Trump order makes immigration status a banking risk factor

On May 19, 2026, President Trump signed an executive order titled "Restoring Integrity to America's Financial System." The order tells banks to treat a customer's immigration status as a factor when they judge financial risk. It directs Treasury Secretary Scott Bessent and federal bank regulators to write guidance that helps banks spot accounts tied to money laundering, terrorism financing, and labor trafficking.

The order leans on the Bank Secrecy Act, a law Congress passed in 1970 to fight money laundering. That law already requires banks to verify customer identities and report suspicious activity. The new order asks regulators to point those existing tools at immigration enforcement.

The order sets a string of deadlines. Treasury has 60 days to issue a formal advisory to banks listing "red flags" for suspicious activity. Treasury then has 90 days to propose changes to Bank Secrecy Act rules that strengthen customer due diligence, and 180 days to consider tighter customer identification program rules.

Those proposed changes would let banks more readily collect customer data, including immigration status and employment authorization. The White House says the rules should also account for the risks that foreign consular identification cards pose to the financial system.

One red flag named in the order is the use of an Individual Taxpayer Identification Number, or ITIN. The IRS issues ITINs so people who cannot get a Social Security number can still pay taxes. Many noncitizens use them, and banks have long accepted ITINs as valid identification.

The Urban Institute estimates that lenders issued 5,000 to 6,000 mortgages to ITIN holders. Treating ITIN use as a warning sign turns a tax-compliance tool into a trigger for extra bank scrutiny.

The order also reaches into lending. It directs the Consumer Financial Protection Bureau to clarify within 60 days that potential deportation and lost wages are valid risk factors a lender may weigh when judging whether a borrower can repay a loan.

The CFPB moved quickly. A spokesperson told Semafor the agency had already submitted a proposed rule for review titled "statement on ability to repay and immigration status." Acting Director Russell Vought, who also runs the Office of Management and Budget, controls that rulemaking.

The signed order is narrower than what the administration first considered. Earlier drafts would have required banks to collect citizenship information from every new and existing customer. Bessent backed that idea in April 2026, saying "there should be stricter rules" and asking "Why can the unknown foreign nationals come and open a bank account?"

Banking executives pushed back hard in private meetings. They warned the requirement would be costly and operationally impossible at scale, and could lead to the "debanking" of millions of customers.

The retreat counts as a win for the banking industry. Rob Nichols, president and CEO of the American Bankers Association, said the group was reviewing the order and shared "the administration's goal of ensuring a safe, sound, and secure financial system."

Nichols added that banks would work with the administration "to ensure today's actions bolster our financial defenses while maintaining consumer access to banking services." Some legal experts still warned the order could impose new compliance costs on banks.

Critics say the order pulls private companies into immigration enforcement. Banks would screen customer profiles for signs of unlawful status, then file reports with the government. Immigrant advocates warn this could push undocumented immigrants, and even lawful visa holders, to pull money out of banks and back into cash.

Efrén Olivares of the National Immigration Law Center said noncitizens "bring millions and millions and probably billions of dollars" into the U.S. economy. Driving them out of banks, he argued, would hurt the broader economy, not just immigrant households.

Advocates also warn the order builds a new pool of personal data the government could reach for later. Eric Rodriguez, senior vice president of policy and advocacy at the Latino civil rights group UnidosUS, said the government has "already exceeded its authority" in collecting private information. If banks must "demand and hold private personal information for lots of folks," he warned, it "raises the specter that the government may go after that and use it abusively to track down and harass people in communities."

That concern sits at the center of the order. Treasury's proposed rules would make banks both the collectors and the reporters of immigration data.

The pushback also came from the political right. Nicholas Anthony, a research fellow at the libertarian Cato Institute, compared the effort to the war on drugs and post-September 11 surveillance, saying "the war on immigration" now follows the same playbook.

Anthony still credited Trump for walking back the broader citizenship-collection plan. He argued the better move would be to scale back the Bank Secrecy Act itself, which Cato says generated 28.7 million reports but few prosecutions.

Banks have never been required to collect citizenship or immigration status from customers, and federal law does not bar noncitizens from opening accounts. That gap is what the order targets. The real fight now shifts to the rulemaking process.

Treasury's proposed Bank Secrecy Act changes must go through notice-and-comment, where the public and the banking industry can file objections before any rule becomes final. The advisory and the CFPB rule will shape how aggressively banks act, and courts may weigh in if advocates challenge the new rules.