Trump Signs Executive Order Directing Banks to Weigh Immigration Status as Financial Risk

WASHINGTON — President Donald Trump signed an executive order on May 20, 2026, that directs federal financial regulators to develop new guidance for banks on assessing risks associated with a customer’s immigration status, a move that extends the administration's immigration enforcement strategy into the financial sector. The order, titled “Restoring Integrity to America’s Financial System,” instructs the Treasury Department and other agencies to guide financial institutions on how to identify and manage potential credit risks posed by customers who may be in the country without legal authorization. The White House framed the directive as a necessary measure to protect the stability of the U.S. financial system. According to the administration, the primary concern is that individuals subject to deportation proceedings may be unable to fulfill their financial obligations, such as repaying loans, if they are removed from the country. The text of the order states the administration “will not tolerate national security and public safety risks caused by illicit cross-border financial activity, nor will it permit risks to our financial system posed by the extension of credit or financial services to the inadmissible and removable alien population.” This action represents a significant expansion of immigration policy, moving beyond traditional enforcement at the border and in workplaces to scrutinize consumer banking activities. The order effectively requires banks to begin treating immigration status as a material factor when evaluating financial risk for services like loans and credit cards. However, the final version of the executive order is notably less prescriptive than many financial institutions had anticipated. Earlier reports and statements from administration officials, including Treasury Secretary Scott Bessent, had suggested a more aggressive policy was under consideration. Bessent recently told Semafor World Economy that an order requiring banks to collect proof of citizenship from all customers was “in process,” remarking that he did not think such a requirement would be “unreasonable.” Contrary to those expectations, the order signed this week does not impose a universal mandate on banks to collect citizenship or immigration data from every customer. Instead, it opts for a more incremental, risk-based approach. The directive focuses on instructing regulators to formulate the rules of engagement, leaving the specific operational changes for banks to be determined by that forthcoming guidance. For millions of non-citizens legally living and working in the United States, the order introduces a new layer of uncertainty into their financial lives. A key provision highlights that the use of an Individual Taxpayer Identification Number (ITIN) in place of a Social Security number could be a factor that triggers “enhanced due diligence” by a financial institution. ITINs are issued by the Internal Revenue Service to individuals who are required to have a U.S. taxpayer identification number but who do not have and are not eligible to obtain a Social Security number. This enhanced scrutiny does not mean an account will be automatically closed, but it could lead to banks requesting additional documentation to verify a customer’s identity, source of funds, and account activity. Many immigrants also use consular identification documents to access financial services, and while the order does not make these forms of ID illegal, their use could also come under review as banks adapt to the new regulatory environment. Advocacy groups and immigration analysts have raised concerns that the policy could have a chilling effect on financial inclusion. By introducing immigration-related scrutiny into routine banking, the order may make it more difficult for non-citizens, regardless of their specific status, to open accounts, secure loans for homes or businesses, or build credit. This could inadvertently push a larger segment of the population into the unbanked or underbanked categories, forcing them to rely on more costly and less secure alternatives like check-cashing services and payday lenders. For non-resident entrepreneurs and investors operating in the U.S., this executive order introduces a significant layer of uncertainty into their financial operations. While the order avoids a blanket mandate to check citizenship, it officially designates immigration status as a financial risk factor, a move that will inevitably trickle down to how banks interact with foreign-national clients. We are particularly concerned about the focus on Individual Taxpayer Identification Number (ITIN) users. An ITIN is a critical and legitimate tool issued by the IRS for federal tax reporting, yet this order frames its use as a potential red flag requiring 'enhanced due diligence.' This creates a challenging environment for compliant, tax-paying non-residents. In our experience, proactive and meticulous documentation is the best defense against banking disruptions. This is precisely the kind of challenge C&S Finance Group LLC helps clients navigate through our services for ITIN acquisition for non-residents. We guide clients through securing the proper credentials and maintaining compliance to ensure their access to the U.S. financial system is not jeopardized. For assistance, visit us at csfinancegroup.com. With the executive order now signed, the focus shifts to the federal regulatory agencies tasked with its implementation. The Treasury Department, along with federal banking regulators, will now begin the process of drafting and issuing the specific guidance that will translate the order’s directives into concrete rules for financial institutions. The content of these forthcoming regulations, and the timeline for their release, will ultimately determine the true operational impact on banks and the financial security of their non-citizen customers across the country.