The Know Your American Customer Act requires banks and credit unions to verify the lawful presence of customers and establishes criminal penalties for noncitizens who maintain unauthorized accounts.
Tom Cotton
Senator
AR
The Know Your American Customer Act requires banks and credit unions to verify the lawful presence of customers before opening or maintaining financial accounts. The bill mandates that individuals with temporary legal status provide updated documentation to maintain account access, with provisions for account restrictions or closure for non-compliance. Additionally, the legislation establishes criminal penalties for non-citizens who open or maintain accounts while not lawfully present in the United States.
New Banking Rules Mandate Citizenship Checks: Accounts to be Frozen and Fined Under 'Know Your American Customer' Act
Imagine trying to pay your rent or buy groceries, only to find your debit card declined because your bank is now required to act as an immigration officer. The 'Know Your American Customer Act' turns your local branch or credit union into a verification checkpoint. Starting 90 days after it passes, anyone opening a new account—or anyone already holding one with temporary papers—must prove their 'lawful presence' in the U.S. using a specific list of documents, like a REAL ID or a U.S. passport (Section 2). While this aims to standardize who can access our financial system, it places a massive administrative burden on banks and a high-stakes hurdle for anyone whose paperwork isn't perfectly up to date.
The 30-Day Countdown
For those here on temporary visas—think of a specialized tech worker on an H-1B or a student finishing a degree—the bill creates a strict 'use it or lose it' timeline for their money. If your authorized stay expires, the clock starts: you get a 30-day grace period of full access, followed by a 60-day 'deposits only' restriction where you can’t withdraw a single cent or swipe your card (Section 2). If you don’t produce updated government certification by the end of that window, the bank is legally required to shut your account down entirely. This means a simple administrative delay at a government office could effectively lock a person out of their own life savings, making it impossible to pay bills or manage a small business.
High Stakes and Heavy Fines
This isn't just about paperwork; it’s about serious legal consequences. The bill introduces massive criminal penalties for noncitizens who maintain an 'active' account without being lawfully present. We’re talking about potential fines of up to $1,000,000 and a year in prison (Section 3). While there are small safety nets—like a 90-day window for those whose stay just expired or those with pending asylum cases—the sheer scale of the $1 million fine is a heavy-handed approach to banking regulation. It treats a checking account like a major federal crime, which could lead banks to preemptively close accounts of anyone with 'complex' status just to avoid the risk of being caught in the middle.
The Paperwork Wall
By overriding state laws and setting a federal standard, the bill ensures that every bank from Maine to California follows the same rules. However, the Secretary of Homeland Security gets the power to decide what counts as 'sufficient proof' of status (Section 2). This 'vague authority' means the goalposts could move at any time. For a regular person—like a legal resident who lost their physical Green Card and is waiting months for a replacement—this bill could mean the difference between financial stability and being completely unbanked. It’s a move that prioritizes strict enforcement over the day-to-day reality of how long it actually takes to process government forms.