President Trump signs two financial services Executive Orders

05/20/26

The Trump administration this week issued two executive orders that could have significant implications for banks, customer due diligence expectations, and the broader competitive landscape in financial services. While the administration ultimately stepped back from one of the most concerning proposals under consideration, the orders still signal an evolving regulatory environment that Ohio banks should monitor closely.

Most notably, the White House abandoned earlier discussions that would have required banks to broadly collect or verify customers' citizenship or immigration status as part of account opening and customer identification procedures. That proposal generated significant concern across the banking industry due to operational complexity, compliance uncertainty, customer access implications, and potential conflicts with longstanding Bank Secrecy Act and Customer Identification Program frameworks. OBL was actively engaged with policymakers as these discussions developed and consistently raised concerns about turning banks into de facto immigration enforcement entities.

Instead, the final executive order takes a narrower approach. Treasury is directed to issue advisories to financial institutions regarding suspicious activity patterns and "red flags" associated with certain unlawful activity tied to illegal immigration, shell companies, labor trafficking, payroll tax evasion, and misuse of Individual Taxpayer Identification Numbers (ITINs). The order also directs regulators to evaluate whether changes to existing Bank Secrecy Act customer due diligence rules or customer identification program requirements may be warranted in the future.

Importantly, at this time, there is still no federal requirement for banks to collect proof of citizenship from customers. Existing CIP obligations remain unchanged. However, banks should expect increased supervisory attention around customer due diligence, suspicious activity monitoring, and documentation practices involving higher-risk accounts or transactions identified in forthcoming Treasury guidance.

The administration's decision to back away from a blanket citizenship verification mandate is a meaningful development for the industry. Banking organizations and policymakers raised concerns that such a requirement could have created significant compliance burdens, increased operational costs, discouraged participation in the regulated banking system, and potentially pushed more financial activity outside of supervised institutions. OBL believes banks should continue to focus on their core role of complying with established BSA/AML requirements, managing measurable financial risk, and serving customers within the framework established by Congress and regulators.

The second executive order could prove equally significant over the long term. The administration directed the Federal Reserve and other financial regulators to evaluate expanding access to Federal Reserve payment services and payment accounts to nonbank financial institutions and fintech firms. This includes potential expanded access to Fed master accounts, which provide direct connectivity to the Federal Reserve payments infrastructure.

OBL has consistently raised concerns with policymakers that allowing nonbank or fintech firms to gain increased access to core banking infrastructure without being subject to the same prudential supervision, capital requirements, CRA obligations, consumer protection standards, and safety and soundness expectations imposed on banks creates an uneven playing field. If policymakers continue moving toward broader nonbank access to the payments system, it will be critical that equivalent regulatory standards and accountability accompany that access.

Taken together, the executive orders reflect two broader trends OBL has been highlighting for members: first, the continued evolution of BSA/AML and customer due diligence expectations tied to national policy priorities; and second, the accelerating push by nonbanks and fintech companies for greater access to the traditional banking system infrastructure without necessarily operating under the same regulatory framework as insured depository institutions.

OBL will continue engaging with regulators, Treasury officials, and Ohio's congressional delegation as these initiatives move from executive orders into potential agency guidance, rulemakings, or supervisory expectations.