• What Happened: The Trump administration is considering an executive order requiring banks to verify citizenship status for both new and existing customers, with passports as the accepted documentation.
  • Why It Matters: Banking groups are calling the idea a "complete nightmare" logistically, warning that millions of everyday Americans do not have citizenship documents readily on hand.
  • Bottom Line: Nothing has been finalized and the White House has not officially confirmed the policy, but Sen. Tom Cotton has voiced support for cutting illegal immigrants off from the U.S. banking system.

President Trump is eyeing a move that would fundamentally change how Americans interact with their banks, and the financial industry is already pushing back hard.

According to people familiar with the discussions, the Trump administration is considering an executive order that would require banks to verify the citizenship status of their customers, collecting documents like passports from both new account holders and existing ones. REAL IDs would not qualify since they do not prove citizenship. Nothing has been officially announced and the White House has not confirmed the specifics.

The logic behind the proposal is straightforward. Senator Tom Cotton supports the move, arguing that illegal immigrants should not have access to the American banking system. If you are not legally in this country, the argument goes, you should not be using its financial infrastructure.

The banking industry sees it differently. One financial services lobbyist called the idea a "complete nightmare" logistically, warning that the mandate could force every bank in America to chase down documentation that millions of everyday Americans simply do not have sitting in a drawer. The lobbyist also raised a political concern worth noting: "The admin might think this is a good idea until Joe MAGA in Alabama is asked to present his papers."

It is a fair point. The federal government spent two full decades trying to get Americans to adopt REAL ID, with mixed results. A citizenship verification requirement for every bank account in the country is a significantly higher bar.

The Treasury Department has not commented on the proposal. Current financial regulations require banks to collect some personal information on customers under illicit finance laws, but citizenship status has never been part of that requirement.

The underlying goal is sound. Illegal immigrants should not be using American financial systems to move money, avoid detection, or funnel remittances out of the country. The question is whether the mechanism to get there is workable without creating a bureaucratic burden for the millions of law-abiding American citizens who would also be caught up in the requirement.

Trump has never been afraid of bold policy. The details on this one will matter.