On May 19, President Donald Trump issued Executive Order 14406, “Restoring Integrity to America’s Financial System,” which establishes a new policy to safeguard financial institutions against structural credit risks and deter fraud and abuse. The order links illicit finance, immigration enforcement, and consumer credit risk, and directs federal financial regulators to tighten risk-based controls around non-work authorized populations and their employers. It reflects a policy view that even basic financial services, when offered without robust know-your-customer and due diligence, can facilitate terrorist financing, narcotics and human trafficking, and large-scale money laundering. At the same time, it expresses concern that lending to borrowers who lack work authorization or face a high risk of deportation may undermine safety and soundness because of heightened “ability-to-repay” concerns.

Importantly, while the order clearly pushes regulators to treat immigration status and work authorization as relevant risk factors, it appears to stop short of requiring financial institutions to verify every customer’s immigration status. Instead, it reinforces a risk-based approach and calls for targeted regulatory and supervisory actions.

Treasury Department and BSA/AML

The order assigns a leading role to the U.S. Department of the Treasury (Treasury) and the federal banking agencies under the Bank Secrecy Act (BSA). Within 60 days, the Secretary of the Treasury must issue an advisory to financial institutions highlighting typologies and red flags involving non-work authorized individuals and their employers, such as payroll tax evasion, off-the-books wage payments, structuring around payroll cycles, and financial activity indicative of labor trafficking or forced labor. The advisory is also expected to spotlight the use of ITINs and certain foreign identification documents as potential risk factors that may call for enhanced due diligence in some cases.

Within 90 days, the Treasury, in consultation with the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and National Credit Union Administration (the federal functional financial regulators), is directed to propose changes to BSA implementing regulations to strengthen risk-based customer due diligence. The order emphasizes that institutions should collect and verify sufficient information to reasonably identify nominal and beneficial owners and that, where other risk indicators are present, they should have the authority to obtain information relevant to an account holder’s lawful immigration status and work authorization, when that information is relevant to assessing fraud, identity misrepresentation, sanctions evasion, or other illicit activity. In addition, within 180 days, the Treasury and the federal functional financial regulators are to consider adjustments to customer identification program requirements, including how foreign consular identification cards are treated for customer identification program purposes.

Consumer Credit and “Ability to Repay”

The order directs the Consumer Financial Protection Bureau to consider clarifying that potential deportation and loss of wages are factors that may negatively affect a non-work authorized borrower’s ability to repay under the Regulation Z “ability-to-repay” framework. It indicates that lenders may take such factors into account as part of a reasonable, good faith underwriting determination. In parallel, each federal functional financial regulator is instructed to issue guidance on managing credit risks associated with the non-work authorized population.

Our Take

These directives signal that federal regulators may expect financial institutions, at least in some contexts, to view the possibility of deportation and related loss of wages as relevant to income stability and credit performance. At the same time, any such guidance will need to be reconciled with fair lending and unfair, deceptive, or abusive acts or practices laws to avoid situations where the consideration of immigration-related criteria results in a violation of other laws, including at the state level.

Despite its strong language, the Executive Order does not itself change the BSA, Truth in Lending Act/Regulation Z, or any other statute or regulation. Rather, it launches a regulatory and supervisory agenda to be implemented through advisories, proposed rules, and guidance. It does not create a blanket requirement to verify the immigration status of every customer or borrower. Instead, it reinforces that institutions may, in appropriate risk-based circumstances, seek immigration or work authorization information where it is relevant to assessing credit risk, illicit finance, or fraud risk. The order also explicitly states that it does not create any enforceable rights or private causes of action.

This Executive Order, coupled with the Consumer Financial Protection Bureau and Department of Justice’s withdrawal in January 2026 of a 2023 Biden-era joint statement that warned lenders against overbroad use of immigration status in credit decisions, underscores one of the key priorities of the current administration — a harder line on immigration.