In an effort to further involve the country’s banks in President Donald Trump’s immigration crackdown, the Treasury Department issued new guidelines on Friday. These guidelines allow banks to quickly share information about suspected customers and advise them to report any indications that one of their clients might not have legal immigration status.
The changes form part of the administration’s broader effort to limit undocumented immigrants’ access to the country’s banking system without directly requiring banks to enforce such measures. To encourage compliance, officials have presented the policy as an initiative aimed at combating fraud and financial crime rather than an immigration-focused action.
In a statement issued during a banking conference in Houston, Treasury Secretary Scott Bessent said, “The information in your purview can help stop a cartel financier, disrupt a money laundering network, uncover labor exploitation, or protect taxpayers from fraud.”
Bessent’s remarks, alongside the Treasury Department’s revised directives, stem from an executive order signed by Trump in May that calls for stricter verification of customers’ citizenship status by financial institutions. The order further mandates regulators and relevant government agencies to monitor and detect cases involving individuals without legal status accessing banking services, including accounts, loans, and credit facilities.
However, the executive order stopped short of requiring banks to collect customers’ citizenship details, a proposal that had faced months of opposition and lobbying from the banking industry.
Under provisions of the Patriot Act, banks have for years been permitted to exchange customer information with one another when there are suspicions of fraud or money laundering, as part of measures introduced after the September 11 attacks to strengthen efforts against terrorism and financial crimes.
The measures announced on Friday expanded the existing framework in two key ways. According to the Treasury Department, banks are now allowed to exchange such customer information more quickly and with fewer restrictions, enabling real-time sharing between financial institutions.
Secondly, the Trump administration has expanded the grounds on which banks can share information, now allowing a broader range of indicators to trigger disclosures, including flags previously associated with immigration status.
An example of this is an Individual Taxpayer Identification Number (ITIN), which is often issued to people who cannot obtain a Social Security number and is frequently used by non-citizens, including many undocumented immigrants, when seeking work.
Bessent told bankers that the updated guidance is simply an extension of standard banking procedures that financial institutions are already expected to carry out as part of their normal operations.
“The advisory does not ask banks to become immigration officers,” Bessent said. “It asks banks to do what they do best: know their customers, identify risk, recognize suspicious patterns, and report illicit activity when they see it.”
Bankers have expressed caution about providing customer data to federal authorities for immigration enforcement purposes. Since banks have not historically gathered citizenship details from clients, introducing such requirements would place a significant administrative burden on institutions and involve extensive documentation and compliance work.
Banks already submit millions of Suspicious Activity Reports (SARs) to federal regulators under the Bank Secrecy Act. Last week, the Treasury Department broadened the criteria for filing such reports to cover situations involving possible undocumented workers.
“The administration is saying they don’t want banks to be immigration officials, but they are trying to get as close to the line as possible,” stated Nicholas Anthony, a banking regulation expert at the libertarian-leaning Cato Institute.
When Trump signed the order, the White House presented it as a measure aimed at tackling fraud. It also maintained that undocumented workers could create risks for the financial system, particularly where loans may go unpaid if borrowers are deported.
Because banks have not traditionally recorded customers’ citizenship status, it is difficult to measure the extent of any risk posed by undocumented workers to the banking system. However, a study by the left-leaning Urban Institute estimated that around 5,000 to 6,000 mortgages were issued to individuals using ITINs—representing only a very small share of the millions of mortgages issued annually.
Immigration advocates have warned that any policy requiring banks to collect citizenship information could push undocumented immigrants out of the formal financial system, potentially leading to a rise in the number of “unbanked” individuals.
The White House has also introduced additional steps aimed at discouraging undocumented workers from accessing the financial system.
In November, the Treasury redefined certain refundable tax credits as “federal public benefits,” effectively excluding some immigrant taxpayers from accessing them, even if they meet filing requirements, pay taxes, and would otherwise be eligible.
