Banks Brace for Citizenship Proof Mandate as Trump Ties Immigration to Financial Access

Treasury Secretary Scott Bessent has a blunt message for U.S. banks. They will collect citizenship data on customers. No exceptions. “If Treasury and the banking regulators say it’s their job, it’s their job,” Bessent told CNBC at the Invest in America Forum in Washington.

An executive order mandating this change sits “in process,” he confirmed. Banks currently verify identity under know-your-customer rules from the Bank Secrecy Act and USA Patriot Act. They gather names, birth dates, addresses, Social Security numbers or ITINs. Citizenship status? Not required. That gap irks Bessent. “Why can unknown foreign nationals come and open a bank account?” he asked. “How do you know your customer if you don’t know if they have legal or illegal status, whether they are a U.S. citizen or green card holder?”

The push fits President Trump’s immigration crackdown. It links financial access to legal status checks, much like efforts on voting and Census data. Bessent insists other nations demand this. “Every other country does it. Every other country. … There should be stricter rules.” Real IDs won’t cut it; they’re off the table as proof.

Sen. Tom Cotton backs the idea. His March bill targets FDIC- and NCUA-insured banks and credit unions. It demands verification that account holders are citizens, permanent residents or on valid visas. Cotton prodded Treasury last October to block illegal immigrants from financial services. Republicans cheer. Banks? Not so much.

Billions in Costs, Millions Unbanked?

Compliance hits hard. The American Action Forum, a center-right think tank, pegs new paperwork at 30 million to 70 million hours. Costs? $2.6 billion to $5.6 billion. That’s for new accounts alone. Existing customers add unknowns. Banks face system overhauls, staff training, customer outreach. Some warn of account closures for non-compliers, swelling the unbanked population.

Noncitizens with ITINs now bank legally. They pay taxes, build credit, join the economy. Cut that off, and cash-only lives return. Economic growth stalls. Policy experts flag risks: fewer ladders for immigrants to climb, less tax revenue, shadow economies thriving. Bessent dismisses it. Illegal immigrants “don’t have a right to be in the banking system.”

Business Insider notes banks expected deregulation under Trump. Now this. Higher costs could mean fee hikes or lost business. Customers without passports—tens of millions of Americans—scramble. Dual nationals face tax headaches, as Forbes points out. A “passport gap” emerges.

The idea simmered since February. Wall Street Journal reported internal talks then. An order or Treasury action via FinCEN could demand passports for new and old accounts. Time says it risks hurdles for millions. No final call on closures yet. But pressure builds.

Industry pushback simmers quietly. A March American Banker piece hailed a delay. Experts called it immigration enforcement outsourced to banks. Anisha Steephen, ex-Treasury advisor, said: “Requiring banks to collect and report citizenship status isn’t a banking policy. It’s immigration enforcement outsourced to private financial institutions.” That pause ended. Bessent’s words signal go.

And the timeline? Urgent. Banks prep now. Customers notice. X posts buzz with fears: seized accounts, hungry kids from lost benefits. Others applaud: banks abroad demand visas. Common sense, they say. Steven Brown, an immigration attorney, notes banks collect some status data already under KYC—but not documents. The EO ups the ante.

But here’s the rub. Implementation trips over reality. Passports cost $130-plus. Birth certificates vary by state. Noncitizens need ongoing visa checks. Banks verify docs, report what? FinCEN? IRS? Legal fights loom. Courts could stall it, as with past Trump orders. Banks lobby hard. Costs bite big players like JPMorgan, Bank of America most.

Broader effects ripple. Immigrants remit billions home yearly. Banking access fuels that. Clamp down, and informal channels boom—riskier for crime. Tax compliance drops. Credit markets shrink. Yet proponents eye security wins: less laundering via ghost accounts, better immigration tracking.

So banks pivot. Compliance teams expand. Tech upgrades roll. Customers dig for papers. Trump ties finance to borders tighter. Bessent’s forum talk marks the pivot point. Watch for the order. It reshapes who banks—and who doesn’t.