U.S. banks may not like the idea of being forced to collect nationality data on their customers, but Treasury Secretary Scott Bessent says they better prepare for the task.
“If the Treasury Department and banking regulators say that’s their job, then that’s their job,” Bessent told CNBC’s Sarah Eisen at the Invest in America Forum in Washington, D.C., on Tuesday.
Earlier this week, Bessent said in an interview with Semaphore that the EO is “in the works,” bringing the executive order, which has been discussed for months, one step closer to reality.
The planned EO is another plank in President Donald Trump’s broader effort to gather more information about immigrants in the United States.
Citizenship documents are not required to open a bank account in the United States. Banks are required to verify your identity.
The United States, like many countries, applies “know your customer” rules to bank accounts to prevent money laundering and other financial crimes, verifying customer identity, assessing risk, and monitoring transactions to prevent fraud. Banks collect documents such as your social security number, name, date of birth, and address.
But that doesn’t satisfy Mr. Bessent. “Why would an unknown foreigner be able to come and open an account?” he said at a CNBC event. “Our job as bank executives is to know our customers. How can we know our customers if we don’t know whether they are legal or illegal, U.S. citizens or green card holders?”
Abroad, citizenship information is often required to access banks, but there is no universal obligation. “Every other country does it. Every country does it. … There should be stricter rules,” Bessent told Eisen.
Republicans have expressed support for the idea.
Sen. Tom Cotton (R-Alaska) introduced a bill in March that would require FDIC- or NCUA-insured banks and credit unions to verify that account openers are U.S. citizens, permanent residents, or in the country on valid visas, as well as additional legal status verification checks.
Bessent previously said that the new executive order does not consider Real ID to be a legal document.
Last October, Cotton sent a letter to the Treasury Department “urging the department to begin a review of current regulations that allow illegal aliens to receive financial services and access the U.S. banking system.”
In addition to legal issues, some policy experts and banks have warned of the potential economic damage and significant increases in banks’ administrative costs if people are denied access to banking systems and savings accounts.
The center-right think tank American Action Forum estimates that nationality verification requirements for banks could add 30 million to 70 million hours of administrative work and increase costs by $2.6 billion to $5.6 billion.
“Verifying new accounts is just the tip of the iceberg. The lack of detail makes it difficult to estimate the cost of verifying existing account holders,” the company said in a March analysis.
Illegal immigrants “have no right to enter the banking system,” Bessent told CNBC.
