U.S. Banks May Face New Customer Data Requirements
U.S. banks might not be thrilled about the prospect of gathering nationality information from their customers, but Treasury Secretary Scott Bessent is suggesting they prepare for it.
Bessent remarked, “If the Treasury and banking regulators say that’s their job, then that’s their job,” during a discussion with CNBC’s Sarah Eisen recently in Washington, D.C.
The executive order, which has been in discussion for a while, has advanced slightly as Bessent indicated earlier this week that an EO is “in progress.”
This proposed order aligns with President Donald Trump’s broader initiative to connect immigration policies with U.S. intelligence efforts, including issues like voting and census data.
Currently, U.S. banks do not require citizenship documents to create an account; they must, however, confirm the identity of their customers. The “know your customer” rules are in place to prevent financial crimes, enabling banks to verify identities and monitor transactions effectively. This is supported by laws like the Bank Secrecy Act and the USA Patriot Act, requiring banks to gather customer information such as Social Security numbers, names, dates of birth, and addresses.
However, Bessent believes that this isn’t enough. He questioned, “Why would an unknown foreigner be able to come and open an account?” He emphasized that bank executives have a responsibility to know their customers. “How can we know our customers if we don’t know their legal status?” he added.
In various countries, providing citizenship information is mandatory to access banking services, though there isn’t a universal requirement. Bessent remarked, “Every other country does it… There should be stricter rules.”
The concept has received support from some Republicans. For instance, Sen. Tom Cotton has proposed a bill to ensure that only U.S. citizens, permanent residents, or those with valid visas can open accounts at insured banks and credit unions.
Previously, Bessent stated that the new executive order does not recognize Real ID as a legitimate document. In a letter to the Treasury last October, Cotton expressed the need for a review of existing regulations that let illegal immigrants access financial services.
However, some experts and banks have raised concerns about potential economic repercussions and higher administrative costs if banking access is restricted. Allowing non-citizens—including undocumented immigrants—to open accounts legally could help them pay taxes and prevent issues linked to being “unbanked,” a status that can adversely affect social mobility and economic contributions.
An analysis by the American Action Forum noted that implementing citizenship verification could lead to a surge in administrative work and costs for banks. They estimated this could mean an increase of 30 to 70 million man-hours and an additional $2.6 billion to $5.6 billion in costs. The report argued that determining the expenses for verifying existing account holders is particularly challenging due to a lack of details.
Bessent, reiterating his stance, stated that undocumented immigrants “have no right to enter the banking system.”
