Trump Order to Require Banks to Collect Citizenship Info 'In Process,' Bessent Says. Here's What to Know

Treasury Secretary Scott Bessent said that an Executive Order that would mandate that banks must collect citizenship information from customers is currently “in process.” 

Speaking with Semafor in an interview published on Monday, Bessent went on to say he doesn’t believe such a requirement would be “unreasonable, because: Why don’t we have information on who’s in our banking system? I have a place in the UK; they want to know who lives in every apartment. And how do we know that it’s not part of a foreign terrorist organization?”

When asked for further information regarding the order, a White House official told TIME that the “Administration continues to explore ways to protect our banking system from unacceptable credit risks and to ensure that banking services remain available and affordable for all Americans.”

The Administration did not confirm details on what citizenship information the Executive Order would require banks to collect. 

The impact of a requirement of this kind could be widespread, potentially creating hurdles for the U.S. banking system, non-citizens, and millions of American citizens without ready access to documents proving their citizenship.

Read more: Trump Keeps Railing Against Non-Citizen Voting. Research Shows It’s Extremely Rare

It’s not clear if the potential order would go so far as to require banks to shut existing customers’ accounts if they couldn’t produce such documents, or how such a mandate would be enforced. Experts have said the executive action would likely face legal challenges.

Here’s what we know about the “in process” Executive Order, and how it could affect both banks and various populations in the U.S. 

What we know about the potential Executive Order so far

Multiple outlets first reported in late February that the Administration was weighing imposing such a requirement on banks, citing sources familiar. 

The action under consideration, the Wall Street Journal reported, could call on banks to ask both new and existing customers for certain documents, such as passports, seeking to maintain a U.S. bank account. 

REAL IDs do not prove a person’s citizenship and would not qualify as eligible documentation, Semafor reported. 

Outlets reported at the time that multiple potential avenues of issuing the requirement were under consideration. It was not clear if an executive action would require banks to close the accounts of customers who could not provide documents verifying their citizenship or just to collect more citizenship information, according to The Washington Post.

A White House spokesperson told news outlets in February that “any reporting about potential policymaking that has not been officially announced by the White House is baseless speculation.”

Existing “know your customer” regulations put in place under the Bank Secrecy Act and USA PATRIOT Act to prevent money laundering and the funding of terrorist activities require financial institutions to collect basic information from clients. But mandating that customers provide citizenship information would be unprecedented.

Republican Senator Tom Cotton of Arkansas expressed strong support for the potential executive action reportedly being considered in February. 

Cotton attached a letter that he had sent to Bessent in October to a social media post, in which he urged the Treasury “to undertake a comprehensive review of current rules that allow illegal aliens to obtain financial services.” The Arkansas Senator also said he would soon introduce legislation to bar undocumented immigrants from accessing U.S. banks.

A month later, Cotton introduced a bill dubbed the Know Your American Customer Act, which would require U.S. banks and credit unions to verify the citizenship or legal immigration status of customers and make it a federal crime for “any individual who is not lawfully present in the United States” to open or maintain a U.S. bank account.

“Access to the American banking system is a privilege that should only be reserved for those who respect our laws and sovereignty,” the Senator said in a statement.

Critics of the potential requirement, however, have contended that it could prove costly to financial institutions and the U.S. economy more broadly, potentially block a number of American citizens from accessing banks, and raise privacy concerns for customers.

How the order could impact banks and their customers

Requiring banks to collect documents verifying citizenship from customers could create a hurdle for tens of millions of people around the country. The exact number of non-citizens who own bank accounts in the U.S. is unknown. But a 2023 report from the Federal Deposit Insurance Corporation (FDIC) showed that 96 percent of U.S. households, or roughly 128 million homes, were banked, meaning at least one member of the household had a checking or savings account at a bank. A report from the Census Bureau meanwhile estimated that, as of 2022, 46.2 million people living in the country—almost 14 percent—were foreign-born, nearly half of whom had not been naturalized as citizens.

Efrén Olivares, the vice president of litigation and legal strategy at the National Immigrant Law Center, notes that if non-citizens were unable to access U.S. banks due to the potential new requirement, the American economy could also take a hit.

“A lot of people who are not citizens, who are here on business visas, on tourist visas, on investor visas, do not have citizenship, are not local permanent residents, but they bring millions and millions and probably billions of dollars to this country's economy,” Olivares tells TIME.

He adds that a portion of American citizens could also be shut out from banks if such a requirement were put in place.

A 2023 Brennan Center for Justice survey found that roughly 21.3 million voting-age citizens––or 9.1 percent––do not have documents proving their citizenship easily available to them.  

“Depending on how this Executive Order reads, it may really prevent many U.S. citizens who do not have a passport, who do not have a driver's license, who do not have a valid ID, from opening up a bank account,” he adds.

Eric Rodriguez, senior vice president of policy and advocacy at UNIDOS, a Latino civil rights organization, says the potential order could also raise concerns for customers’ privacy.

“We've already seen the government exceed its authority in collecting and requesting private and confidential information about people between government agencies,” he says. “And if they can require banks to demand in some ways and hold private personal information for lots of folks, it raises the specter that the government may go after that and use it abusively to track down and harass people in communities.”

The Trump Administration has drawn criticism for its moves to share data between federal agencies. Trump has sought to increase that data-sharing since early in second term, signing an Executive Order last March that sought to eliminate “information silos” and allow agency heads to have “full and prompt access to all unclassified agency records” with the stated intention of stopping “waste, fraud, and abuse.”

Immigrant advocacy groups have in particular sounded alarms about information sharing agreements signed between Immigration and Customs Enforcement (ICE) and other agencies, including the Centers for Medicare and Medicaid Services (CMS) and the Internal Revenue Service (IRS), amid Trump’s immigration crackdown. Those agreements are the subject of ongoing legal challenges.

Rodriguez adds that the potential order would “almost de facto put [banks] in a position to somehow enforce immigration laws.”

If users’ private banking information were accessed by the federal government, banks could be held liable for violating laws that safeguard customers’ personal information, Rodriguez says. The Gramm-Leach-Bliley Act, for example, requires financial institutions, such as banks, to explain their information-sharing practices and protect customers’ sensitive data. It also requires banks to explain their customers’ right to opt-out of information sharing with third parties. 

The U.S. banking industry itself has reportedly pushed back against the potential requirement as well. Reports of the executive action being considered drew opposition from representatives of the banking industry, who argued that the requirements would be impractical and costly. Even some longtime Treasury employees urged a less strict version of the contemplated action, according to Bloomberg.

Bessent brushed off the industry’s reported concerns when speaking at a CNBC event on Tuesday.

“If Treasury and the banking regulators say it’s their job, it’s their job,” Bessent told the outlet’s Sara Eisen.

“Our bank executives’ job is to know your customer. How do you know your customer if you don’t know if they have legal or illegal status, whether they are a U.S. citizen or green card holder?”