Summary#
This bill (the "Know Your American Customer Act") would require banks and insured credit unions to verify that most people opening or holding accounts are U.S. citizens or are lawfully present in the United States. It adds a new rule to federal law that lets covered institutions freeze or close accounts if the account holder is not lawfully present. It also creates new criminal penalties for some individuals who open or maintain accounts while not lawfully present.
- Main change: Banks and insured credit unions must check documents proving U.S. citizenship or lawful presence before opening (and in some cases while maintaining) accounts for most natural persons and certain people who control legal entities.
- Who enforces: The Treasury Department, through FinCEN, enforces the rule; the National Credit Union Administration coordinates enforcement for insured credit unions.
- Document list: The bill lists acceptable documents (for example, REAL ID-compliant state ID, U.S. passport, birth certificate, permanent resident card, valid foreign passport with I-94) and lets the Secretary of Homeland Security add other acceptable documents.
- Account limits and timing: People with temporary authorized stays must certify their status and, when that stay expires, get a 30-day full-access period followed by up to 60 days of restricted access before account closure if they do not update documents.
- Safe harbors for institutions: Banks that make a good-faith effort to comply, accept certain listed documents, or accept state IDs issued only to lawfully present people get protections from civil penalty.
- Preemption: The federal rule would override state laws on verification of lawful residency by financial institutions.
What it means for you#
- Bank and credit union customers: If you open a new account after the rule starts, you will generally need to present a listed document proving U.S. citizenship or lawful presence. Existing account holders at the same institution before the effective date may be exempt from the initial-document rule.
- People with temporary immigration status: You must provide a certification of your expiration date and basis for stay when opening an account. After your authorized stay ends, you get 30 days of full access, then up to 60 days during which deposits are allowed but withdrawals and outgoing payment transactions may be blocked, unless you update your documents.
- Authorized users or joint holders: Anyone added as a joint owner or authorized signer after the effective date must meet the same verification rules.
- People who control companies (beneficial owners): Individuals who exercise substantial control over a legal entity opening an account are covered and must meet verification rules.
- Insured depository institutions and insured credit unions: Must implement document checks, follow notice and freezing/closure procedures set by Treasury, and comply with interim guidance and final regulations.
- Non-resident foreign persons and foreign accounts: The bill exempts nonresident aliens not physically present in the U.S., foreign entities not resident in the U.S., and certain foreign bank branches and international capital inflows from these verification requirements.
- State governments and state ID policies: Federal provisions in the bill would override any state law on financial institutions’ verification of lawful residency.
Expenses#
No publicly available information.
Possible costs or budget effects the bill implies (not estimated in the text):
- Banks and credit unions may face new compliance costs for verifying documents, training staff, changing systems, and handling account freezes and closures.
- Treasury/FinCEN and NCUA may require resources to write and enforce interim guidance and final regulations.
- Customers could face costs or lost access if accounts are restricted or closed (for example, delayed bill payments or inability to receive direct deposits).
- There may be legal or administrative costs related to disputes, redirects of incoming payments, and handling of remaining balances; the bill requires Treasury to make rules for these processes but gives no cost estimates.
Proponents' View#
The bill text itself does not include outside statements by supporters. Based on the text, a possible argument for the bill is:
- The bill appears intended to make sure that bank and credit union accounts are limited to U.S. citizens and people lawfully present. Supporters may see this as strengthening enforcement of immigration-related eligibility for holding accounts and reducing the use of U.S. financial accounts by people who lack lawful status.
Other intended practical benefits implied by the text:
- Standardizes a set of acceptable identity and lawful-presence documents for covered institutions.
- Creates enforcement tools (civil penalties for institutions and criminal penalties for certain individuals) to encourage compliance.
- Provides clear exemptions for foreign accounts and nonresident aliens not in the U.S.
Opponents' View#
The bill text does not record outside criticisms. Based on the bill’s design, reasonable concerns include:
- The rule may block or restrict access to bank accounts for people with temporary status, people transitioning immigration status, and others who lack the listed documents. That could interrupt paychecks, benefits, rent payments, and everyday transactions.
- Freezing an account (allowing deposits but blocking withdrawals and outgoing transfers) for up to 60 days after a temporary stay ends could cause immediate financial harm to account holders and to those who depend on payments from the account.
- The bill creates criminal penalties (fines and jail) for individuals who open or maintain active accounts while not lawfully present. The scope and enforcement of those penalties could raise concerns about proportionality and legal uncertainty.
- Compliance could impose significant operational and technology costs on small banks and credit unions, and the bill gives no cost estimate or transition funding.
- The interim guidance rule has rapid deadlines (30 days for interim guidance; 90 days for final rules) and exempts certain information collections from regular review, which may create implementation challenges for institutions.
- Preempting state laws on verification could override state protections or alternative state policies that aim to expand access to banking.
- The bill leaves some important operational details unclear until Treasury issues regulations, including how incoming payments to frozen accounts are redirected and how remaining balances are disbursed.