President Orders Tighter Restrictions on Servicing "Illegal Aliens"

President Trump issued an Executive Order directing the Treasury Department and the federal banking regulators to tighten bank customer due diligence rules on "non-work authorized populations and their employers."  

In signing the Order, "Restoring Integrity to America's Financial System," President Trump stated that the administration will not permit risks to the financial system from the extension of credit or financial services to "the inadmissible and removable alien population." 

The Order set three Treasury deadlines. Within 60 days, the Secretary of the Treasury must issue a formal advisory to financial institutions on red flags for suspicious activity. The advisory must describe red flags in six categories. Those include payroll tax evasion by employers, the use of foreign-identity documents and nominee accounts to obscure beneficial owners, and off-the-books wage payments through unregistered money services businesses. Within 90 days, Treasury and the regulators must propose changes to Bank Secrecy Act rules to strengthen risk-based customer due diligence. Within 180 days, they must consider changes to customer identification program rules that account for the risks posed by foreign consular identification cards.

The Order also addressed "structural credit risks." Within 60 days, the Consumer Financial Protection Bureau must clarify that potential deportation and loss of wages could adversely affect a non-work-authorized borrower's ability to repay credit under the ability-to-repay standards in 12 CFR Part 1026 ("Truth in Lending"). The clarification must state that lenders may weigh those factors in a good-faith underwriting determination.

A companion White House fact sheet accompanied the order.