Trump Abandons Effort to Require Banks to Verify Customer Citizenship as Financial Industry Pushes Back

Immigrants won’t have to be afraid to use banking services, for now, because banks won’t share their information with the Federal Government.

The Trump administration has quietly abandoned a controversial proposal that would have forced American banks to demand proof of citizenship from their customers, retreating after an unusual and forceful round of opposition from the financial industry itself.
The Washington Post first reported the decision, which The Daily Beast and American Banker later confirmed through additional reporting. Wall Street’s resistance compelled the White House to withdraw this immigration enforcement measure before it reached the executive order stage, marking a rare instance of industry influence.

For weeks, senior administration officials circulated a draft executive order that would have required banks to collect citizenship documentation—such as passports—from both new and existing account holders.
According to The Washington Post, the proposal went well beyond the current regulatory framework governing financial institutions. Under existing federal “know your customer” rules, banks are required to verify a customer’s name, date of birth, and address, typically through a driver’s license or similar identification, as noted in the Inquisitr.
The proposed order would have added a citizenship verification requirement to these existing protocols. This addition would have pulled private financial institutions into the administration’s immigration enforcement efforts.

According to The Daily Beast and U.S. State Department data, many Americans lack passports, making a citizenship-based verification system unworkable for many, especially lower-income or rural citizens.

That reality created a fundamental problem for the proposal. Industry officials argued, as American Banker reported, that a passport-based verification system would have effectively barred lawful U.S. residents and citizens from opening or maintaining bank accounts, pushed them toward unregulated financial channels, and increased their vulnerability to fraud and exploitation. Banking groups told reporters that compliance alone would have created an enormous burden, forcing institutions to overhaul onboarding systems, retrain staff, and handle a documentation process that their existing infrastructure was never designed to accommodate.

The idea first surfaced publicly in February, when The Washington Post reported that the administration was considering whether banks should collect citizenship data from all account holders as part of a broader immigration policy strategy. The backlash arrived immediately. Jeremy Kress, an associate professor of business law at the University of Michigan, told The Washington Post at the time that the plan would turn the financial system into a vehicle for political objectives. Kress called the initiative an attempt to use banks as instruments of enforcement rather than institutions serving the public interest.

Not everyone in the administration shared the industry’s alarm. Jonathan Gould, the comptroller of the currency, sought to minimize operational concerns during Senate testimony in late February. As The Washington Post reported, Gould told lawmakers that he believed additional compliance requirements would pose only a minor burden for financial institutions. However, bankers and compliance professionals—who would have implemented the policy—offered little support for this assessment.

American Banker stated that most of the industry viewed the White House’s decision to withdraw the draft order with relief. Compliance experts warned that the proposed citizenship checks would have strained operational capacity and could have driven a segment of customers out of the regulated banking system—an outcome that would undermine longstanding federal efforts to promote financial inclusion and combat money laundering through formal channels.

Even a reduced version of the proposal, which would have applied the citizenship requirement only to new customers rather than retroactively auditing existing ones, failed to gain traction. The Daily Beast reported that lenders continued to oppose the measure in any form, arguing that even a narrower mandate would have introduced unacceptable complexity and risk.

The White House, in a statement to The Washington Post, acknowledged that a draft had been prepared but distanced itself from the more ambitious version of the plan. Administration officials emphasized that they never seriously considered requiring banks to audit the citizenship status of their entire existing customer base—a characterization that some banking industry sources disputed, according to multiple outlets.

As of this writing, the administration has not signed any executive order. Reports from Friday suggest that the concept could re-emerge later in a more limited form. For now, the administration has stepped back from a clash with an industry it rarely confronts—an industry that argued with considerable force that the plan, as conceived, was too expensive, too disruptive, and too difficult to enforce to justify the immigration enforcement gains it promised.

Sources: The Washington Post, The Daily Beast, American Banker, Inquisitr. Passport data cited from the U.S. State Department.