Trump Drops Plan for Banks to Collect Citizenship Data Under Bank Secrecy Act

(UNITED STATES) — President Donald Trump did not move forward with a requirement that banks collect proof of citizenship from customers, retreating in a final executive order released on May 20, 2026 from an earlier proposal that would have required financial institutions to gather citizenship documentation.

The White House had scheduled a pair of executive orders for May 20, 2026, and the final language in the banking order backed away from the citizenship-document proposal that had circulated earlier. Instead of directing banks to demand citizenship records, the order shifted toward instructions for Treasury and financial regulators.

Under the final order, Treasury Secretary Scott Bessent is directed to advise financial institutions on ways undocumented immigrants might open accounts or receive loans. The order also directs Bessent and federal regulators to consider changes to Bank Secrecy Act rules that would strengthen customer-due-diligence and customer identification program requirements.

Trump’s order also asks the Consumer Financial Protection Bureau to consider whether deportation and wage loss should factor into borrowers’ ability to repay loans. That language places another federal agency into the policy effort, with a focus on how lenders assess repayment risk.

The change marked a clear shift from the earlier idea under discussion from February to May 2026. That earlier proposal would have required banks to collect proof of citizenship, such as a U.S. passport, from new and possibly existing customers.

Banking industry opposition helped shape the outcome. The proposal drew strong pushback over compliance costs and liability concerns, two issues that financial institutions often raise when new identity-checking requirements affect large customer bases and account-opening systems.

By dropping the citizenship-document requirement, the administration avoided imposing a rule that would have changed how banks collect information from customers at the front end of the banking relationship. The final text left intact the broader focus on identification and due diligence, but it stopped short of ordering banks to gather direct proof of citizenship.

That distinction matters in practical regulatory terms. Customer identification program requirements and customer-due-diligence standards already sit inside existing compliance structures, while a citizenship-document mandate would have added a separate evidentiary step tied specifically to nationality.

The final order does not leave banks untouched. Bessent and federal regulators are instructed to consider changes to Bank Secrecy Act rules, and those changes could affect how financial institutions handle customer-due-diligence and customer identification program processes.

Those two compliance areas form part of the routine mechanics banks use to identify customers and assess risk. Strengthening them under Bank Secrecy Act rules would keep the administration’s attention on account-opening controls, even after the White House dropped the more direct citizenship-check proposal.

The directive involving undocumented immigrants also sets up a difficult policy balance. On one hand, Bessent is told to advise financial institutions on ways undocumented immigrants might open accounts or receive loans; on the other, the same order points regulators toward tighter due-diligence and identification requirements.

That combination suggests the administration wants Treasury and regulators to examine access to financial services and scrutiny of customer identity at the same time. The text released on May 20, 2026 does not return to the earlier approach of requiring banks to collect proof of citizenship from customers.

The Consumer Financial Protection Bureau now has a separate question to examine: whether deportation and wage loss should factor into a borrower’s ability to repay loans. That would place immigration-related disruption alongside more traditional lending considerations in any future analysis the bureau undertakes.

For lenders, that part of the order points toward underwriting and repayment standards rather than account-opening paperwork. Deportation and wage loss are framed in the final language as possible factors in borrower repayment capacity, a signal that the administration wants regulators to examine how those risks fit into credit assessments.

The White House’s shift from the earlier proposal also narrows one of the most contentious parts of the debate. Requiring proof of citizenship from new and possibly existing customers would have pushed banks to collect documents such as a U.S. passport, raising questions inside the industry about operational burden and exposure to liability if records were mishandled or misapplied.

By contrast, the final executive order leaves the next steps with Treasury, federal regulators and the Consumer Financial Protection Bureau. Their work now centers on advice to financial institutions, possible revisions to Bank Secrecy Act rules tied to customer-due-diligence and customer identification program standards, and analysis of whether deportation and wage loss belong in borrower repayment assessments.

What comes next will depend on that guidance and review process. Banks and regulators will be watching for any recommendations from Bessent on how undocumented immigrants might open accounts or receive loans, as well as any proposals to revise Bank Secrecy Act compliance rules that govern how customers are identified and assessed.

The order released on May 20, 2026 leaves Trump’s banking policy in a narrower form than the version floated earlier in the year. The administration stepped back from forcing banks to collect citizenship documents, but it kept pressure on regulators to revisit identification rules, due-diligence standards and the way lenders judge repayment risk.