Scott Bessent Says Citizenship Order for Banks Is in Process
Scott Bessent said the administration is moving ahead with an executive order in process that would require banks to collect citizenship data from customers. The U.S. Department of the Treasury chief said the administration expects banks to comply if regulators decide the information should be collected, even though current citizenship rules under Know Your Customer do not require it.
“If Treasury and the banking regulators say it’s their job, it’s their job,” Bessent said last week. The policy push would add citizenship or legal-status checks to bank onboarding, a step that banks have warned would bring new compliance demands.
Tom Cotton’s bank bill
Senator Tom Cotton has introduced the Know Your American Customer Act, which would require banks and credit unions to verify that new account holders are U.S. citizens, permanent residents, or otherwise legally present in the country. The bill has been introduced but not passed, leaving the proposed bank citizenship requirement in legislative limbo even as Treasury signals movement through the executive branch.
Under current Know Your Customer rules, banks verify identity but do not have to confirm citizenship or immigration status. That gap is the heart of the dispute. Supporters of the push say administration officials frame the effort as protection for the banking system and a way to keep services accessible and affordable, while banks say collecting and checking extra customer data would add operational complexity and compliance costs.
Mortgage lending implications
The sharpest practical effect would likely fall at account opening, where lenders and banks gather the records that later feed mortgage underwriting. Mortgage professionals say changes to documentation could affect how borrowers enter the lending process because lending relies heavily on verified bank accounts for assets and reserves.
Industry participants say the policy could be more noticeable for borrowers who already rely on alternative qualification methods. Lenders also say stricter verification at the bank level could make it harder to document assets or keep accounts used in underwriting, especially in purchase transactions where timing matters.
Banks await the next move
Legislation can take months or longer to advance, but regulatory action could move faster and reshape compliance expectations at the bank level. No executive order has been issued to date, and for now there is no immediate change to loan guidelines.
For banks, the next step is whether regulators turn Bessent’s “in process” order into a formal requirement. For customers, the immediate issue is simpler: the current account-opening rules stay in place until Washington turns this policy discussion into binding action.
