Banks may face big citizenship-data bill

U.S. banks are bracing for a possible new mandate to collect customers’ citizenship information, a change Treasury Secretary Scott Bessent said this week is “in process.” (cnbc.com) No executive order or formal rule has been published yet, but Bessent’s April 15 remarks moved the proposal from rumor to an active administration plan. Earlier reports said the White House was weighing an order that could apply to both new and existing accounts. (bloomberg.com 1) (bloomberg.com 2) Today, banks opening accounts must verify identity under Customer Identification Program rules and run anti-money-laundering checks; they do not generally have to verify whether a customer is a U.S. citizen. FinCEN’s current customer-due-diligence rule focuses on identity, beneficial ownership, and suspicious activity monitoring. (fincen.gov) That distinction is the operational fight. Verifying “who you are” can be done with a driver’s license or other identification; verifying “what your citizenship status is” can require passports, naturalization papers, immigration records, or new database links that many banks do not use in routine account opening. (forbes.com) Banks had spent the first months of 2026 expecting some compliance relief instead. On February 13, FinCEN gave covered institutions exceptive relief from having to identify and verify beneficial owners at each new account opening for legal-entity customers. (fincen.gov) Then, on April 7, FinCEN proposed a broader anti-money-laundering and counter-terrorism-financing rewrite that it said would “modernize” Bank Secrecy Act programs and shift attention toward higher-risk customers and activities. Comments on that proposal are due June 9, 2026. (fincen.gov) The citizenship push is coming from a different lane inside the administration. A March 25, 2025 executive order on “America’s bank account” told Treasury to tighten controls over federal payments and cited an estimated $233 billion to $521 billion in annual federal fraud losses from the Government Accountability Office. (whitehouse.gov) (federalregister.gov) Treasury has already used that order to push other system changes. On May 30, 2025, it said federal payments made by paper check, including Social Security benefits and tax refunds, would move to electronic delivery starting September 30, 2025, and asked for public input on the transition. (home.treasury.gov) Banks and their trade groups have been cautious in public. Bloomberg reported in February that the American Bankers Association and Bank Policy Institute declined to comment, while a White House spokesman called unannounced policy reporting “baseless speculation”; by mid-April, Bessent was openly defending the idea. (bloomberg.com) (thehill.com) The customer impact could extend beyond compliance departments. The Federal Deposit Insurance Corporation said 4.2% of U.S. households, about 5.6 million, were unbanked in 2023, and Treasury’s own 2025 payments notice said unbanked and underbanked consumers needed help transitioning into the banking system. (fdic.gov) (home.treasury.gov) What happens next depends on whether the White House issues an order, how Treasury writes any follow-on rule, and whether banks get time to retrofit account-opening systems for millions of records. For now, the biggest fact is still the simplest one: a banking rulebook built around identity checks may soon be asked to track citizenship too. (time.com)