President Donald Trump's latest executive order targeting undocumented immigrants' interaction with the financial system could eventually lead to new compliance expectations for credit unions, although industry leaders say the administration stopped short of mandating universal citizenship verification requirements.
The executive order, titled "Restoring Integrity to America's Financial System", directs the Treasury Department, NCUA and other federal financial regulators to begin a series of reviews and rulemaking efforts tied to account identification, suspicious activity monitoring and lending practices.
Within 60 days, Treasury must issue guidance identifying potential red flags involving ITIN accounts, payroll structuring and consular identification cards. Regulators including the NCUA are also directed to issue guidance addressing lending risks associated with non-work-authorized borrowers.
Within 90 days, Treasury is expected to propose Bank Secrecy Act changes allowing financial institutions to inquire about immigration status during risk-based due diligence reviews. Within 180 days, regulators are expected to consider tighter Customer Identification Program standards involving foreign consular ID cards.
America's Credit Unions President/CEO Scott Simpson said the organization appreciates that the administration appears willing to pursue changes through formal rulemaking rather than immediate mandates.
"We have engaged the administration on this issue, highlighting the high regulatory standards credit unions are held to," Simpson said.
The trade group had previously urged Treasury and White House officials to avoid mandatory citizenship collection requirements and requested reasonable implementation timelines, good-faith compliance protections and prospective application of any future rules.
The ultimate impact on member onboarding, consumer lending and mortgage underwriting will depend heavily on future Treasury advisories, CFPB guidance and NCUA directives that have yet to be drafted.
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