How Trump’s banking Immigration status order could create new financial barriers for Immigrants?

The Trump administration has signed an executive order on May 19, requiring banks, government departments and financial regulators to assess the citizenship status of bank customers.

The recent order is seen as a push against those people, especially immigrants, who are living in America without proper legal status.

Under this order, the financial regulators are obliged to look for people’s citizenship status who are either interested in opening bank accounts or obtaining credit cards and loans.

According to the White House, this move will help combat potential credit risks to the financial system. Because when individuals without legal status are deported, the loans can become uncollectible.

The order would not “permit risks to our financial system posed by the extension of credit or financial services to the inadmissible and removable alien population,” The White House stated.

Against the banks’ expectations, the recent order is less stringent as previously the administration was thinking of enforcing the rules, making the collection of citizenship data mandatory for all customers.

But banks resisted this mandate that would have coerced them to gather citizenship information for all customers because such a move would cost them significant money and impose heavy administrative burden.

On the other hand, the immigration advocates have raised concerns over this order as the citizenship status may push undocumented individuals out of the formal banking systems. Eventually, there would be a surge in unbanked populations.

Because the people will fear the sharing of their information with federal authorities, leading to stringent implications for them. Moreover, many immigrants would rush to withdraw their money from banks over the concerns that their accounts might be flagged.

Consequently, they will fall prey to predatory financial services, including payday lenders and high-interest check cashers.