U.S. banks are grappling with uncertainty over a potential White House executive order that would require them to collect customers’ citizenship or immigration status. Treasury Secretary Scott Bessent recently indicated that the administration is working on such a directive, though details remain unclear. Industry executives say they have received little communication despite the scale of the proposal, which was first reported by The Wall Street Journal. Banking groups have already warned that implementing the requirement could be legally complex, costly, and disruptive, potentially pushing millions of people out of the formal banking system.
Experts and analysts caution that the operational burden on banks would be immense. Current know-your-customer rules do not require verification of citizenship status, and expanding them would demand major upgrades to IT systems, document verification processes, and staff training. The American Action Forum estimates that collecting such data for new accounts alone could cost banks between $2.6 billion and $5.6 billion annually. Legal scholars, including those from Columbia Law School, argue the move could create significant challenges not only for banks but also for ordinary Americans, especially given that many lack readily available proof of citizenship.
The potential impact could be particularly severe for lower-income and rural populations. Millions of Americans do not possess passports or official documentation, making compliance difficult even if the rule applies only to new accounts. Bankers warn that stricter requirements could limit online account openings and lead institutions to turn away customers, raising concerns about financial exclusion and discrimination. With questions also emerging over the legal authority to enforce such a measure, analysts suggest the proposal could face significant regulatory hurdles and court challenges before any implementation.
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