricter rules on opening bank accounts. He questioned, “Why can people of unknown nationality come and open a bank account?” Bessent emphasized that bank executives should “know their customers,” highlighting the challenge of understanding a client’s legal status without citizenship data.

The banking industry pushed back against the potential mandate, citing high costs and paperwork as primary concerns. The final order, containing merely a recommendation, indicates a potential compromise with the banks.

Immigrant rights advocates have expressed concerns that mandating citizenship data collection could drive unauthorized immigrants out of the financial system. The administration has taken other actions to discourage unauthorized workers from using financial services. The Treasury Department plans to reclassify some refundable tax credits as “federal public benefits,” limiting access for immigrant taxpayers, even those who file tax returns and comply with regulations.

Tax experts noted that immigrants known as DACA recipients and those with Temporary Protected Status would be significantly affected by this tax credit reclassification.