At a gathering of Arizona bankers on Thursday, Treasury Secretary Scott Bessent outlined the administration’s latest push against financial crimes tied to illegal immigration, vowing to end what he described as blatant misuse of the U.S. banking system. He emphasized that the government will not accept risks associated with offering financial services to undocumented individuals, nor will it tolerate fraudulent payroll operations or illicit money movement.
The initiative traces back to a May 19 executive order by President Trump, “Restoring Integrity to America’s Financial System,” which tasks multiple federal bodies—including the Treasury, the Federal Reserve, the FDIC, the OCC, the NCUA, and the CFPB—with intensifying scrutiny of financial activities connected to unauthorized work. Among its mandates are stricter customer verification protocols, enhanced due-diligence requirements, and a fresh look at how lenders evaluate creditworthiness for borrowers lacking work authorization.
Bessent made clear that the administration is counting on the banking sector to assist in uncovering fraudulent schemes, though he stopped short of asking lenders to act as border patrol agents. InstEAD, he stressed the importance of banks staying vigilant—knowing their clientele, flagging emerging risks, and reporting suspicious activity before it escalates into criminal behavior.
According to Bessent, the Treasury has already hit the order’s initial milestones. In June, the Financial Crimes Enforcement Network released guidance aimed at helping financial institutions detect patterns linked to illegal employment, labor brokers, shell companies, payroll tax evasion, and identity theft. Around the same time, the Office of the Comptroller of the Currency issued an advisory reminding banks to incorporate a borrower’s willingness and ability to repay into standard lending decisions when dealing with individuals not authorized to work in the U.S.
Bessent praised Arizona’s banking community for its robust compliance frameworks, staff training, and suspicious-activity reporting, calling them a model of the collaboration the executive order seeks to foster. He added that the Treasury is committed to equipping banks with improved fraud-detection tools and pledged that Washington would pay closer attention to input from community lenders.
Observers, however, note that the real impact of the order hinges on forthcoming rulemaking. Debevoise & Plimpton, in a June 3 client alert, pointed out that the order itself introduces no immediate compliance mandates for banks, but it sets in motion agency reviews that could ultimately alter anti-money-laundering practices, due-diligence expectations, and lending criteria. The CFPB is separately examining whether the risk of deportation or lost income should influence a borrower’s ability-to-repay assessment. The law firm also highlighted that the order falls short of an earlier, more aggressive proposal that would have mandated citizenship verification for every bank customer.
KPMG’s Washington National Tax practice, in a June analysis, characterized the order as “a policy signal rather than an immediate change to any law, rule, or regulation.” The firm cautioned that if stricter know-your-customer rules emerge, multinational companies and global mobility initiatives might face delays in opening accounts and heightened documentation burdens for employees using Individual Taxpayer Identification Numbers instead of Social Security numbers—a category that includes both lawful residents and those without legal status.
Regulators were required to release credit-risk guidance and the CFPB’s ability-to-repay clarification by July 20. The Treasury has until Aug. 17 to propose revisions to customer due-diligence rules, with a broader customer identification framework due by Nov. 16.