Federal Attack on Immigrant Banking and Credit

A May 19 Executive Order and federal agency statements on June 5 and June 8 target immigrant access to banking and credit. This article explains the short-term and longer-term implications of the Executive Order and the two federal agency statements for immigrants.

The May 19 Executive Order

Executive Order 14406, 91 Fed Reg 30,479 (May 19, 2026), does not implement any immediate change but instead calls upon federal agencies to take various steps. The Executive Order has four main components. 

The first component pertains to the Truth in Lending Act (TILA) and Regulation Z.  Executive Order 14406 § 4(a) directs the CFPB to “clarify[] that potential deportation and loss of wages are factors that could adversely affect a non-work authorized borrower’s ability to repay” credit cards and mortgages.  In response, the CFPB issued a complying statement on June 8, discussed infra.

The remaining three substantive components of the executive order, §§ 3(a), 3(b), and 3(c), relate to Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulations.  These rules currently impose requirements on financial institutions to:

• Have systems to verify the identity of their customers and their customers’ businesses, including a Customer Identification Program (CIP) and Customer Due Diligence;
• Monitor accounts to ensure they are not being used for illicit purposes including enhanced due diligence; and 
• Report suspicious activity through Suspicious Activity Reports. 

BSA/AML rules are examined at NCLC’s Consumer Banking and Payments Law Chapter 2.

BSA/AML requirements feed into a financial institution’s risk management program, key in determining whether to treat a particular individual or business as a customer, both at account opening and while monitoring an existing account.  Three executive order provisions call for changes to the BSA/AML requirements.

Executive Order § 3(a) directs the Treasury Department to issue an advisory concerning BSA/AML requirements in conjunction with the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Federal Reserve Board (FRB).  In response, an advisory was issued on June 5. 

The advisory sets out red flags for financial risks relating to employer payments to “non-work authorized populations,” including the use of labor brokers and the use of an individual taxpayer identification number (ITIN) to obtain credit products or open depository accounts where the applicant lacks verified lawful immigration status. This advisory is discussed infra.  The Federal Reserve Board (FRB) did not join this statement, although the Executive Order requires the FRB to issue a statement.

Executive Order § 3(b) requires the Treasury Department, on or before August 20, 2026, in consultation with other federal banking regulators, to issue proposed changes to BSA/AML regulations “to strengthen risk-based customer due diligence requirements for covered financial institutions.” To date, no proposal has been issued. 

Executive Order § 3(c) requires the Treasury Department, on or before November 18, 2026, in consultation with other federal banking regulators, to consider changes to BSA/AML regulations “to strengthen risk-based customer identification program requirements,” accounting for the (purported) risks of foreign consular identification cards. To date, no proposal has been issued.

In terms of access to credit and other financial services, the greatest risk posed by the Executive Order and the already published agency statements is that financial service providers, concerned about heightened scrutiny of their lending and banking practices in immigrant communities, will withdraw from those communities. As described below, wholesale refusal to lend to immigrant communities or to certain immigrant communities may subject the financial service providers to claims under: the Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691 et seq.; federal civil rights requirements codified at 42 U.S.C. § 1981(a); and state anti-discrimination laws. 

ITINs in the Cross Hairs

Both the executive order and the already published agency statements focus on the use of Individual Taxpayer Identification Numbers (ITINs) to identify those who could be unlawfully employed and subject to removal, with the attendant credit and banking risks. An ITIN, like a Social Security number, is a nine-digit number, but the first digit is always a “9.” Issued by the Department of the Treasury (not the Social Security Administration), the ITIN is designed to be used to file tax returns by those who are ineligible for a Social Security number. There are over 5 million active ITIN numbers.

The executive order and agency statements associate a person with an ITIN as someone who may not be authorized to work in the United States or who may lack “verified lawful immigration status.” However, this is not always the case. Because the purpose of an ITIN is to assist those without Social Security numbers to file tax returns, a person with an ITIN could include:

• A dependent or spouse of a U.S. citizen or lawful permanent resident; 
• A dependent or spouse of a foreign national on a temporary visa; 
• A foreign national who is a student, professor, or researcher in the United States on a visa;
• Certain immigrants on special immigration programs, such as domestic violence survivors and entrants from certain countries; and 
• A foreign national legally residing in the United States who, based on the number of days in the country, is filing a U.S. tax return.

Anti-Discrimination Challenges to Financial Institution Implementation of the New Federal Policies

Financial institutions over-eager in compliance with the federal attack on immigrant banking and credit may find themselves subject to private litigation under federal or state civil rights statutes. A blanket rule assuming all ITIN holders are subject to removal and thus are increased credit risks is discriminatory and unreasonable. Also discriminatory would be a blanket rule assuming illegality or risk involving ITIN holders of certain races or nationalities.  Using race or nationality, or perceived race or nationality, as a proxy for immigration status would also be discriminatory. Additionally, financial institutions that discriminate among different immigration statuses can also run afoul of the law, depending on the specific circumstances.

Banks, credit card issuers, and others discriminating in this way could face private litigation under the ECOA, the civil rights legislation at 42 U.S.C. § 1981(a), or state laws. Specifically, section 1981 prohibits discrimination based on alienage, that is, non-citizen status and race. Some courts have applied the prohibition on alienage discrimination to discrimination between different forms of non-citizenship status. See, e.g., Rodriguez v. Procter & Gamble Co., 465 F. Supp. 3d 1301 (S.D. Fla. 2020) (upholding DACA recipient’s claim where employer had a policy hiring immigrants with certain statuses but declining all DACA recipients). 

The ECOA prohibits discrimination related to credit determinations based on race, national origin, sex, marital status, and other protected classes. 15 U.S.C. § 1691. A creditor risks liability under the ECOA if it uses race or nationality as a proxy for immigrant status or treats immigrants differently depending on their race or nationality. 

Similarly, a financial institution risks liability if it denies credit to a citizen in a mixed-status household, simply because the household has members with different statuses. Such a circumstance could indicate that the creditor was focusing solely on race, national origin, gender, or marital status, rather than actual credit risk. 

Many state laws track—or expand upon—the language contained in these federal statutes. In addition to the protected classes contained in federal statutes, some states explicitly prohibit discrimination based on “immigration status” as a separate protected class. See, e.g., Cal. Civ. Code § 51 (West); N.Y. Exec. Law § 296-A (McKinney); Wash. Rev. Code § 49.60.010. For a state-by-state summary of state credit discrimination laws, see NCLC’s Credit Discrimination Appx. F.

In 2023, the CFPB and Department of Justice issued a Joint Statement on Fair Lending and Credit Opportunities for Noncitizen Borrowers Under the Equal Credit Opportunity Act:

Thus, while ECOA and Regulation B do not expressly prohibit consideration of immigration status, they do prohibit creditors from using immigration status to discriminate on the basis of national origin, race, or any other protected characteristic…. For example, if a creditor has a blanket policy of refusing to consider applications from certain groups of noncitizens regardless of the credit qualifications of individual borrowers within that group, that policy may risk violating ECOA and Regulation B…. In addition to potential violations of ECOA and Regulation B, creditors should be mindful of their obligations under 42 U.S.C. 1981… [which provides] ‘‘[a]ll persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts ... as is enjoyed by white citizens[,]’’ 42 U.S.C. 1981(a), and has long been construed to prohibit discrimination based on alienage.

See 88 Fed. Reg. 71,845 (Oct. 18, 2023), withdrawn 91 Fed. Reg. 1138 (Jan. 12, 2026) (withdrawal based on current CFPB policy against the agency issuing interpretations and concerns that the 2023 statement could be interpreted in an overly broad fashion, while not challenging the 2023 statement’s core message). Indeed, the ECOA commentary clarifies that noncitizens in different situations could be considered differently. ECOA Official Interpretations (b)(7)-1.

Thus, while the ECOA allows creditors to consider immigrant status in determining ability to repay, a creditor who implements or fails to prevent line staff from implementing blanket practices for all immigrants, or all immigrants judged at risk of deportation because of their national origin, risks litigation and liability under the ECOA, Civil Rights Act § 1981, and state law. 

Assessing deportation risk and its impact on the ability to repay requires a careful assessment of an individual’s legal documents pertaining to immigration status and financial circumstances. Similarly, financial institutions should exercise caution in flagging accounts as suspicious or refusing to open accounts solely based on a person’s immigration status, or risk liability under state and federal law.  For further information on the ECOA, section 1981, and state credit discrimination law, see NCLC’s Credit Discrimination.

The CFPB’s Statement on Ability to Pay and Immigrant Status

Responding to the executive order, the CFPB issued a Statement on Ability to Pay and Immigrant Status, 91 Fed. Reg. 34,607 (June 8, 2026), which concerns Truth in Lending’s (TILA’s) ability-to-pay standard in underwriting credit card and home mortgage applications. The statement suggests that creditors consider immigration status as a negative factor in an individual’s ability to repay, especially where removal from the United States may disrupt the consumer’s income. Use of an ITIN is mentioned as one indicator that an individual may be subject to removal. 

On the other hand, the CFPB statement notes that lenders “need not make any particular predictions about the continued likelihood that a consumer will earn income in the absence of specific information.” There are 24 million non-citizens in the United States with varying types of immigration statuses, and the odds of any one individual immigrant being removed are small. Lenders cannot reliably predict which immigrants would be affected and how.

Indeed, loss of employment to any credit applicant in the United States is significantly more likely than the risk that an unauthorized immigrant will be deported, undermining the purported value of immigration status or ITIN use as a predictor for ability to pay. Research has shown that ITIN holders are less likely to default than consumers who use Social Security numbers. See Experian, Unlocking Credit Potential: The Financial Behavior and Creditworthiness of ITIN Holders (Jan. 12, 2026); Goodman, Mehrotra, Zinn, ITIN Mortgages (Feb. 2024).

Furthermore, the CFPB statement is not a regulation. The statement itself clarifies that “this statement does not have the force or effect of law. It has no legally binding effect.” 91 Fed. Reg. 34,609.

Impact of CFPB Statement on Immigrant Access to Credit Cards

The CFPB’s Statement on Ability to Pay and Immigrant Status, 91 Fed. Reg. 34,607 (June 8, 2026), requires credit card issuers to consider an applicant’s ability to pay, meaning that, under TILA, credit card issuers must consider at least one of the following 

• The ratio of debt to income;
• The ratio of debt to assets; or
• The income the consumer will have after paying their debts.

The issuer is required to consider one of these factors but is not required to have a specific minimum debt-to-income or asset ratio. There are no bright-line rules as to when someone does not have the ability to pay. The card issuer has wide discretion in making the ability-to-pay determination, including how immigrant status affects that ability to pay.  For more on TILA’s credit card ability-to-pay standard, see NCLC’s Truth in Lending § 7.6.

TILA’s requirement of an ability-to-pay determination for credit cards does not affect existing cards, but only new applications and new requests for credit increases. Furthermore, an issuer need only base its consideration on the facts and circumstances known at the time an immigrant applies to open an account or increase a credit limit. 

Moreover, TILA requires that credit card issuers consider card applicants’ ability to pay only as to the required minimum payment, which is generally one percent of the balances plus any fees and finance charges, not the entire balance or credit limit.  Any risk posed by an immigrant’s status also does not apply when immigrants are merely authorized users, in which case it is the status of the card holder, not the authorized user, that must be assessed. 

Even if an immigrant does not have or could lose the ability to repay the monthly minimum on their own, a card issuer can rely on a joint cardholder or guarantor’s ability to pay. Card issuers are even permitted to rely on the income and assets of non-applicants if the immigrant has a reasonable expectation of accessing these funds, such as when such funds are regularly deposited in a joint account or used to pay household expenses.

TILA’s requirement of an ability-to-pay determination for credit cards does not apply to open-end credit that is not a credit card, such as a store line of credit, or to any closed-end credit, such as retail or motor vehicle installment sales. Ability to pay should not apply to secured cards, that is cards where the credit availability is matched with the cardholder’s deposits in a bank account at an institution related to the card issuer. 

Nor does the credit card ability-to-pay determination apply to the use of debit cards, prepaid cards, Venmo, Apple Cash, Zelle, Cash App, gift cards, checks, and the like. Nevertheless, some of these forms of payment require a bank account, and other federal actions might limit immigrant access to the banking system or even directly to some of these forms of payment 

Impact of CFPB Statement on Immigrant Access to Mortgage Loans

The CFPB’s Statement on Ability to Pay and Immigrant Status, 91 Fed. Reg. 34,607 (June 8, 2026), applies to the extension of home mortgages. TILA rules about ability to repay as a factor in mortgage underwriting do not set out specific income requirements, only that creditors collect and verify basic information about the consumer’s reasonably expected income and assets and then assess that person’s reasonable ability to repay the loan. For more on the ability-to-pay standard for mortgage loans, see NCLC’s Truth in Lending § 9.3.3.

It is not yet clear how adding consideration of immigrant status to the general directive under the TILA standards will impact underwriting and access to mortgage credit. Mortgage market participants, including federal agencies and secondary market participants, will continue to have a significant role in shaping specific underwriting policy. 

There are limits to the significance of the CFPB statement concerning ability to pay for mortgage loans. TILA’s requirement of an ability-to-pay determination does not affect existing mortgages and does not apply at all to home equity lines of credit, timeshare plans, or bridge or construction loans. TILA’s ability-to-pay assessment does not apply to a successor in interest who acquires title to a dwelling, for example, by way of inheritance or as part of a divorce settlement. Nor does it apply to most reverse mortgages. 

As with other areas, the largest risk is that lenders will decide to reduce their lending in the face of this federal scrutiny on lending practices to immigrant communities. As discussed, supra, if they do so, they risk violating federal and state laws.

Access to Bank Accounts: FinCen Advisory on Non-Work Authorized Populations 

On June 5, 2026, as required by the May 19 Executive Order, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), together with the FDIC, OCC, and NCUA, issued an advisory to those financial institutions required to comply with the Bank Secrecy Act. See U.S. Dep’t of Treasury, FinCEN Advisory, FIN-2026-A002, Joint Advisory on Non-Work Authorized Populations and Their Employers and Risks to the Integrity of the U.S. Financial System (June 5, 2026). 

The Bank Secrecy Act and its implementing regulations (often collectively referred to in conjunction with Anti-Money Laundering rules as BSA/AML law) impose requirements on financial institutions to have systems to verify the identity of their customers and their customers’ businesses, to monitor accounts to ensure they are not being used for illicit purposes, and to report suspicious activity.

As part of BSA/AML compliance, financial institutions must verify the identity of each customer “to the extent reasonable and practicable” through a Customer Identification Program (CIP).  31 C.F.R. § 1020.220. One requirement of a CIP is to collect an identification number, which could include an ITIN. 

However, the advisory warns that the use of an ITIN instead of an SSN or valid employment authorization document may be considered a risk factor “requiring enhanced due diligence” to ensure the account is not being utilized to “facilitate the unlawful employment of unlawful aliens” or any other illicit finance risks.  This implicates another requirement of BSA/AML compliance referred to as consumer due diligence/enhanced due diligence.  Joint Advisory, at 8.

As a result, the advisory encourages banks to assess whether the use of an ITIN may be a relevant risk factor, considering “the totality of other factors and information available to the bank to understand the nature and purpose of customer relationships for the purpose of developing customer risk profiles and conduct ongoing monitoring to identify and report suspicious transactions.” Id. 

The advisory’s focus is to discourage employer payments via a bank account to “non-work authorized populations” and payments to and from a labor broker acting as an intermediary between the employer and “non-work authorized populations.” The red flags listed in the advisory apply to bank accounts used by labor brokers or employers and to individual accounts. The red flags for individual accountholders are worrisome as they target individuals who are employed in the agriculture, construction, domestic service, hospitality, or staffing industries, where many immigrants work.

However, the advisory is not a regulation or law, and it does not require financial institutions to take any particular action. The advisory does not prohibit the use of ITINs but instead suggests that their use may require banks to take additional measures to confirm that a customer does not pose a risk under BSA/AML law.

Historically, FinCEN and other bank regulators have indicated that any category of customer and product can pose a BSA/AML risk, and therefore categorical determinations of risk would be inappropriate. This is why the advisory states that “no single red flag is determinative of illicit or suspicious activity” and should not be “taken in isolation,” and banks “should consider the surrounding facts and circumstances,” including whether a “customer exhibits multiple red flags” before determining whether an account or activity poses a BSA/AML risk.  Banks currently have discretion concerning acceptance of ITINs and will continue to have that discretion, but perhaps with greater scrutiny of immigrant customers. Again, depending on how banks exercise that discretion, they may run afoul of federal and state laws.

Heightened Financial Institution Scrutiny of Immigrants Under BSA/AML Law

Existing BSA/AML regulations contain various requirements that apply broadly to many financial institutions and not just banks. See NCLC’s Consumer Banking and Payments Law § 2.3. The executive order directs Treasury, in consultation with other federal banking regulators, to propose changes to BSA/AML regulations “to strengthen risk-based customer due diligence requirements for covered financial institutions” on or before August 20, 2026. Although these changes could implicate multiple areas of BSA/AML compliance, at a minimum, the proposed regulations will touch upon Customer Identification Program (CIP) requirements, relevant at account opening, and Customer Due Diligence/Enhanced Due Diligence requirements, which are ongoing throughout the course of the banking relationship. 

The executive order indicates that changes to BSA/AML regulations should ensure that financial institutions can obtain additional information, when necessary, to assess risk and BSA/AML compliance, “including information relevant to whether account holders possess lawful immigration status and employment authorization in the United States when such information is relevant to assessing risks associated with fraud, identity misrepresentation, sanctions evasion, or other illicit financial activity.” 

Though the exact language of any proposed or final rule is not yet known, the executive order language signals to financial institutions that heightened scrutiny of immigration status may be necessary to ensure BSA/AML compliance in the future. These changes could impact both new customers and existing customers.

Impact of the Executive Order on Matricula Consular and Other Consular ID Cards

The Customer Identification Program (CIP) requirements under existing BSA/AML regulations allow banks to accept the following types of identification from immigrants:

• A Social Security number;
• An ITIN;
• A passport number, along with the country of issuance; 
• An alien identification card number; or 
• The number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard. 

31 C.F.R. § 1020.220(a)(2)(i)(4). 

Consular ID cards are a type of government-issued document evidencing nationality and bearing a photograph. They are issued by the consulate of another country as a form of identification while an individual is residing in the United States. A common consular ID is the “Matricula consular,” issued by a Mexican consulate. Many U.S. banks accept the Matricular consular ID as a form of identification pursuant to their customer identification program.

However, the May 19 Executive Order requires the Secretary of the Treasury, the OCC, FRB, FDIC, and NCUA (the Agencies) to consider by November 2026 regulatory changes to strengthen these customer identification program requirements under the Bank Secrecy Act. “Any changes considered should account for the risks foreign consular identification cards pose to the integrity of the United States financial system.” Executive Order 14406 § 3(b), (c). 

The executive order only requires that amendments to the regulations be “considered.” It does not indicate that the use of consular IDs should be prohibited, nor does it require the Agencies to issue proposed changes, only that they should consider such changes. If the Agencies do issue proposed changes to CIP requirements, there will be a notice and comment period, followed by an analysis of the comments. As a result, any changes are unlikely until 2027. 

Banks on their own can reject consular ID cards as identification and have always had discretion to do so.  Whether any specific bank will voluntarily change its policy in response to the executive order is hard to predict. As with the other changes discussed, if banks treat people differently based on race or national origin status, among other factors, they risk violating both federal and state law and being subject to private liability.

Additional NCLC Resources

New Presidential Order on Bank Accounts and ITINs: What You Need to Know, a two-page handout in English and Spanish, suitable for distribution to clients.

Top 10 Reasons Why Recent Trump Administration Efforts to Debank Immigrants Are a Bad Idea (July 7, 2026)

What States & Local Governments Can Do to Support Immigrants’ Financial Stability (June 22, 2026).

American Banker: Compliance Expectations Muddied with Immigration Advisory (June 12, 2026)

Consumer Banking and Payments Law, particularly Chapter 2

Credit Discrimination

Truth in Lending, particularly §§ 7.6, 9.3.3

Mortgage Lending, particularly § 7.2

Acknowledgments

This article includes contributions from NCLC attorneys Chi Chi Wu, Jon Sheldon, Diane Thompson, Alys Cohen and Steve Sharpe.  Special thanks for their help to Relman Colfax PLLC attorneys Stephen Hayes and Alessandra Markano-Stark.