The Trump administration is advancing plans to require banks to collect citizenship data from account holders, a move that could impose billions in costs and millions of hours of additional paperwork on the financial sector. Treasury Secretary Scott Bessent confirmed this week that the executive order is 'in progress,' emphasizing that banks should prepare to comply with the new directive.
Costs and Compliance Concerns
The American Action Forum, a center-right think tank, estimates that the requirement could add between 30 million and 70 million hours of paperwork and cost banks between $2.6 billion and $5.6 billion. Banks already verify customer identities through the Customer Identification Program, collecting names, birthdays, addresses, and taxpayer identification numbers. However, citizenship documents are not currently mandated.
'How is this not adding red tape?'
Chasse Rehwinkel, president of Devon Bank in Chicago, criticized the proposal as burdensome and lacking clear regulatory purpose. He warned that the requirement could deter individuals from opening accounts if they lack necessary documentation or have outdated records.
Economic and Consumer Impacts
George Braunegg, a professor at the University of Southern California's Marshall School of Business, highlighted the potential for lost customers and increased costs. 'New onboarding procedures, system upgrades, audits, and legal oversight. These aren't one-time — they're ongoing,' Braunegg said. He also noted that banks might pass compliance costs onto consumers through higher account fees.
The policy appears to contradict the Trump administration's broader push for deregulation, raising questions about its economic rationale and potential impact on American workers and businesses.