Trump Executive Order on banking is here. Banks are not being told to verify citizenship, but to look far more closely at immigration and work authorization risk. The EO leaves significant discretion to regulators and financial institutions. What happens next?
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Following concerns that banks might soon require proof of U.S. citizenship from all customers, President Trump’s May 19, 2026 Executive Order, “Restoring Integrity to America’s Financial System,” while taking a narrower approach still leaves many open questions and policy implications. The Executive Order does not impose a universal citizenship verification requirement. Instead, it directs federal agencies and financial regulators to strengthen risk-based compliance measures focused on individuals lacking work authorization and on financial activity viewed as presenting elevated fraud, money laundering, tax evasion, trafficking, or credit risks.
In my earlier Forbes article, Is Citizenship Becoming The New Banking Requirement? I examined the significant practical and legal challenges that could arise if financial institutions were required to verify U.S. citizenship as a condition of providing banking services. The Executive Order ultimately stops short of imposing such a requirement.
The more significant development, however, may be how financial policy is implemented in practice rather than how it is framed in statutory or executive language. Recent Treasury implementation decisions around federally related financial accounts have already raised questions about how custodial structures, onboarding systems, and intermediary institutions can affect real-world access for individuals even if they are legally entitled to use such accounts under a statute but who may nonetheless encounter significant administrative friction in the process.
Taken together, these developments underscore a broader point. Financial access is increasingly shaped not only by formal eligibility rules, but also by how compliance systems, identity verification frameworks, and institutional risk design operate in practice. The coming Treasury advisories and proposed Bank Secrecy Act changes will determine whether the new framework remains narrowly focused on unauthorized employment and illicit-finance risks or evolves into a broader compliance structure with wider implications for lawfully present foreign nationals engaged in cross-border financial activity.
What’s Next? What We Can Expect?
Within 60 days, the Treasury Department must issue a formal advisory to financial institutions identifying suspicious activity “red flags.” These include payroll tax evasion schemes, labor trafficking indicators, structuring activity, use of various mechanisms to conceal the identity of true owners including nominee accounts, shell companies, or complex “funnel” structures, certain uses of foreign identity documents, and the use of Individual Taxpayer Identification Numbers (ITINs) in situations where lawful immigration status has not been verified.
Also within 60 days, the Consumer Financial Protection Bureau is directed to consider clarifying that potential deportation or loss of wages may be relevant factors when evaluating a borrower’s ability to repay. Federal banking regulators are likewise directed to issue guidance regarding credit risks associated with lending to individuals who are not authorized to work.
Within 90 days, Treasury and federal banking regulators must propose changes to Bank Secrecy Act regulations designed to strengthen customer due diligence requirements. The proposal contemplates giving financial institutions greater authority to obtain additional information when risk indicators are present, including information relating to lawful immigration status and employment authorization when these are relevant to assessing illicit-finance, fraud, or compliance risks.
Within 180 days, Treasury Department and banking regulators must consider revisions to customer identification requirements, including the risks associated with use of foreign consular identification cards.
The Potential Impact On Lawfully Present Foreign Nationals
An important unanswered question is how financial institutions will apply these enhanced due diligence standards to lawfully present foreign nationals.
Many individuals who fully comply with U.S. tax and immigration laws routinely rely on foreign passports, foreign identity documents, overseas financial records, and, in some cases, ITINs. Foreign bank accounts, foreign investment holdings, and cross-border financial activity are often a normal part of life for immigrants, visa holders, foreign investors, and newly arrived U.S. residents.
If banks begin treating these factors as elevated-risk indicators requiring additional review, documentation, or approval procedures, the practical impact could extend well beyond the Executive Order’s stated focus on unauthorized employment and unlawful presence. For many foreign nationals, ordinary aspects of international life could increasingly become part of the banking compliance review process.
Bottom Line
The Executive Order is not mandating that financial institutions implement a blanket citizenship verification requirement. Most routine customers are unlikely to experience immediate changes. However, if an individual presents with a higher-risk compliance profile it could result in enhanced scrutiny, requests for further documents, and possibly greater restrictions on certain banking and credit products. For foreign nationals living, investing, or doing business in the United States, the forthcoming implementation details will likely determine the real-world impact.
Reach me at vljeker@us-taxes.org
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This communication is for general informational purposes only. It is not intended to constitute tax advice or a recommended course of action. Professional tax advice should be sought as the information here is not intended to be, and should not be, relied upon by the reader in making a decision.