WASHINGTON — A Trump administration proposal to use the U.S. banking system as a tool for immigration enforcement is drawing strong pushback from financial institutions, regulators and industry experts, raising questions about the feasibility of the plan, according to reports.
As the CU Daily reported here earlier, the proposal would require financial institutions to collect and potentially verify customers’ citizenship or immigration status as part of account opening and maintenance processes, according to reporting by The Washington Post. Whether credit unions would also be involved in such data collection has not been specifically reported.
After weeks of internal discussions, the administration has delayed moving forward amid widespread resistance from banks and government officials, also reported by The Washington Post.
Bank executives and trade groups say the proposal would impose significant operational burdens, requiring institutions to verify documentation for millions of customers — a process they argue would be costly and difficult to implement.
Industry participants told The Washington Post the plan could also disrupt access to financial services, noting that many Americans do not possess passports or other documents that might be required to verify citizenship.
Could Drive Some from System
Analysts cited by American Banker warned the proposal could drive customers — particularly immigrants — out of the traditional banking system, potentially pushing them toward alternative financial services outside regulatory oversight.
Opposition has also emerged within the federal government. Career staff at the Treasury Department raised concerns about the proposal’s feasibility and unintended consequences, according to Bloomberg.
Legal experts told American Banker the policy could create conflicts with existing compliance frameworks, including requirements under the Bank Secrecy Act, which governs customer identification and anti-money-laundering rules but does not require verification of immigration status.
More Limited Approach Under Consideration
Facing mounting criticism, administration officials are considering narrowing the proposal to apply only to new accounts, rather than existing customers, according to people familiar with the matter cited by The Washington Post.
Even with that adjustment, financial institutions say the policy would mark a significant shift in their role, effectively positioning banks as participants in federal immigration enforcement.
Critics cited by The Daily Beast warned the approach could politicize the banking system and erode consumer trust in financial institutions.
One Response
I find this interesting because of big banks cracking down on the January 6th accounts.