Federal Regulators Direct Banks To Scrutinize Loans To Illegal Aliens

Authored by AG News Staff via American Greatness,

Federal banking regulators have closed a long-standing loophole that allow illegal immigrants borrow money from U.S. financial institutions with little scrutiny of their legal status.

The Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) jointly advised that banks "might consider" requiring customers to produce "evidence of continuing work authorization" and other documentation when assessing whether a borrower can repay a loan. The agencies also directed banks to watch for risky concentrations of lending in "geographic markets, employers or industries" that could be "disproportionately affected" by the Trump administration's expanded immigration enforcement.

The guidance carries out President Donald Trump's executive order signed in May, "Restoring Integrity to America's Financial System," which sought to cut off illegal immigrants' access to the U.S. banking system. That order directed the Treasury Department and financial regulators to draft stricter due-diligence standards for verifying customer identities and evaluating loans to people in the country illegally.

Current federal law does not bar banks from serving illegal immigrants, an omission the administration has moved to address after sustained pressure from supporters of Trump's deportation agenda, who have pushed the White House to cut illegal immigrants off from the financial system entirely as part of a debanking effort.

Trump signaled he wants the crackdown to go even further than the executive order. In a Truth Social post last month, he said bank accounts used to "enable" illegal immigration should be shut down and seized outright, though he offered no specifics on how such seizures would be carried out.

The Consumer Financial Protection Bureau (CFPB) reinforced the administration's approach last month with its own guidance, cautioning banks about the credit risks tied to lending to immigrants who lack legal work authorization.