U.S. banks have heard little from the Trump administration about the scope of an expected executive order that would require them to collect citizenship or immigration-status data on their customers, leaving the industry warning of multibillion-dollar costs and the prospect of millions of Americans being shut out of the banking system, Reuters reported Thursday. 

Three people familiar with the matter told Reuters that bank lobby groups initially pushed back in meetings with administration officials, warning the requirement would be operationally and legally complex, expensive, and could leave millions of people unbanked. In recent weeks, however, banks have had little communication from the administration despite the magnitude of the potential requirement, according to the report.

The center-right American Action Forum estimated last month that the industry would spend between $2.6 billion and $5.6 billion a year just to collect citizenship data on new accounts, according to the report.

“The logistical challenges for banks are significant,” Kathryn Judge, a professor at Columbia Law School, told Reuters. “Overall, the initiative is bad news for banks but worse news for ordinary Americans. Even for citizens, the process could create significant headaches.”

Existing know-your-customer rules require banks to verify a customer’s identity and gather basic personal data, including Social Security or tax identification numbers, but do not require lenders to collect or verify citizenship or immigration status.

Banks told the news agency that adding such a requirement would force a wholesale overhaul of document-processing and IT systems and extensive training of frontline staff to identify and assess the validity of more than 180 different visa types listed by the U.S. State Department.

Verifying such documents for new customers would be extremely burdensome, but doing so for existing customers would be “almost impossible,” a retail bank chief executive told Reuters.

A fifth source described as a top banker said the requirement could create new enforcement risk if authorities pursue lenders for failing to adequately check customer paperwork.

Roughly half of Americans do not have passports, according to State Department data cited by the news service, and 21.3 million American citizens of voting age lack readily available proof of citizenship, according to 2024 research by the Brennan Center for Justice cited by Reuters. Many account-holders, especially women who have been married, may have different names on their birth certificates than on current identification. 

Two people told the news outlet that most banks would likely restrict online account opening if the order takes effect, making it harder for Americans in rural banking “deserts” to open accounts.

“The initial implementation would be a lot of extra work because nobody would be accustomed to following the process,” Ross Delston, an attorney specializing in anti-money-laundering compliance, told Reuters. “And then you run the risk that banks would just start turning customers away,” with a potential discriminatory impact on some groups, he said in the article. 

For an executive order to take legal effect, the Treasury or bank regulators would typically have to write new rules and allow public feedback, giving the industry another chance to push back, Reuters said.