Trump Restricts Bank Access for Undocumented Migrants

President Donald Trump’s administration is taking additional measures to prevent people living in the United States without residency authorization from using the country’s banking system. On Monday, a group of financial regulators is expected to issue guidelines intended to remind banks and financial institutions of their “know your customer” requirements regarding credit risk management. The warning is one of several measures the Trump administration has adopted to discourage people who are in the United States illegally from interacting with the extensive American financial system.

The announcement is expected to be made by three banking regulators: the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Association of Credit Unions. The agencies indicated that banks should consider that people in the United States illegally may be unable to repay a loan in case of deportation.

In summary, they note that people working in the United States illegally represent a general risk to the national financial system. There is limited data on how many people in the United States illegally have bank accounts and loans through banks.

This occurs as part of an executive order by President Trump signed in May that requires banks and other financial institutions to more closely examine the citizenship of their customers. That order initiated the most recent wave of changes in banking regulation, instructing banking regulators and government offices to look for signs that people without legal status are opening accounts or obtaining loans or credit cards.

What Specific Measures Will the Government Implement?

The measures are designed to strongly encourage banks to remove such people as customers, without expressly ordering banks to do so. In May, FinCEN, the financial crimes arm of the Treasury Department, issued a notice to banks instructing them to be alert to identity theft, payroll tax fraud, and money laundering schemes linked to hiring people not authorized to work in the United States. The notice urges financial institutions to be alert to more than a dozen red flags indicating that a person is in the United States illegally.

The White House has also taken other measures to discourage people in the United States illegally from using the financial system. In November, the Treasury announced it would reclassify certain refundable tax credits as “federal public benefits,” which prevents some immigrant taxpayers from receiving them, even if they file and pay taxes. Tax experts noted that immigrants who arrived as children to the United States, that is those beneficiaries of Deferred Action for Childhood Arrivals (DACA), and immigrants with Temporary Protected Status would be affected by the planned change.

The guidelines remind financial institutions of their existing obligations under “know your customer” laws. Banks must verify