President Trump’s May 19, 2026 executive order, Restoring Integrity to America’s Financial System, directs Treasury, FinCEN, the CFPB, and the federal banking agencies to reassess how financial institutions identify and manage risks associated with non-work authorized populations and related cross border financial activity. The order reflects a significant shift in federal expectations across BSA/AML compliance, customer identification, and consumer credit underwriting. It also establishes short deadlines that will drive rapid regulatory and supervisory developments through the remainder of 2026.

The order frames these issues as national security and public safety concerns. It cites analyses linking low dollar cross border transfers to terrorist financing, narcotics trafficking, and human trafficking. It highlights Chinese money laundering networks that allegedly used U.S. accounts held by foreign passport holders to launder more than $312 billion for criminal organizations. It also identifies fentanyl related financial activity tied to Mexico based cartels as a priority area for regulatory attention.

At the same time, the order directs regulators to treat lending to non-work authorized individuals as a structural safety and soundness concern. It characterizes potential deportation and loss of wages as creating a fundamental ability to repay deficiency. This framing signals a broader policy shift that will affect both consumer credit markets and fair lending supervision.

Key Directives and Deadlines

The order requires several regulatory actions on compressed timelines.

Treasury Advisory (60 Days)

Within 60 days, Treasury must issue an Advisory describing red flags and typologies associated with six categories of suspicious activity:

  • Payroll tax evasion by employers or labor brokers
  • Use of foreign identity documents or nominee structures to conceal beneficial ownership or payroll disbursements
  • Unregistered MSBs and third party processors used for off the books wage payments intended to bypass BSA reporting thresholds
  • Structuring and micro structuring correlated with payroll cycles
  • Labor trafficking indicators where illicit proceeds are commingled with legitimate revenue
  • Use of ITINs to obtain credit or open accounts without verified lawful immigration status

Although the Advisory will not be binding, examiners routinely treat Treasury Advisories as articulations of expected practice. Institutions should anticipate that the Advisory will influence SAR filing expectations and monitoring scenarios well before any rulemaking is complete.

BSA Due Diligence Regulations (90 Days)

Within 90 days, Treasury must propose amendments to strengthen risk-based customer due diligence. The proposal must ensure institutions collect and verify sufficient identity information to assess illicit finance, sanctions evasion, and fraud risks. It must also preserve institutional authority to obtain additional information, including information relevant to immigration status and employment authorization, when other risk indicators warrant it.

Customer Identification Program Requirements (180 Days)

Within 180 days, Treasury and the federal functional financial regulators must consider changes to CIP regulations, with specific attention to risks associated with foreign consular identification cards. Institutions that rely on these documents for account opening should prepare for potential verification or documentation changes.

Credit Risk Guidance (60 Days)

Within 60 days, the CFPB must consider clarifying that potential deportation and loss of wages may adversely affect a non-work authorized borrower’s ability to repay under Regulation Z. Each federal functional financial regulator must also issue guidance on managing credit risks associated with non-work authorized populations. This directive raises complex questions about how lenders may incorporate immigration related risk factors while managing fair lending obligations.

Practical Implications for Financial Institutions

BSA/AML Programs

Institutions should begin reviewing transaction monitoring scenarios and SAR filing practices against the six categories of suspicious activity identified in the order. The forthcoming Treasury Advisory will likely establish new expectations for how institutions identify and report activity involving non-work authorized populations and their employers. Institutions should evaluate whether existing monitoring rules capture payroll related structuring, funnel account activity, and patterns associated with unregistered MSBs or third-party processors.

Customer Identification and Due Diligence

The order’s focus on consular identification cards and ITINs signals heightened scrutiny of identification documents commonly used by noncitizens. Institutions that accept these documents should assess whether existing CIP and CDD procedures address the risk indicators identified and whether additional verification steps may become necessary. Potential enhancements include supplemental non documentary verification, additional beneficial ownership inquiries, and review of employment authorization where risk indicators are present.

Credit Underwriting

Lenders offering consumer credit, particularly mortgage, auto, and credit card products, should evaluate whether underwriting models and ability to repay analyses account for the immigration related risk factors highlighted in the order. The CFPB’s forthcoming guidance will determine how lenders may incorporate these factors while managing fair lending obligations. Institutions should prepare for potential adjustments to income stability assessments, treatment of ITIN based applications, and portfolio level risk reviews.

Employer Related Risks

The order’s treatment of employer immigration law violations as a financial system vulnerability is notable. Institutions that bank employers in industries with high concentrations of non work authorized labor should anticipate increased scrutiny of payroll irregularities, mismatched tax identification numbers, and unusual payment patterns. These considerations may affect risk rating methodologies and periodic reviews for certain commercial customers.

Fair Lending Considerations

Institutions should monitor how the CFPB and prudential regulators reconcile the order’s directives with existing fair lending requirements under the Equal Credit Opportunity Act and the Fair Housing Act. The intersection of immigration status considerations and prohibited basis discrimination will require careful navigation, particularly if regulators expect lenders to incorporate deportation risk into underwriting.

Looking Ahead

The compressed timelines in the executive order mean that financial institutions will face a rapidly evolving regulatory environment over the next two to six months. Institutions should begin assessing how their existing BSA/AML, CIP, CDD, and credit underwriting programs align with the issues highlighted in the order and prepare for increased supervisory attention as agencies issue Advisories, proposed rules, and credit risk guidance.

We will continue to monitor developments as agencies complete their reviews and begin implementing the Order. If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. And please click here to find out about Ballard Spahr’s Anti-Money Laundering Team.