Treasury Secretary Signals Mandatory Citizenship Verification for U.S. Banks

U.S. Treasury Secretary Scott Bessent has warned financial institutions to prepare for new mandates requiring the collection of citizenship data from account holders. Speaking at the Invest in America Forum, Bessent emphasized that if regulators deem the task necessary, banks must comply, signaling that a long-discussed executive order is now "in process." Currently, U.S. banks operate under "Know Your Customer" (KYC) rules, the Bank Secrecy Act, and the USA PATRIOT Act. These regulations require identity verification via Social Security numbers or Individual Taxpayer Identification Numbers (ITIN) to prevent money laundering, but they do not explicitly require proof of citizenship or legal residency to open an account. Bessent argued that the current system allows "unknown foreign nationals" to access the banking system, asserting that stricter rules are necessary and common in other countries. He further noted that Real IDs would not be accepted as valid documentation under the proposed order. This policy aligns with legislative efforts, such as a bill introduced by Senator Tom Cotton in March, to mandate verification of legal status for all insured bank and credit union accounts. The proposal has sparked concerns regarding administrative burdens and economic stability. The American Action Forum estimates that implementing citizenship verification could cost banks between $2.6 billion and $5.6 billion, adding up to 70 million paperwork hours. Critics warn that denying banking access to non-citizens could expand the "unbanked" population, pushing more individuals into a cash-based economy and hindering overall economic growth.