Treasury Secretary Scott Besant said an executive order mandating that banks must collect citizenship information from customers is “in process.”
Speaking to Semaphore in an interview published on Monday, Besant said he did not believe such a requirement would be “unreasonable”, because: Why don’t we know who is in our banking system? I have a place in the UK; They want to know who lives in each apartment. And how do we know it’s not part of a foreign terrorist organization?
Asked for more information about the order, a White House official told TIME that “the administration continues to seek ways to protect our banking system from unacceptable credit risks and to ensure that banking services remain available and affordable for all Americans.”
The administration did not confirm the details of what citizenship information the executive order would require banks to collect.
The impact of such a requirement could be widespread, potentially creating disruptions to the US banking system, non-citizens, and millions of US citizens without access to documents proving their citizenship.
Read more: Trump rails against non-citizen voting. Research shows this is extremely rare
It is unclear whether the potential order would require banks to close the accounts of existing customers if they fail to produce such documents, or how such a mandate would be enforced. Experts say the executive action could face legal challenges.
Here’s what we know about the “in process” executive order, and how it could affect U.S. banks and various populations.
Here’s what we know about the potential executive order so far
Several outlets first reported in late February that the administration was imposing such a requirement on banks, citing familiar sources.
The pending action, The Wall Street Journal reported, could call for banks to ask for certain documents, such as passports, from new and existing customers seeking to maintain a U.S. bank account.
Real IDs do not prove a person’s citizenship and do not qualify as valid documents, Semaphore reported.
Outlets reported at the time that several possible routes to issuing the requirement were under consideration. According to the Washington Post, it was not clear whether the enforcement action would require banks to close the accounts of customers who cannot provide documents proving their citizenship or collect additional citizenship information.
A White House spokesman told news outlets in February that “any report of potential policymaking that has not been officially announced by the White House is baseless speculation.”
“Know your customer” regulations under the Bank Secrecy Act and the USA PATRIOT Act require financial institutions to collect basic information from customers to prevent money laundering and the financing of terrorist activities. But it would be unprecedented for customers to provide citizenship information.
Senator Tom Cotton, Republican of Arkansas, expressed strong support for potential executive action in February.
Cotton attached a letter he sent to Besant in a social media post in October, in which he asked the Treasury to “undertake a comprehensive review of the current rules that allow illegal aliens to obtain financial services.” The Arkansas senator also said he would soon introduce legislation to prevent undocumented immigrants from accessing U.S. banks.
A month later, Cotton introduced a bill called the Know Your American Customer Act, which would require U.S. banks and credit unions to verify customers’ citizenship or legal immigration status and 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.
Critics of the potential requirement, however, have argued that it could prove more costly to financial institutions and the U.S. economy more broadly, potentially prevent more U.S. citizens from accessing banks, and raise privacy concerns for customers.
How this order may affect banks and their customers
Requiring banks to collect citizenship verification documents from customers could create hurdles for millions of people across the country. The exact number of non-citizens with bank accounts in the US is unknown. But a 2023 report from the Federal Deposit Insurance Corporation (FDIC) showed that 96 percent of American households, or about 128 million households, were banked, meaning at least one member of the household had a checking or savings account at the bank. Meanwhile a Census Bureau report estimated that, as of 2022, 46.2 million people living in the country — about 14 percent — were foreign-born, nearly half of whom had not been naturalized as citizens.
Efrain Olivares, vice president of litigation and legal strategy at the National Immigrant Law Center, noted that if non-citizens are unable to access U.S. banks because of the potential new requirement, the U.S. economy could also suffer.
“A lot of people who are not citizens, who are here on business visas, on tourist visas, on investor visas, have no citizenship, are not local permanent residents, but they bring millions and millions and possibly billions of dollars into the economy of this country,” Olivares told TIME.
He added that a section of US citizens could be locked out of the bank if such a requirement were imposed.
A 2023 Brennan Center for Justice survey found that about 21.3 million voting-age citizens––or 9.1 percent––did not have readily available documents proving their citizenship.
“Depending on how this executive order reads, it could actually prevent many American citizens who don’t have passports, who don’t have driver’s licenses, who don’t have valid ID, from opening bank accounts,” he adds.
Eric Rodriguez, senior vice president of policy and advocacy at UNIDOS, a Latino civil rights organization, says the potential order could also raise concerns for customers’ privacy.
“We’ve already seen governments exceed their authority in collecting and requesting private and confidential information about individuals among government agencies,” he says. “And if they can require banks in some way and keep private personal information for a lot of people, it can be used by the government to go after that and use it offensively to track and harass people in the community.”
The Trump administration has drawn criticism for its move to share data between federal agencies. Trump has sought to increase data sharing since early in his second term, signing an executive order last March to eliminate “information silos” and allow agency heads “full and rapid access to all declassified agency records” aimed at preventing “waste, fraud, and abuse.”
Immigrant advocacy groups have specifically warned about information sharing agreements signed between Immigration and Customs Enforcement (ICE) and other agencies, including Medicare and Medicaid Services (CMS) and the Internal Revenue Service (IRS) amid Trump’s immigration crackdown. Those agreements are the subject of ongoing legal challenges.
Rodriguez adds that the potential order is “almost realistically placed [banks] in a position to somehow enforce immigration laws.”
If users’ private banking information were accessed by the federal government, banks could be held liable for violating laws protecting customers’ personal information, Rodriguez says. For example, the Gramm-Leach-Bliley Act requires financial institutions such as banks to explain their information-sharing practices and protect sensitive customer data. It also requires banks to explain their customers’ right to opt-out of information exchange with third parties.
The US banking industry itself has pushed back against possible necessity. The executive action report was opposed by representatives of the banking industry, who argued that the requirements would be unreasonable and costly. Some longtime Treasury officials also urged a less stringent version of the proposed action, according to Bloomberg.
Speaking on a CNBC program Tuesday, Bessant brushed off the industry’s reported concerns.
“If the Treasury and banking regulators say it’s their job, it’s their job,” Besant told the outlet’s Sarah Eisen.
“The job of our bank executives is to know your customer. If you don’t know whether your customer has legal or illegal status, how do you know if they are a US citizen or a green card holder?”
