Donald Trump has moved a step closer to turning the U.S. banking system into a tool of immigration enforcement, advancing a controversial push to make banks collect information about customers’ citizenship or legal status as a condition of opening accounts. The emerging policy, still not fully written but now backed by a White House executive order directing regulators to act, has alarmed Wall Street, community lenders and immigrant‑rights advocates, who warn it could create millions of unbanked people and effectively draft private banks into immigration policing.
What Trump is ordering, and what it isn’t (yet)
So far, there is no final rule forcing banks to verify every customer’s immigration status, but the administration has clearly signaled its intention to head in that direction.
- In February, The Wall Street Journal and other outlets reported that the administration was considering an executive order or regulatory action to require banks to collect citizenship documents, such as passports, from customers as a condition of opening or keeping accounts.
- On April 15, Treasury Secretary Scott Bessent told Semafor that an executive order mandating banks to collect citizenship information from customers was “in process,” arguing it was not “unreasonable” to know who is in the system.
- On April 30, Reuters reported that U.S. banks were “left guessing” about the scope of a looming White House order instructing regulators to gather data on customers’ citizenship or immigration status.
The clearest public sign came this week, when a White House‑linked X post, citing Bloomberg, said Donald Trump had signed an executive order directing regulators to issue guidance on banking services for undocumented migrants, a step that could tighten their access to the financial system.
Legal alerts from firms like Winston & Strawn stress that no binding policy is in force yet: there is still “no enacted policy, executive order, proposed rule, or agency guidance requiring banks to collect or verify customer citizenship status.” But the new presidential order gives agencies such as the Treasury Department and its Financial Crimes Enforcement Network (FinCEN) a formal mandate to explore such requirements.
From “know your customer” to “know your citizen”
Under current law, banks must follow “know your customer” rules designed to fight money laundering and terrorism financing. Those rules require collecting basic identifying information — name, address, date of birth, taxpayer ID — and verifying identity with a government‑issued photo ID, usually a driver’s license. They do not require verifying citizenship or immigration status.
The emerging Trump initiative would break that precedent.
TIME reports that the administration has considered requiring banks to collect documents verifying citizenship from customers, potentially including U.S. passports or other proof, while explicitly excluding REAL ID driver’s licenses, which do not prove citizenship. The Washington Post says early drafts went much further than current KYC rules, effectively re‑engineering them to add a citizenship or legal‑status check.
One version, described by the Post, would have required banks to seek documentation from new and existing customers, raising the prospect of mass “citizenship audits.” After heavy pushback from major banks and community lenders, the administration has delayed and narrowed the proposal, and officials now suggest any order is more likely to focus only on new accounts.
Even that narrower move would be unprecedented, experts say, and could require FinCEN to amend Customer Identification Program rules, potentially forcing banks to collect and store passport data and other sensitive information.
Motivation: immigration enforcement by other means
The push is part of a broader Trump strategy to use every corner of government, from workplaces to local police and now the financial system, to pressure undocumented immigrants.
The Wall Street Journal and Reuters, citing officials and sources familiar, report that the banking initiative grew out of discussions during the Trump transition about harnessing the financial system as an immigration enforcement tool, not just a way to manage credit risk. Officials explored using banks’ vast customer databases to identify and potentially pressure undocumented people, long before the current order.
Treasury Secretary Bessent’s public explanations have leaned heavily on risk and security. “Why don’t we have information on who’s in our banking system?” he told Semafor, invoking concerns about terrorism and saying banks should know whether account holders could be linked to foreign organizations.
Senator Tom Cotton introduced a “Know Your American Customer Act” in 2025, which would require banks and credit unions to verify customers’ citizenship or legal status and make it a federal crime for someone “not lawfully present” to open or maintain a U.S. bank account. That bill has not advanced, but it illustrates how parts of Trump’s political coalition see the banking system as a frontline in immigration policy.
Banks warn of billions in costs, and millions pushed out of the system
Banking industry groups have quietly and publicly pushed back, warning that even a narrower order focused on new accounts could be enormously disruptive.
Reuters reports that lobbyists for big banks and community lenders told the administration the proposal would impose “significant costs and disruptions”, requiring staff to understand more than 180 different visa types and to overhaul documentation processes and IT systems.
The center‑right American Action Forum, a Washington think tank generally supportive of market‑friendly policies, estimated that collecting citizenship data for new accounts alone could cost the banking sector $2.6 billion to $5.6 billion per year, factoring in updates to software, training, and manual processing.
Lenders also worry about being forced to act as de facto immigration screeners. TIME quotes former U.S. Citizenship and Immigration Services Director León Rodríguez warning that such an order would “almost de facto put [banks] in a position to somehow enforce immigration laws,” a role they are neither trained nor mandated to perform.
Community banks have raised specific fears that customers, including many U.S. citizens who lack passports or ready documents, could simply walk away rather than submit paperwork, shrinking deposit bases and local lending capacity.
Immigrant communities fear a new wave of financial exclusion
Immigrant‑rights advocates, financial‑inclusion experts and some regulators warn that turning bank accounts into immigration checkpoints could drive millions of people out of the formal financial system.
TIME notes that potentially tens of millions of U.S. residents, including citizens, do not have up‑to‑date passports or ready access to paperwork proving citizenship. For undocumented immigrants, many of whom already face barriers to opening accounts, new documentation demands would add another high hurdle, especially if they fear data could be shared with immigration authorities.
Advocates say that would push people toward cash‑only living, check‑cashing outlets and informal lenders, increasing their exposure to theft, predatory fees, and exploitation. Some state and local efforts over the past decade have aimed to do the opposite, encouraging unbanked immigrants to use regulated banks and credit unions for safety and integration into the mainstream economy.
There are also concerns about discrimination. Without clear safeguards, banks might over‑scrutinize customers who “look foreign” or have non‑Anglo names, even if they are citizens or lawful residents, creating civil‑rights risks and potential lawsuits.
Legal and political headwinds
Any move from a broad executive order to enforceable rules will have to navigate complex law and intense political scrutiny.
Winston & Strawn notes that as of now there is no official rulemaking; to implement a citizenship‑verification requirement, Treasury or banking regulators would have to propose regulatory changes, solicit public comment, and withstand potential court challenges. Critics are likely to argue that such rules exceed the statutory authority of the Bank Secrecy Act and related laws, which focus on financial crime, not immigration.
Civil‑liberties groups could also challenge any scheme that effectively criminalizes undocumented people holding bank accounts or compels banks to report immigration status, citing privacy, due‑process, and equal‑protection concerns.
Politically, the White House has sent mixed signals. When early reports appeared in February, a spokesperson said that “any reporting about potential policymaking that has not been officially announced by the White House is baseless speculation.” Since then, officials have acknowledged that an order is in development but insist they never “seriously considered” mass audits of existing customers, and say the focus is on “protect[ing] our banking system from unacceptable credit risks” while keeping services “available and affordable for all Americans.”
The Washington Post reports that Wall Street opposition has already forced the administration to scale back its initial ambitions and postpone signing the order once, though officials warn it could still return “in a more limited form.”
What’s next
For now, U.S. banks are preparing for multiple scenarios: a narrow rule targeting only new accounts; a more expansive move that touches existing customers; or a drawn‑out regulatory process that extends well past this year’s election.
Compliance lawyers advise institutions to monitor announcements from the White House, Treasury and FinCEN, review their customer‑identification programs and consider how they would handle document collection and verification if a citizenship requirement materializes.
For millions of customers, especially non‑citizens and mixed‑status families, the stakes are concrete: whether they can keep using the same bank account to pay rent and wages, and whether walking into a branch will someday feel less like a financial errand and more like stepping into an immigration checkpoint.
The Trump administration’s banking‑immigration order is, in legal terms, still a work in progress. But the direction of travel is clear, toward a tighter link between financial access and immigration status, and the debate over whether banks should know their customers, or their citizens, is only just beginning.
