President Trump signed an executive order on May 20 that requires banks to take a closer look at the citizenship of their customers. The order—titled “Restoring Integrity to America’s Financial System”—signals a material shift in how financial institutions must treat immigration status in their risk assessment and compliance programs. If you counsel non-citizens, DACA recipients, or ITIN holders on financial planning, or advise clients on banking access, you need to understand what this order requires and how it may affect your clients’ accounts.
What changed
The order directs the Treasury Secretary and federal financial regulators to issue guidance to banks on identifying customers whose profiles or transactions potentially indicate risks like money laundering, terrorism financing, and labor trafficking in line with the 1970 Bank Secrecy Act. 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 “red flags” to watch for include payroll tax evasion, attempts to conceal identity, the “strategic use” of unregistered money services businesses or third-party payment platforms, labor trafficking or forced labor and the use of individual taxpayer identification numbers to obtain credit or open accounts. The order also directs the Treasury to consider regulatory changes under the Bank Secrecy Act that would enable financial institutions to more readily collect customer data, including immigration status and employment authorization.
Importantly, the order is less aggressive than banks had expected, as earlier reports suggested the White House was drafting an order that would make collecting customers’ citizenship information mandatory. Since the order only offers guidance to the banks instead of a mandate, it appears the banks were able to win over the White House.
Why it matters
This order reframes immigration status as a money-laundering risk factor, moving it from a legal/regulatory gray zone into a formal compliance obligation. 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. That changes now in substance, if not formally in regulation.
For your clients:
- Non-citizens and ITIN holders may face heightened scrutiny when opening accounts or taking out loans. Banks will begin flagging ITIN usage and may impose additional documentation requirements or deny services.
- DACA recipients and TPS holders should expect that banks will begin tracking immigration status and may face account closures or service restrictions if banks view them as “removal risks.”
- Undocumented immigrants may increasingly avoid regulated banking altogether, moving back into cash-based transactions or informal money transfer systems—a trend that worsens their financial vulnerability and creates other legal exposure.
The move could make it more difficult for non-citizens, especially undocumented immigrants, to access financial services, even for legitimate reasons. Immigration advocates have previously said any order that would order banks to collect citizenship information would likely result in undocumented immigrants moving out of the financial system, increasing the number of “unbanked” individuals.
Way forward
- Document your client’s immigration status and eligibility. If your client is a lawful permanent resident, DACA holder, TPS recipient, or other person with lawful status, ensure they have that documentation readily available when opening accounts or applying for credit. Banks will be asking.
- Advise clients to open/consolidate accounts now before compliance programs tighten. Clients with borderline documentation or mixed immigration status may face barriers within weeks as banks implement new screening.
- Monitor your client’s existing accounts. If your client is undocumented or in mixed-status households, discuss the risk that existing accounts could be flagged or closed under new bank policies. Develop a contingency plan for financial access and any balances at risk.
- Anticipate tax reporting conflicts. Clients using ITINs for tax purposes should understand that ITIN usage is now an explicit bank “red flag.” This creates tension for undocumented workers who file taxes voluntarily but may be identified as non-compliant with immigration law as a result.
Disclaimer
This article is not legal advice. Fola is a software company, not a law firm. Immigration law and banking regulation intersect in complex ways that vary by institution, jurisdiction, and individual circumstance. Consult a licensed immigration attorney in your jurisdiction before advising clients on banking strategy or financial planning in light of this order. Policy can change without notice; verify the current guidance and any Treasury or regulatory updates against the primary source linked above and with your local financial regulators.