Treasury expands bank data-sharing rules tied to immigration crackdown

These measures are part of an administration push to remove undocumented workers from the financial system, framed as a strategy to combat fraud and crime. Treasury Secretary Scott Bessent stated that the information banks possess can help disrupt illicit activities and protect taxpayers. The guidance stems from a May executive order by Trump, which directs regulators and government departments to identify signs of individuals without legal status opening accounts or obtaining loans, though it does not mandate banks collect citizenship information.

Previously, banks could share customer information under the Patriot Act for suspected money laundering or fraud. The updated system allows for real-time sharing and includes flags historically tied to immigration status, such as a customer using an Individual Taxpayer Identification Number (ITIN). Bessent emphasized that the advisory does not require banks to act as immigration officers but to leverage their customer knowledge to identify risk and report illicit activity.

Bankers have expressed reservations about increased involvement in immigration enforcement, citing the significant effort and paperwork required to collect citizenship data. Immigration advocates have warned that such measures could push undocumented immigrants out of the formal financial system, increasing the number of unbanked individuals. The Treasury had previously taken steps to discourage undocumented workers from using financial services, such as reclassifying certain tax credits as federal public benefits.