Treasury warns banks of ‘red flags’ tied to customers in the US illegally

WASHINGTON (AP) — Treasury’s financial crimes arm wants banks to help identify payroll schemes tied to people living in the country illegally, as part of the Trump administration’s latest measure to clamp down on immigration.

The Financial Crimes Enforcement Network — also known a FinCEN — issued an advisory Friday to banks that tells them to watch out for identity theft, payroll tax fraud, and money laundering schemes tied to hiring unauthorized workers.

This comes after President Donald Trump in May signed an executive order that requires banks to take a closer look at the citizenship of their customers.

The order directs bank regulators and government departments to look for signs that people without legal status are opening accounts or obtaining loans or credit cards. However, the order is less aggressive than banks had previously expected, as earlier reports suggested the White House was drafting an order that would make collecting customers’ citizenship information mandatory.

Still, without encouraging a blanket debanking of broad segments of the population, the order and latest advisory acts to discourage people in the U.S. illegally from interacting with the larger U.S. financial system.

Treasury Secretary Scott Bessent said in a statement that the Trump administration “will not allow illegal aliens to abuse financial institutions to steal billions of dollars from hardworking American taxpayers.”

“Schemes to pay unlawful workers often rely upon access to the U.S. financial system, including U.S. banks,” he said.

Since banks have never collected any information about their customers’ citizenship or immigration status, there are no reliable public figures on how much risk these customers pose to the financial system.

The banking industry had been aggressively lobbying for months to stop the White House from issuing an executive order that would have made collecting customers’ citizenship status mandatory, arguing it would be expensive and require vast amounts of paperwork. Since the order only offered guidance to the banks instead of a mandate, it appears the banks were able to win over the White House.

The advisory calls on financial institutions to be alert for more than a dozen so-called ‘”red flags” that indicate an individual is in the U.S. illegally.

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Sweet reported from New York.