Published on
May 28, 2026
President Trump Orders Financial Regulators to Mitigate Risks from Immigration Status
Update on Trump's May 19, 2026 Executive Order directing regulators to address financial risks tied to immigration status.
President Donald Trump has signed an executive order aimed at addressing risks to the American financial system posed by certain aspects of immigration status. Titled "Restoring Integrity to America’s Financial System", the order, issued on May 19, 2026, directs several federal agencies to develop guidance and propose regulatory changes to strengthen customer due diligence, address credit risks, and combat illicit financial activities linked to unauthorized work status.
A Risk-Based Approach to Immigration-Related Financial Risks
The executive order emphasizes the role of financial institutions in protecting the public from fraud, abuse, and national security threats. It specifically highlights the potential risks associated with extending financial services to individuals lacking valid work authorization. According to the order, these risks include the possibility of wage loss due to deportation or employer compliance with immigration laws, which could undermine the borrower’s ability to repay loans and destabilize the national banking system.
Notably, the order stops short of mandating universal collection of citizenship information from bank customers. Treasury Secretary Scott Bessent had previously hinted at the possibility of such a requirement, stating in an interview with Semafor World Economy that requiring banks to collect citizenship data would not be "unreasonable." However, the finalized executive order instead advocates for a risk-based approach, allowing financial institutions to request immigration status information only when other risk indicators are present.
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Key Directives and Timelines
The executive order establishes a series of deadlines for federal agencies to take regulatory action, focusing on enhanced compliance and risk management processes:
Treasury Advisory on Red Flags (60-Day Deadline)
By mid-July 2026, the Secretary of the Treasury is required to issue an advisory to financial institutions. This advisory will outline "red flags and typologies" of suspicious financial activities associated with non-work-authorized populations. These include payroll tax evasion, use of nominee accounts, unregistered payment platforms, and financial patterns linked to labor trafficking.
CFPB Guidance on Ability-to-Repay Standards (60-Day Deadline)
The Consumer Financial Protection Bureau (CFPB) must consider clarifying that a borrower’s immigration status and the potential for deportation may be relevant to assessing their ability to repay loans. The CFPB is tasked with ensuring that lenders can incorporate such considerations under the Truth in Lending Act and Regulation Z.
Federal Financial Regulators’ Credit Risk Guidance (60-Day Deadline)
Federal financial regulators - including the Federal Reserve, the Office of the Comptroller of the Currency, the FDIC, and the National Credit Union Administration - are directed to issue guidance on managing credit risks associated with the non-work-authorized population.
Customer Due Diligence Requirements (90-Day Deadline)
By mid-August 2026, the Treasury Department, in consultation with federal financial regulators, must propose changes to the Bank Secrecy Act (BSA) regulations. These changes would strengthen customer due diligence (CDD) requirements, ensuring that financial institutions collect sufficient information to assess risks related to sanctions evasion, fraud, and other illicit activities. Immigration status may be included in such assessments when warranted.
Strengthening Customer Identification Programs (180-Day Deadline)
By mid-November 2026, federal regulators are expected to propose updates to customer identification program (CIP) requirements. These updates will focus on addressing risks posed by foreign consular identification cards and ensuring the integrity of the financial system.
Broader Implications for Financial Institutions
The executive order signals potentially significant changes for anti-money laundering compliance and credit underwriting practices. While financial institutions are not required to implement universal citizenship verification, they will need to allocate resources to align with the forthcoming guidance and regulatory changes.
"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", the executive order declares.
Compliance teams will likely need to update transaction-monitoring systems, enhance suspicious activity reporting, and integrate new standards into customer identification and due diligence processes. Additionally, lenders may have to reconsider underwriting criteria for borrowers without Social Security numbers, ensuring compliance with fair-lending laws.
The full impact of the executive order and its related guidance will unfold as regulatory agencies take action over the coming months. Financial institutions are advised to prepare for potential changes and monitor developments closely.
