Treasury expands bank data-sharing rules tied to Trump immigration crackdown

NEW YORK (AP) — The Treasury Department moved Friday to enlist the nation’s banks more deeply in President Donald Trump’s immigration crackdown, including issuing fresh guidance that lets banks rapidly share information about suspected customers and an advisory steering them to flag signs that one of their customers may lack legal immigration status.

These changes are part of the administration’s push to remove undocumented workers from the nation’s banking system without explicitly mandating that banks do so. In order to get banks to participate, the administration has framed these actions as a crackdown on fraud and crime, not explicitly about immigration.

“The information in your purview can help stop a cartel financier, disrupt a money laundering network, uncover labor exploitation, or protect taxpayers from fraud,” Treasury Secretary Scott Bessent said in prepared remarks at a banking conference in Houston.

Bessent’s remarks and the Treasury Department’s new guidelines come from an executive order signed in May by Trump that requires banks to take a closer look at the citizenship of their customers as well as directs bank regulators and government departments to look for signs that people without legal status are opening accounts or obtaining loans or credit cards. But that executive order did not include an explicit mandate that banks collect citizenship information, which the industry for months lobbied against.

Banks have long been able to share information about their customers with other banks under the Patriot Act program when they suspect money laundering or fraud, part of the post-9/11 effort to combat terrorism and other crimes.

Friday’s actions widened that system on two fronts. Banks can now share such information with one another in real time and more freely, the Treasury Department said.

Secondly, the Trump Administration is giving banks a wider variety of reasons to share information, which now include flags historically tied to immigration status. One example is a customer having an individual taxpayer identification number (ITIN), which are disproportionally used by undocumented immigrants when applying for work.

Bessent told bankers that the new guidance is simply part of what the banking system needs to do as part of their routine operations.

“The advisory does not ask banks to become immigration officers,” Bessent said. “It asks banks to do what they do best: know their customers, identify risk, recognize suspicious patterns, and report illicit activity when they see it.”

Bankers have been wary about sharing customer information with the federal government as part of immigration enforcement. Bankers never collected citizenship information on their customers, so any effort to do so would require a massive effort by banks and significant amounts of paperwork. There’s also the fact that banks send millions of what are known as Suspicious Activity Reports to the federal bank regulators under the Bank Secrecy Act. Last week, the Treasury Department expanded the reasons why a bank might file a SAR to include potential undocumented workers.

“The administration is saying they don’t want banks to be immigration officials, but they are trying to get as close to the line as possible,” said Nicholas Anthony, who focuses on bank regulation issues at the libertarian-leaning Cato Institute.

At the time Trump signed the order, the White House framed the effort on the premise of combating fraud, but also it said undocumented workers introduce risk to the overall financial system by taking out loans that could potentially never be repaid because the borrowers could be deported. Since banks haven’t historically collected citizenship data on their customers, it’s hard to quantify how much of a risk undocumented workers are to banks. One study by the left-leaning Urban Institute estimated that between 5,000 and 6,000 mortgages were issued to customers with ITINs, which would be a tiny fraction of the millions of mortgages written each year.

Immigration advocates have previously said any order that would order banks to collect citizenship information would likely result in undocumented immigrants moving out of the financial system, increasing the number of “unbanked” individuals.

The White House has taken other measures to discourage undocumented workers from using the financial system. The Treasury last November announced that it would reclassify certain refundable tax credits as “federal public benefits,” which bars some immigrant taxpayers from receiving them, even if they file and pay taxes and would otherwise qualify.