The Donald Trump Administration does not want to leave any flank open in its offensive against migrants. Now it is the financial sector’s turn. The Republican president issued an executive order this Tuesday for banks to verify the immigration status of their clients. The goal is to prevent foreigners without permanent residency from opening accounts or accessing loans and credit cards.
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The order is less severe than expected, because it urges banks to collect the information, but does not require them to do so. For months, the government had announced plans to require financial institutions to obtain the immigration data of their clients, but banks applied political pressure to avoid it.
The Treasury Secretary, Scott Bessent, stated last month that “there should be stricter rules” for opening bank accounts. “Why can unknown foreigners come and open a bank account?” questioned Bessent. The banking sector criticized that the measure would be very costly and would involve a huge amount of administrative procedures.
To justify the order, Trump warned of the risks looming for the financial system if loans are granted to people who will end up deported and, therefore, will not be able to meet their debts. “My Administration will not tolerate the risks to national security and public safety caused by illicit cross-border financial activities, nor will it allow the risks to our financial system posed by granting credit or financial services to the population of inadmissible and removable aliens,” the order states.
Since banks have never collected any information about the citizenship or immigration status of their clients, there are no reliable public figures on the level of risk these clients represent to the financial system.
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A study conducted by the Urban Institute estimated that between 5,000 and 6,000 mortgages were granted to clients who held an Individual Taxpayer Identification Number (ITIN). Generally, these ITINs are used by undocumented workers instead of the Social Security number. According to this institute, banks and mortgage entities are reluctant to grant credit to people who have an ITIN, reports AP.
The requirement to determine immigration status would cause millions of people to be excluded from the banking system, according to experts. For the White House, which tends to equate undocumented migrants with criminals, their access to financial services favors criminal activities.
“Even the provision of the most basic financial services, in the absence of proper ‘know your customer’ practices, can be abused to facilitate the financing of activities that pose significant threats to national security and public safety. Low-value cross-border fund transfers have been used to facilitate or commit acts of terrorism financing, drug trafficking, human trafficking, and other illicit activities,” says the text of the order.
Tax experts have warned that the disclosure of immigration data to authorities will greatly affect DACA (Deferred Action for Childhood Arrivals) beneficiaries, who have been in the country for decades, and migrants with Temporary Protected Status (TPS). In both cases, migrants are suffering persecution from the Administration to leave the country.
