By Nupur Anand and Tatiana Bautzer
May 19 (Reuters) – Non-citizens in the U.S. will face greater scrutiny on their banking activities following an executive order by President Donald Trump on Tuesday, but the order was less extensive than a previous proposal floated by Treasury requiring banks to collect clients’ citizenship information.
The order directs the Treasury secretary to issue an advisory to banks to identify red flags tied to payroll tax evasion, concealment of true account ownership, off-the-books wage payments, labor trafficking and the use of individual taxpayer identification numbers to open accounts or obtain credit without verified legal presence in the U.S.
The White House also said Treasury and regulators should propose changes to the Bank Secrecy Act to make it easier to obtain information about clients, singling out consular identification documents as risky. News website Semafor reported the content of the executive orders earlier on Tuesday.
Trump had earlier announced he would issue an order requiring banks to collect data on their customers’ citizenship or immigration status, a directive that senior industry executives had warned would be costly and disruptive.
Banks considered that checking the immigration status and citizenship of all current clients would be very burdensome and nearly impossible, Reuters reported last month.
Trade groups have explained that such an order could lead to debanking of millions of customers and reduce financial access to Americans. An executive in a large bank that asked for anonymity said the administration showed it listens and is open to change.
The changes are positive to the banks, said Ed Mills, a Washington policy analyst with Raymond James.
“Obviously, the administration wants greater controls on immigration, but the bank regulators have always wanted as many financial transactions to go through the traditional financial systems. This would have removed a lot of individuals from the financial system, which could create a national security risk as well,” he added.
(Reporting by Nupur Anand and Tatiana Bautzer in New York and Chandni Shah in Bengaluru; Editing by Mark Porter and Lincoln Feast.)
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