President Trump’s new executive order stops short of requiring banks to verify citizenship, but it opens the door to a far more consequential shift: expanded compliance scrutiny tied to immigration and employment authorization. It directs Treasury and federal banking regulators to tighten risk‑based reviews of customers whose documentation, employment status or cross‑border financial activity may signal elevated fraud or illicit‑finance concerns — a framework that could reshape how financial institutions evaluate foreign‑national clients even without a formal citizenship rule.

Amid public speculation that banks might soon require proof of U.S. citizenship from all customers, the May 19 order, Restoring Integrity to America’s Financial System, takes a narrower approach. It does not mandate universal citizenship verification. Instead, it instructs regulators to strengthen compliance measures focused on individuals lacking work authorization and on financial activity associated with elevated fraud, money laundering, tax evasion, trafficking or credit risks.

In my earlier Forbes article, I examined the legal and operational challenges that would accompany a citizenship-verification mandate. While the new order avoids that outcome, its implementation could still meaningfully influence how banks assess risk, onboard customers and interpret documentation in practice.

How Implementation May Matter More Than The Order Itself

The more significant development may be how financial policy is implemented in practice rather than how it is framed in statutory or executive language. Recent Treasury implementation decisions involving federally related financial accounts have already raised questions about how custodial structures, onboarding systems and intermediary institutions can affect real-world access for individuals who are legally entitled to use such accounts but still encounter administrative friction.

Taken together, these developments underscore a broader point: Financial access is increasingly shaped not only by formal eligibility rules but also by how compliance systems, identity verification frameworks and institutional risk design operate in practice. The coming Treasury advisories and proposed Bank Secrecy Act changes will determine whether the new framework remains narrowly focused on unauthorized employment and illicit-finance risks or evolves into a broader compliance structure with wider implications for lawfully present foreign nationals engaged in cross-border financial activity.

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What Happens Next

Within 60 days, the Treasury Department must issue a formal advisory to financial institutions identifying suspicious activity red flags. These include payroll tax-evasion schemes, labor-trafficking indicators, structuring activity, use of mechanisms to conceal the identity of true owners — including nominee accounts, shell companies or complex “funnel” structures — certain uses of foreign identity documents and the use of Individual Taxpayer Identification Numbers in situations where lawful immigration status has not been verified.

Also within 60 days, the Consumer Financial Protection Bureau must consider clarifying that potential deportation or loss of wages may be relevant factors when evaluating a borrower’s ability to repay. Federal banking regulators must issue guidance regarding credit risks associated with lending to individuals who are not authorized to work.

Within 90 days, Treasury and federal banking regulators must propose changes to Bank Secrecy Act regulations designed to strengthen customer due diligence requirements. The proposal contemplates giving financial institutions greater authority to obtain additional information when risk indicators are present, including information relating to lawful immigration status and employment authorization when these are relevant to assessing illicit-finance, fraud or compliance risks.

Within 180 days, Treasury and banking regulators must consider revisions to customer identification requirements, including the risks associated with using foreign consular identification cards.

How This Could Affect Lawfully Present Foreign Nationals

An important unanswered question is how financial institutions will apply these enhanced due-diligence standards to lawfully present foreign nationals.

Many individuals who comply with U.S. tax and immigration laws routinely rely on foreign passports, foreign identity documents, overseas financial records and, in some cases, ITINs. Foreign bank accounts, foreign investment holdings and cross-border financial activity are often a normal part of life for immigrants, visa holders, foreign investors and newly arrived U.S. residents.

If banks begin treating these factors as elevated-risk indicators requiring additional review, documentation or approval procedures, the practical impact could extend beyond the order's stated focus on unauthorized employment and unlawful presence. For many foreign nationals, ordinary aspects of international life could increasingly become part of the banking compliance review process.

Bottom Line

The Executive Order does not require financial institutions to implement a blanket citizenship-verification rule, and most routine customers are unlikely to experience immediate changes. However, individuals who present a higher-risk compliance profile could face enhanced scrutiny, requests for further documents or greater restrictions on certain banking and credit products. For foreign nationals living, investing or doing business in the United States, the forthcoming implementation details will likely determine the real-world impact.

Reach me at vljeker@us-taxes.org

Visit my US tax blog www.us-tax.org It is an invaluable guide in all areas of U.S. international tax. It will help you stay on top of legislative developments, keeping you ahead of U.S. tax changes impacting your life, family or business.