WASHINGTON — America’s Credit Unions is requesting that an effort be made to “minimize” any new regulations after Treasury Secretary Scott Bessent said a proposed executive order that could require banks to collect citizenship information from customers is “in process.”
The trade group has also offered a number of recommendations for any new rules.
Bessent made the remarks in an interview with The Hill, saying he did not view the potential requirement as unreasonable. The proposal has raised questions among credit unions concerned over what compliance mandates it might entail.
“And I don’t think it’s unreasonable, because why don’t we have information on who’s in our banking system?” Bessent said, according to the report. “I have a place in the UK; they want to know who lives in every apartment — and how do we know that it’s not part of a foreign terrorist organization?”
As the CU Daily reported earlier, the draft executive order was first disclosed earlier this year and would require financial institutions to request additional identification documents from customers. The proposal would mark another step in the Trump administration’s broader efforts to address illegal immigration.
REAL IDs Would Not Qualify
According to The HIll, REAL IDs would not qualify under the proposed requirement because they do not establish citizenship status.
The potential policy has drawn support from some Republicans. After The Wall Street Journal reported banks could require passports under the plan, Sen. Tom Cotton (R-AR) reposted a letter he sent to Bessent in October urging a review of rules that allow undocumented immigrants to access financial services.
“Access to the American banking system is a privilege that should be reserved for those who respect our laws and sovereignty,” Cotton wrote in the letter, as cited by The Hill. “When individuals are allowed to open accounts without verifying legal status, we are permitting illegal aliens to establish financial roots and integrate economically, all while bypassing the legal channels that millions use properly.”
America’s Credit Unions Wants Compliance Burden Minimized
In response to the comments, America’s Credit Unions President/CEO Scott Simpson has asked the administration to minimize the compliance burden on credit unions.
“Credit unions already comply with the Customer Identification Program (CIP) requirements established under the Bank Secrecy Act and implemented by the Financial Crimes Enforcement Network (FinCEN),” Simpson wrote in a letter to Bessent. “The existing CIP framework requires credit unions to obtain and verify identifying information for each person opening an account and provides a risk-based approach that has functioned effectively for more than two decades. Expanding these obligations to require the collection and verification of citizenship information would impose additional operational, technological, and member-service burdens on credit unions, and those burdens would fall particularly hard on smaller institutions with limited compliance resources.”
Recommendations Offered
Should the administration move forward with an Executive Order, Simpson’s letter offered several recommendations to minimize the impact on credit unions:
- Implementation: Simpson asked for CIP changes to go through notice-and-comment rulemaking to “allow affected institutions to identify operational concerns, provide data on implementation costs, and propose workable verification standards before new obligations take effect” while also allowing financial regulators to coordinate supervisory expectations.
- Prospective application: Simpson requested that any new requirement apply to prospective accounts, noting that requiring retroactive citizenship documentation for existing accounts “would present substantial operational challenges” and “would fall disproportionately on smaller credit unions, which often serve rural, low-income, and underserved communities and which have limited staff and technology resources available for large-scale outreach.”
- Compliance runway: Simpson called for “an adequate implementation period” to allow credit unions time to appropriately update processes and systems, in consultation with regulators and industry stakeholders to determine what is feasible.
- Good-faith standard: Simpson commended the administration on its commitment to reducing regulatory burdens on community financial institutions. Consistent with those efforts, federal regulators should honor good-faith efforts to comply with any new requirements.
No Confirmation From White House
The Hill reported that the White House has not confirmed the policy. White House spokesman Kush Desai told NewsNation earlier this year that media reports on the potential order were unverified.
“Any reporting about potential policymaking that has not been officially announced by the White House is baseless speculation,” Desai said, according to The Hill.
A White House official told The Hill that the administration “continues to explore ways to protect our banking system from unacceptable credit risks and to ensure that banking services remain available and affordable for all Americans.”
