On May 19, President Trump issued an executive order to safeguard the U.S. financial system from illicit activity, strengthen customer identification requirements for financial institutions, and address purported credit risks tied to extending financial services to “non-work authorized populations.”

The order directs: (i) the CFPB to consider within 60 days clarifying that “potential deportation and loss of wages are factors that could adversely affect a non-work authorized borrower’s ability to repay an extension of credit” under Regulation Z’s “ability-to-repay” standards, and that lenders may consider these when making “reasonable and good-faith” underwriting determinations; (ii) each “Federal functional financial regulator” (i.e., the Fed, the OCC, the FDIC, and the NCUA) to issue guidance within 60 days on managing credit risks posed by the non-work authorized population; and (iii) Treasury to issue within 60 days a formal advisory to financial institutions on red flags associated with the purported “exploitation of the U.S. financial system by non-work-authorized populations and their employers,” including payroll tax evasion, concealed account ownership, structuring schemes, labor trafficking, and the use of individual taxpayer identification numbers by applicants lacking “verified lawful immigration status.”

The order further directs Treasury, along with the Federal functional financial regulators, to: (i) propose within 90 days changes to the BSA/AML regulations to strengthen risk-based customer due diligence requirements, including ensuring institutions can identify beneficial owners of accounts and obtain additional information where warranted to assess risks related to illicit finance, sanctions evasion, or fraud; and (ii) consider within 180 days strengthening customer identification program requirements, including accounting for risks posed by foreign consular identification cards.