The Trump administration has issued an executive order directing heightened scrutiny on the banking activities of non-citizens in the United States. While representing a significant policy shift, the directive is notably less extensive than an earlier proposal that would have required banks to collect detailed citizenship information from all clients, a move that drew widespread concern from the financial industry. This latest order, announced on Tuesday, appears to signal a willingness by the administration to heed industry feedback.
Instead of mandating citizenship data collection, the executive order instructs the Treasury Secretary to issue an advisory to banks. This advisory will focus on identifying “red flags” associated with various illicit activities. These include payroll tax evasion, the concealment of true account ownership, off-the-books wage payments, and labour trafficking. Additionally, it targets the use of individual taxpayer identification numbers (ITINs) to open accounts or obtain credit without verified legal presence in the U.S. Senior industry executives had previously warned that collecting citizenship data would be both costly and highly disruptive.
The banking sector had cautioned that such a broad requirement could lead to the “debanking” of millions of customers and significantly reduce financial access for many Americans. Ed Mills, a Washington policy analyst with Raymond James, noted that while the administration seeks greater immigration controls, bank regulators prefer financial transactions to remain within traditional systems to avoid potential national security risks. Specific red flags highlighted by the new order include accounts in the names of shell companies, platforms used to disguise wage payments, repetitive cash withdrawals, and ITIN use not accompanied by a Social Security number or work visa. The White House also indicated a desire for Treasury and regulators to propose amendments to the Bank Secrecy Act, aiming to simplify client information acquisition and flagging documents issued by foreign consulates as potentially risky.
