Treasury Secretary Bessent Confirms Executive Order Requiring Banks to Collect Citizenship Data Is ‘In Process’

Treasury Secretary Scott Bessent confirmed this week that a proposed executive order requiring banks to collect citizenship information from account holders is actively being developed, marking what could be one of the most significant changes to U.S. banking regulations in decades. Bessent defended the initiative, asking publicly, “Why don’t we have information on who’s in our banking system?” The move would represent a dramatic expansion of federal know-your-customer requirements and has already drawn intense debate over its implications for immigration enforcement, financial privacy, and the broader banking system.

The proposed executive order sits at the intersection of two of the Trump administration’s highest domestic priorities: immigration enforcement and financial system oversight. Under existing law — primarily the Bank Secrecy Act of 1970 and its subsequent amendments, including provisions strengthened by the USA PATRIOT Act of 2001 — banks are already required to implement robust Customer Identification Programs (CIPs). These programs mandate that financial institutions verify the identity of individuals opening accounts by collecting names, dates of birth, addresses, and identification numbers. However, crucially, current regulations allow banks to accept Individual Taxpayer Identification Numbers (ITINs) issued by the IRS, which are available to individuals regardless of immigration status. This has long served as the primary mechanism through which noncitizens, including undocumented immigrants, access the formal banking system. The proposed order would fundamentally alter this framework by adding citizenship status as a required data point, effectively creating a new layer of screening that could exclude millions from traditional banking services.

The implications of such a policy shift extend far beyond immigration enforcement. Financial inclusion advocates have long argued that pushing individuals out of the formal banking system drives them toward unregulated alternatives — cash-only economies, unlicensed money transmitters, and informal lending networks — which are far more difficult for law enforcement to monitor and which are frequently exploited by criminal enterprises. The Federal Deposit Insurance Corporation (FDIC) estimated in its most recent national survey that approximately 4.5 percent of U.S. households — roughly 5.9 million — were “unbanked” as of 2021, a figure that had been declining steadily over the previous decade. Critics of the proposed order warn that it could reverse that trend significantly. Additionally, the banking industry itself faces enormous practical challenges: retroactively collecting citizenship data from tens of millions of existing customers would require massive investments in technology, staffing, and compliance infrastructure. The American Bankers Association and other trade groups have historically resisted mandates that expand data collection requirements due to both cost and liability concerns, particularly around data security.

Legal experts are already raising questions about whether an executive order alone carries sufficient authority to impose such a sweeping change on the banking sector, or whether Congressional action would be required to amend the Bank Secrecy Act and related statutes. Executive orders directing regulatory agencies like the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to issue new rules would still need to go through formal rulemaking processes under the Administrative Procedure Act, which typically involves public comment periods and could face legal challenges. Civil rights organizations are expected to mount court challenges arguing that the policy constitutes discriminatory profiling, while state attorneys general in jurisdictions with large immigrant populations may also intervene. Meanwhile, the practical question of what banks would be required to do with the collected citizenship data — whether it would be shared with Immigration and Customs Enforcement (ICE) or other agencies — remains unanswered and will be a critical factor in determining the order’s ultimate legal and political viability.

Looking ahead, the timeline for the executive order’s finalization remains unclear. Bessent’s use of the phrase “in process” suggests the administration is still working through legal and logistical details. Congressional allies of the administration may seek to codify such requirements legislatively to insulate the policy from legal challenge, while opponents in both chambers are likely to introduce countermeasures. The banking industry’s response will be pivotal — if major financial institutions push back strongly on implementation costs and data liability, it could slow or reshape the initiative. For the estimated millions of noncitizens who currently rely on the U.S. banking system for everyday transactions, the stakes could not be higher, and the coming weeks will likely bring intensified lobbying from all sides of the debate.