Treasury Secretary Scott Bessent announced at the Invest in America Forum that the Trump administration is preparing to require U.S. banks to collect citizenship data from customers, marking a significant shift in banking compliance requirements [1]. Bessent stated that an executive order (EO) mandating this data collection is 'in process,' and emphasized that banks will be expected to comply if Treasury and banking regulators determine it is their responsibility [1].
Currently, U.S. banks adhere to 'Know Your Customer' (KYC) rules, collecting information such as Social Security numbers, ITINs, names, dates of birth, and addresses to verify identity and prevent financial crimes under laws like the Bank Secrecy Act and the USA PATRIOT Act [1]. However, citizenship documents are not presently required to open a bank account in the U.S. Bessent questioned the adequacy of existing KYC practices, asking, '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?' [1].
The proposed EO is part of President Donald Trump's broader initiative to link immigration policy with information collection efforts, including those related to voting and the Census [1]. Overseas, some countries require citizenship information for banking, but there is no universal mandate. Bessent argued for stricter rules, stating, 'Every other country does it. Every other country. ... There should be stricter rules' [1].
Republican lawmakers, including Sen. Tom Cotton (R-AK), have expressed support for the measure. In March, Cotton introduced a bill to require FDIC or NCUA-insured banks and credit unions to verify the citizenship or legal status of account holders, and previously urged the Treasury to review rules allowing non-citizens access to U.S. financial services [1]. Bessent clarified that Real IDs would not be considered legal documents under the anticipated executive order [1].
Some policy experts and banks have raised legal and operational concerns about the proposed mandate, though specific details of these warnings were not provided in the article [1].
CONCLUSION
The Trump administration is moving forward with an executive order that would require U.S. banks to collect citizenship data, a departure from current KYC practices. While the initiative has garnered Republican support, it faces pushback from banks and policy experts concerned about its implications. The market impact is medium, as the mandate could significantly alter compliance requirements for financial institutions.