According to the White House fact sheet, the order directs the US Treasury Department to issue guidance to banks and financial institutions on identifying suspicious financial activity associated with payroll tax evasion, labour trafficking, concealment of account ownership and off-the-books wage payments.
Treasury, regulators asked to tighten due diligence norms
The executive order states that within 60 days, the Treasury Secretary must issue a formal advisory detailing “red flags and typologies” related to suspicious transactions.
These include structured cash withdrawals and deposits, the use of shell companies and nominee accounts, unregistered money service businesses and peer-to-peer payment platforms allegedly used to bypass tax and reporting obligations.
The order also highlighted concerns over the use of Individual Taxpayer Identification Numbers (ITINs) to access financial services without verified immigration status.
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It noted that while ITINs facilitate tax compliance, their use in place of Social Security numbers or work-authorised visas could require enhanced scrutiny by financial institutions.
The executive order also instructs the Treasury Secretary to propose amendments to Bank Secrecy Act regulations to strengthen customer due diligence requirements and allow financial institutions to seek additional information when necessary to assess risks tied to unlawful activity.
Under the order, the Treasury Department and federal financial regulators have also been asked to review customer identification rules, including risks linked to foreign consular identification cards.
Lending practices linked to immigration concerns
The White House said the administration believes extending mortgages, auto loans and credit cards to undocumented immigrants without legal work authorisation creates “structural credit risks” for lenders and the wider banking system.
The executive order directs the Consumer Financial Protection Bureau to consider clarifying that “potential deportation and loss of wages” may be considered under existing “ability-to-repay” lending standards.
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In the order, the Trump administration said that weaknesses in customer identification systems have enabled criminal organisations, including drug traffickers and money laundering networks, to exploit US financial institutions.
The White House cited alleged links between Chinese money laundering networks, fentanyl-related financial activity and Mexico-based cartels.
