WASHINGTON — Even though some banks have already been pushing back on such a proposal, Sen. Tom Cotton (R-AR) has introduced legislation that would bar immigrants in the country illegally from accessing the U.S. banking system, including at credit unions.
The measure, titled the “Know Your American Customer Act,” would require financial institutions to verify the legal status of new customers/members before allowing them to open accounts. The proposal would apply to banks insured by the Federal Deposit Insurance Corporation and credit unions backed by the National Credit Union Administration/National CU Share Insurance Fund, according to the Washington Examiner.
Under the legislation, customers/members would need to demonstrate they are U.S. citizens, lawful permanent residents or legally present in the country on a valid visa. Current rules already require identification to open accounts, but the bill would add legal status verification requirements.
‘A Privilege’
“Access to the American banking system is a privilege that should only be reserved for those who respect our laws and sovereignty,” Cotton said, according to the Washington Examiner.
The Examiner reported that the proposal would also make it a federal crime for individuals in the country illegally to open or maintain accounts at covered institutions, provided the financial institution makes a “good faith effort” to verify documentation and comply with the law, according to the report.
To limit disruption, the bill would allow existing customers to maintain their accounts and open new ones if they already have a relationship with the institution, effectively grandfathering in current account holder, the report stated.
Earlier Efforts
Cotton has previously called for tighter controls on financial access for immigrants in the country illegally. In 2025, he urged the Treasury Department to investigate the issue, arguing that allowing such access enables individuals to establish financial ties while bypassing legal immigration channels.
The Arkansas Republican, who serves as Senate GOP conference chair, has introduced several immigration-related measures in recent weeks, according to the Washington Examiner. Among them is the “Naturalization Accountability Act,” which would expand the grounds for revoking citizenship to include felony convictions.
The legislation’s prospects in Congress remain uncertain.
