President Donald Trump is directing federal regulators to increase scrutiny of noncitizens using the U.S. financial system, including customers who rely on taxpayer identification numbers rather than Social Security numbers.
Trump signed an executive order titled “Restoring Integrity to America’s Financial System,” directing the Treasury Department and financial regulators to revise guidance used by banks to identify potentially suspicious customers and transactions.
The order does not immediately prohibit undocumented immigrants or other noncitizens from opening bank accounts, obtaining loans or using Individual Taxpayer Identification Numbers, known as ITINs.
Instead, it directs regulators to consider immigration-related information as part of a broader effort to combat money laundering, terrorism financing, human trafficking and other financial crimes.
The administration said regulators should develop new “red flags and typologies” under the Bank Secrecy Act, the landmark 1970 law requiring financial institutions to help federal authorities detect money laundering and other suspicious financial activity.
Among the practices receiving additional scrutiny are repeated cash withdrawals, shell companies used to conceal the true owners of assets and financial platforms allegedly used to make off-the-books wage payments.
The administration also identified the use of an ITIN instead of a Social Security number in certain circumstances as a potential indicator warranting additional scrutiny.
An ITIN is issued by the Internal Revenue Service to people who need a U.S. taxpayer identification number but are not eligible for a Social Security number.
Possessing or using an ITIN is not itself evidence of illegal immigration or financial misconduct. The numbers are used by various categories of taxpayers, including some lawfully present immigrants and undocumented immigrants, to file federal tax returns and pay taxes.
The order also focuses on foreign consular identification documents.
Trump directed Treasury Secretary Scott Bessent and federal banking regulators to examine “potential threats to the integrity of the United States financial system posed by foreign consular identification cards.”
Those cards can be issued by foreign governments to their citizens living in the United States and are accepted as identification by some financial institutions.
The administration argues that gaps in customer-identification requirements have created opportunities for criminal organizations.
“President Trump is taking action to restore integrity to America’s financial system, cracking down on illicit activity that threatens national security and ending the extension of credit to high-risk borrowers that American citizens are forced to subsidize,” the White House said.
The administration specifically cited Chinese-linked money-laundering networks, drug trafficking and human trafficking as examples of criminal activity it says has exploited weaknesses in the American banking system.
The White House also pointed to mortgages, credit cards and other loans provided to undocumented immigrants.
It argued that financial institutions sometimes pass the costs associated with riskier lending onto other consumers through higher interest rates and fees.
The extent to which lending to undocumented borrowers materially raises borrowing costs for other Americans is less clear.
Interest rates are generally influenced by broader factors including Federal Reserve policy, lenders’ funding costs, market conditions and individual borrowers’ credit histories.
ITIN mortgages also represent a relatively small portion of the overall U.S. mortgage market.
Research by the Urban Institute estimated that lenders originated roughly 5,000 to 6,000 ITIN mortgages annually during the period it studied.
Fannie Mae and Freddie Mac generally require borrowers to have Social Security numbers or otherwise demonstrate lawful residency or employment eligibility under their underwriting rules, limiting the role of ITIN-only borrowers in the conventional mortgage market.
Trump’s order could nevertheless produce broader changes.
It directs Treasury to consider modifying Bank Secrecy Act regulations to make it easier for financial institutions to collect additional information about customers, potentially including immigration status and employment authorization.
Exactly what information banks ultimately would have to collect will depend on regulations and guidance developed following the order.
The action is part of a broader administration effort to incorporate immigration enforcement into areas of federal policy beyond traditional border and deportation operations.
Treasury has separately considered treating certain refundable tax credits as federal public benefits, a change that could restrict eligibility for some noncitizens who file U.S. taxes.
The new banking policy also comes as Trump has pursued a separate campaign against what he calls politically motivated “debanking.”
Trump has accused major financial institutions of discriminating against conservatives and sued JPMorgan Chase and CEO Jamie Dimon for $5 billion over the bank’s decision to close accounts associated with Trump following the Jan. 6, 2021, Capitol attack.
This article may contain commentary which reflects the author's opinion.
