WASHINGTON — President Trump has signed an executive order the White House says is aimed at tightening oversight of the U.S. financial system by directing federal agencies to strengthen anti-money laundering safeguards and identify potential abuse tied to illegal activity, while stopping short of requiring FIs to broadly collect citizenship information from customers.
The executive order, titled “Restoring Integrity to America’s Financial System,” directs the Treasury Department to issue advisories to financial institutions identifying “red flags” linked to payroll tax evasion, concealed account ownership, labor trafficking and the misuse of taxpayer identification numbers, according to the White House.
The Specifics
Specifically, the order:
Specifically, the executive order would direct the agencies to:
- Within 60 days: Treasury to issue an Advisory listing red flags for suspicious activity, including ITIN accounts, consular ID use, and payroll-related structuring
- Within 60 days: NCUA and the other banking regulators to issue guidance on credit risks of lending to non-work-authorized borrowers. The CFPB to consider whether deportation and wage loss can be weighed in ability-to-repay decisions
- Within 90 days: Treasury to propose BSA rule changes allowing institutions to ask about immigration status in risk-based due diligence
- Within 180 days: Treasury and the financial regulators to consider tightening CIP rules on foreign consular ID cards
According to Reuters and The Wall Street Journal, the administration had previously considered a broader proposal that would have required banks to collect citizenship or immigration-status documentation from customers. Banking industry groups and financial institutions reportedly warned such a mandate would be costly, difficult to implement and could drive some consumers outside the regulated banking system.
The revised executive order instead focuses on heightened scrutiny of suspicious financial activity involving undocumented immigrants and illicit networks, including money laundering operations and labor trafficking schemes, according to the White House and media reports.
America’s CUs Reviewing Order
In a statement, America’s Credit Unions President and CEO Scott Simpson said credit unions welcomed the administration’s decision to seek stakeholder input before imposing new compliance mandates.
“We appreciate President Trump’s approach to ensure compliance burdens do not weigh heavily on credit unions as it considers ways to verify account holder identities,” Simpson said in a statement. “We have engaged the administration on this issue, highlighting the high regulatory standards credit unions are held to, and encouraged policymakers to pursue these efforts through an official rulemaking process. While we continue our review and assessment of the Executive Order, it appears as though the directive aligns with our requests for stakeholder input and time to implement any changes.”
Separate EO Signed
Trump also signed a separate executive order Tuesday directing federal financial regulators and the Federal Reserve to review rules viewed as limiting financial technology innovation and to consider expanding access to the Fed’s payment systems for fintech and nonbank firms.
The White House said regulators are expected to now begin developing proposed rule changes tied to the order, including possible updates to customer due diligence and anti-money laundering requirements under the Bank Secrecy Act.
