According to Semafor, the Trump administration will not move forward with a requirement directing financial institutions to collect proof of citizenship for their customers.

Trump Administration Allegedly Considering Executive Order Requiring Banks Verify Citizenship From Customers, White House Spokesperson Responds

A White House official told Semafor that Trump will sign a pair of executive orders "aimed at insulating the US’ financial system from undocumented immigrants and expanding fintech firms’ access to the Federal Reserve’s payment rails," the outlet reports.

Semafor shared further:

The first executive order is a step back from initial proposals, which were expected as recently as Tuesday to direct financial institutions to collect proof of citizenship from their customers. That drew widespread ire from the banking industry, which warned of implementation costs and potential liability.

In a win for Wall Street, the final version instead directs Treasury Secretary Scott Bessent to advise financial institutions on ways undocumented immigrants might open accounts or receive loans.

It will also direct Bessent to work with federal regulators to propose changes to Bank Secrecy Act regulations that strengthen customer-due-diligence requirements and empower financial institutions to seek additional information when necessary, and Bessent and federal regulators to consider changes to BSA regulations that strengthen customer identification program requirements.

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Trump will ask the Consumer Financial Protection Bureau to weigh modifying its rules to include deportation and wage-loss as factors that impact customers’ ability to repay loans. And he’ll call on regulators to issue guidance on managing credit risks associated with undocumented immigrants.

Reuters noted that banks considered checking the immigration status and citizenship of all current clients as "very burdensome" and "nearly impossible."

"Good news! Trump won’t turn banks into border control. It was a terrible idea that I’ve been recently writing against. Glad they’re listening," said Vance Ginn, former chief economist at the White House’s Office of Management and Budget (OMB) during the first Trump administration.

Reuters noted:

Trade groups have explained that such an order could lead to debanking of millions of customers and reduce financial access to Americans. An executive ‌in a large bank that asked for anonymity ​said the administration showed it listens and is ​open to change.

The changes are positive ​to the banks, said Ed Mills, a Washington policy analyst with ‌Raymond James.

"Obviously, the administration wants greater ​controls on immigration, but ​the bank regulators have always wanted as many financial transactions to go through the traditional financial systems. This would have removed a lot of individuals from ​the financial system, which ‌could create a national security risk as well," he added.

 

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