Trump’s first term consisted of military and law enforcement actions to address illegal immigration. This term, he has pulled in more than a dozen federal departments to tackle the issue from all angles, including the Treasury Department.

In July, the federal government disclosed plans to require U.S. banks to consider the citizenship of customers, making it more difficult for applicants to be approved for a loan or account.

“This administration will not tolerate blatant abuse of our financial system, nor will it permit risks posed by the extension of financial services to illegal aliens,” Treasury Secretary Scott Bessent said on Thursday while speaking to lawmakers in Arizona.

Bessent is imploring America’s largest financial institutions to flag suspicious activity their systems detect in accounts, such as money laundering by cartels and under-the-table payments made to illegal workers.

“We do not ask bankers to assume the burdens of border enforcement,” Bessent said. “But we depend on banks to do what you do best: know your customers, identify risks as they arise, and report suspicious patterns before they metastasize into criminal schemes.”

Trump signed an executive order in May that required banks to report payroll tax evasion, suspected shell companies, and the unverified use of an individual taxpayer identification number. ITINs are nine-digit tax processing numbers that the IRS issues to foreigners for tax filing. 

It also directed the Treasury Department and bank regulators to look for indicators that illegal immigrants are using bank accounts, loans, or credit cards with major financial institutions in the U.S.

Banks were notified in June on how to spot banking patterns tied to illegal labor, labor brokers, payroll tax evasion, and identity theft.

KPMG Corporate Finance, a global mid-market adviser, issued guidance this summer that described the administration’s actions in May as “a policy signal rather than an immediate change to any law, rule, or regulation.”

However, KPMG added, the change signified that know-your-customer requirements could become more stringent and ultimately impact the number of new accounts opened.

The White House touted the plan as a way to avoid putting the financial system at risk by extending credit or financial services to the “inadmissible and removable alien population.”

The One Big Beautiful Bill Act prevented many illegal immigrants from accessing any public benefits, including health insurance and food stamps. The bill also blocked illegal immigrants with U.S. citizen children from being eligible for the annual child tax credit, worth up to $2,200 per child in 2026.

The Treasury Department took it further and reclassified refundable tax credits as “federal public benefits,” a move that prevents anyone without a Social Security number from receiving that money.

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Although people paroled into the country or awaiting an immigration court date may have temporary status to be present in the country, they do not have Social Security numbers.

A federal court approved the use of a data-sharing system between the Department of Homeland Security and the IRS last May, allowing Immigration and Customs Enforcement, a DHS agency, to use tax filing records, including personal information on those records, in its efforts to locate and arrest illegal immigrants.