On May 19, 2026, President Trump signed an Executive Order directing financial institutions to strengthen customer identification requirements and to treat immigration status as a factor in financial risk assessment. The Order signals a substantial shift in how federal policymakers expect banks, credit unions, and other regulated lenders to evaluate account holders and credit applicants, and it sets the stage for forthcoming Treasury guidance that will carry direct compliance consequences for the industry.
Under the Order, the Secretary of the Treasury is tasked with issuing a formal advisory identifying red flags and suspicious activity patterns linked to payroll tax evasion, off-the-books wage payments, and the use of Individual Taxpayer Identification Numbers (ITINs) to open accounts or obtain credit without verified legal presence. While the precise contours of that advisory remain to be seen, the Order makes clear that regulators will expect institutions to integrate these considerations into their Bank Secrecy Act and anti-money laundering frameworks, including Customer Identification Program (CIP) and Know Your Customer (KYC) procedures, as well as Suspicious Activity Report (SAR) filings.
For financial institutions, the practical implications are immediate. Compliance leaders should begin reviewing existing CIP and KYC protocols to confirm they can capture and document the data points that Treasury is likely to emphasize, and should evaluate whether current SAR narratives adequately address the categories of conduct flagged in the Order. Institutions with meaningful ITIN-based account or lending portfolios should consider a targeted risk reassessment, including transaction monitoring rules, onboarding documentation standards, and escalation procedures, to identify exposures that may require remediation before the advisory is published.
Equally important, banks and lenders should anticipate the operational and training implications of the new expectations. Compliance, front-line, and lending personnel will need updated guidance and retraining to apply the forthcoming standards consistently, and legal counsel should be engaged early to help reconcile the Order with existing fair lending, privacy, and nondiscrimination obligations. Boards and senior management should also be briefed on potential regulatory examination focus areas and reputational considerations.
This update is provided for general informational purposes only and does not constitute legal advice. Clients facing specific compliance questions or portfolio decisions should seek tailored guidance from qualified counsel.