White House issues executive order on verifying citizenship

The White House issued an executive order yesterday titled Restoring Integrity to America’s Financial System directing the NCUA and other federal financial regulators to address undocumented immigrants’ interaction with financial institutions. The executive order does not require universal citizenship collection on existing or new accounts.

"We appreciate President Trump's approach to ensure compliance burdens do not weigh heavily on credit unions as it considers ways to verify account holder identities. We have engaged the administration on this issue, highlighting the high regulatory standards credit unions are held to, and encouraged policymakers to pursue these efforts through an official rulemaking process,” stated America’s Credit Unions President/CEO Scott Simpson. “While we continue our review and assessment of the Executive Order, it appears as though the directive aligns with our requests for stakeholder input and time to implement any changes."  

In advance of any executive order, America’s Credit Unions coordinated with state Leagues and system partners, proactively addressing the issue with Treasury with a letter and in conversations with White House officials. The letter outlined opposition to any mandatory citizenship collection requirement while urging that any new mandate include good-faith compliance standards, a reasonable implementation period, apply only prospectively, and proceed through notice-and-comment rulemaking.

America’s Credit Unions distributed an advocacy alert Tuesday, outlining the steps ahead required by the executive order. 

Within 60 days:

• Treasury must issue an Advisory listing red flags for suspicious activity, including ITIN accounts, consular ID use, and payroll-related structuring.
• NCUA and other banking regulators (including the Federal Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation) must issue guidance on credit risks of lending to non-work-authorized borrowers.  
• The CFPB will consider whether deportation and wage loss can be weighed in ability-to-repay decisions. 

Within 90 days:

• Treasury will propose Bank Secrecy Act (BSA) rule changes allowing institutions to ask about immigration status in risk-based due diligence

Within 180 days:

• Treasury and the financial regulators are to consider tightening Customer Identification Program (CIP) rules on foreign consular ID cards.

The day-to-day impact on credit unions’ member onboarding will depend on Treasury Advisory and any future CIP rule. The credit risk guidance’s effect on consumer and mortgage underwriting depends on the level of the NCUA’s directive. The BSA rulemaking and CFPB Ability-to-Repay clarifications will go through agency processes before taking effect, and America’s Credit Unions will engage with members to provide comments. 

As part of America’s Credit Unions’ ongoing outreach, it will engage Treasury, Financial Crimes Enforcement Network, NCUA, and the CFPB on each of the regulatory undertakings at every stage.