A new executive order from President Trump would push banks to collect more information about their customers’ immigration status, part of an administration effort to crack down on undocumented immigrants’ access to the U.S. banking system.
Trump on Tuesday ordered regulators to rethink so-called “know your customer” rules meant to guard against money laundering and terrorist financing. The executive order would make a person’s immigration status an explicit part of a bank’s assessment of whether a customer poses a money-laundering risk.
The executive order doesn’t go as far as an earlier proposal first reported by The Wall Street Journal in February, which would have required banks to collect a new category of documents—such as passports—from both new and existing customers.
The details
The White House on Tuesday pointed to Chinese money-laundering networks and Mexican cartels as the basis for the rewrite of know-your-customer rules. It ordered regulators to propose changes to those rules within 90 days.
The changes should ensure financial institutions have the “authority, where warranted,” to obtain additional information from their customers, including “information relevant to whether account holders possess lawful immigration status and employment authorization.”
The current know-your-customer rules don’t require the gathering of citizenship status specifically, and banks don’t routinely share that information with the government. There is also no prohibition on banks opening accounts for noncitizens.
The context
The banking industry pushed back on the earlier proposed order, questioning the legal basis for the policy and voicing concerns about the cost of implementing it.
“I don’t think it’s unreasonable,” Treasury Secretary Scott Bessent, who was involved in the creation of the executive order, said in April. “Why don’t we have information on who’s in our banking system?”
Write to Dylan Tokar at dylan.tokar@wsj.com
