Sen. Tom Cotton has introduced legislation that would force banks and credit unions to verify whether new account holders are U.S. citizens, permanent residents or otherwise legally present in the country, pushing a citizenship question into the front end of everyday banking. The proposal, the Know Your American Customer Act, has been introduced but not passed, and no executive order has been issued to date.
Under current Know Your Customer rules, banks must confirm identity but do not have to verify citizenship or immigration status. That makes the Cotton bill, if enacted, a major expansion of bank-level checks, and the same would be true if the policy came through executive action instead of Congress.
The issue moved into sharper focus last week when Treasury Secretary Scott Bessent said the administration expects banks to comply if regulators decide citizenship data collection is required. He also said an executive order requiring banks to collect citizenship data is in process, adding pressure on lenders already trying to understand what the next phase might look like. Bessent said, “If Treasury and the banking regulators say it’s their job, it’s their job.”
The fight is not only about paperwork. Banks have pushed back on the idea, citing the operational complexity and compliance costs that would come with collecting and verifying more customer data. Administration officials say the effort is aimed at protecting the banking system and making sure services remain accessible and affordable, but the policy discussion now centers on how much new burden the industry would have to absorb to carry it out.
Mortgage professionals are also watching closely because changes to account opening and verification could spill into lending. Mortgage applications often rely on verified bank accounts to document assets and reserves, so a shift at the deposit-account stage could affect how borrowers enter the lending process. That makes the banking debate relevant well beyond checking accounts, extending into the first steps many households take when they seek a home loan.
The dispute fits into a broader pattern of citizenship-driven policy fights that have reached beyond immigration and into daily life, from ancestry claims in Italy to application surges in Canada and court battles in the United States. Here, though, the consequences are immediate and practical: the rules that govern who can open an account, what data banks must collect and how much more the industry must spend to do it.
For now, the bill is still only a proposal and the executive order Bessent described has not been issued. But the direction of travel is clear enough: if regulators or the White House move ahead, banks may soon be asked to prove more than who their customers are. They may be asked to prove who they are allowed to be.
