Trump EO demands banks ‘consider’ immigration status before issuing credit

The order instructs the Treasury Department to issue warnings to banks about suspicious activity linked to payroll tax evasion, labor trafficking, off-the-books wage payments, and the use of taxpayer identification numbers to open accounts without verified legal presence. Federal regulators are also being told to review Bank Secrecy Act rules and customer due diligence standards.

Under the order, the Consumer Financial Protection Bureau will also consider updating regulations governing “ability-to-repay” standards for borrowers. The Trump administration said potential deportation or loss of wages could affect a borrower’s ability to repay mortgages, auto loans, and other forms of credit. The White House noted that employers who hire illegal immigrants may underreport wages and evade payroll taxes, making inaccurate income data that impacts credit underwriting and financial risk assessments.

The order states, "Consumer Financial Protection Bureau shall consider clarifying that potential deportation and loss of wages are factors that could adversely affect a non-work authorized borrower’s ability to repay an extension of credit ... and that lenders may consider such factors as part of a reasonable and good-faith underwriting determination."

According to the administration, gaps in customer identification standards have allowed criminal groups, including money laundering operations and drug trafficking organizations, to move illicit funds through US financial institutions. The White House pointed to fentanyl-related financial activity tied to Mexican cartels and claimed Chinese money laundering networks have processed billions of dollars for criminal organizations: "Financial trend analyses have uncovered hubs of illicit fentanyl-related financial activity in the United States tied to Mexico-based cartels," they wrote in Tuesday's release.

The executive order also directs federal financial regulators to issue guidance on managing credit risks connected to extending loans and financial services to illegal immigrants with no work authorization.

"President Trump signed an Executive Order to ensure that Federal regulators do not promote policies and practices that allow financial institutions to deny or restrict services based on political beliefs, religious beliefs, or lawful business activities, ensuring fair access to banking for all Americans, " the fact sheet states.