EXECUTIVE SUMMARY

• The Trump Administration is considering requiring banks to verify the citizenship status of new – and existing – account holders, which would be very costly for both banks and their customers.
• This analysis finds that, based on applying agency cost estimates from existing verification programs to a citizenship verification regime for banks, this action could result in anywhere from 33.1–73.3 million additional paperwork hours and $2.6–$5.6 billion in additional costs.
• Verifying new accounts is the tip of the iceberg; the lack of details makes it difficult to estimate the costs of verifying existing accountholders, but even under the most conservative of assumptions it would add millions of hours and billions of dollars in administrative costs.

INTRODUCTION

In late February, media reports emerged that the Trump Administration was considering an executive action that “could ultimately task banks with asking for an unprecedented new category of documents, such as a passports, from both new and existing customers who want to maintain a bank account in the U.S.” Banks have to record and verify certain aspects of their accountholders under the Financial Crimes Enforcement Network’s (FinCEN) Customer Identification Program (CIP), but citizenship status is not currently one of those data points. FinCEN estimates that the CIP process currently takes 3 minutes for each new account and amounts to roughly 2.8 million hours of paperwork annually. The president would most likely direct FinCEN to update the relevant regulatory code on the parameters of the CIP.

Adding citizenship verification to this process would require customers to procure and banks to record additional documentation (such as a birth certificate or valid passport), leading to a greater time burden for both parties to the transaction. Agencies currently have some data available on the time such processes require. This analysis uses these existing data as proxies to illustrate the scale of administrative burdens involved under this new potential compliance regime.

Estimates of the time burden for comparable current requirements from other agencies range from 40 minutes to more than an hour per response. Applying such estimates to the CIP – instead of its current 3 minute per response time – would increase the annual time burden by 33.1–73.3 million hours with anywhere between $2.6–$5.6 billion in commensurate costs. The imposition of similar compliance requirements for existing accounts would – at a minimum – represent a sizable level of administrative burdens, but with the potential for much more consequential effects if such directives disrupted the banker-customer relationship across a significant number of accounts.

CURRENT CUSTOMER IDENTIFICATION REQUIREMENTS

For banks, under the current CIP system “the minimum requirements include: 1) implementation of a written customer identification program appropriate for the financial institution’s size and type of business; 2) identity verification procedures; 3) recordkeeping; 4) comparison with government lists; and 5) customer notice.” This is no specific form associated with CIP requirements, but rather (per the relevant supporting statement):

Banks are required to document and maintain records reflecting their compliance with CIP requirements. These requirements will assist law enforcement in financial investigations, protect against terrorism and strengthen national security, improve financial institutions’ ability to assess and mitigate risk, help prevent evasion of financial sanctions, facilitate tax compliance, enhance financial transparency of legal entities, and advance U.S. compliance with international standards and commitments.

FinCEN calculates that the 10,400 covered institutions will take 11 hours each per year to maintain their systems for recording this data and that it will take 3 minutes of additional data entry for each of the 53.6 million accounts opened each year. In total, meeting current requirements involves nearly 2.8 million hours in administrative burdens for banks annually. Then, using a “fully-loaded composite hourly wage rate of $106.30 that is utilized in other” recent FinCEN actions, the agency estimates more than $297 million in commensurate costs for banks. The per-account calculations are critical for determining the scale of additional compliance burdens. Notably, past estimates of the CIP burden for banks did not account for this factor.

POTENTIAL ADDITIONAL BURDENS FOR NEW ACCOUNTS

Two existing paperwork requirements that could provide useful examples of the additional burdens involved in verifying citizenship status are the “Employment Eligibility Verification” (or Form I-9) and the “Application for a U.S. Passport.” The I-9’s current per-response burden is 40 minutes (split between 9 minutes for employees to supply their information and 31 minutes for employers to complete and review the form). The average passport applicant takes an estimated 85 minutes to complete the relevant steps.

Each comes with certain caveats as direct comparisons, however. The I-9 does not specifically check for citizenship, per se, but rather some authorization to work in the country legally. This allows for a broader swath of supporting documentation. The passport application does check for citizenship but also includes notable steps, such as procuring a passport photograph, that do not apply to opening a bank account (at least in most instances). Additionally, there are likely significant differences in relative compliance burdens for different bank customers. Some may have the relevant documentation, such as their passport, readily available, and thus face an additional burden of only a few minutes. Others may need to procure new copies of such documents – a task that could be a significant logistical burden in any number of ways.

Nevertheless, another recent Trump Administration initiative helps to affirm that utilizing this range of per-response estimates has some merit. On February 20, 2026, the Department of Housing and Urban Development (HUD) published its proposed rule on “Housing and Community Development Act of 1980: Verification of Eligible Status.” This proposal seeks to “require the verification of U.S. citizenship or the eligible immigration status of all applicants and recipients of” certain public housing programs. In the section summarizing the potential paperwork implications, HUD puts the per-response burden at 1.25 hours (or 75 minutes). While the agency does not cite a specific rationale for this estimate, the accompanying Regulatory Impact Analysis includes a range of .5 hours (30 minutes) to 2 hours. The 1.25-hour estimate represents the midpoint of this range.

To project the potential associated monetary costs of these burdens – either in forgone opportunity costs for individuals or direct compliance costs by banks – one can pull from estimates provided in the agency calculations for either the Form I-9 or passport application examples. The passport application estimate includes a $47.20 per hour figure for the opportunity cost of applicants’ time “based on the civilian hourly wage listed in the Employer Costs for Employee Compensation released by the Bureau of Labor Statistics in 2025.” As noted earlier, FinCEN estimates $106.30 per hour in costs to banks for the purposes of CIP compliance. Since both parties will bear some burden in either providing or reviewing the relevant documents, one can reasonably use a midpoint compliance rate of $76.75 per hour to calculate the potential costs.

The table below illustrates the estimated additional burdens[1] across these other examples:

EXISTING ACCOUNTS AND OTHER CONSIDERATIONS

As reports on this burgeoning initiative have noted, the administration’s plans may involve not only additional reporting burdens for new accounts, but also requirements for cross-checking the status of existing accountholders. Such an exercise likely would involve administrative burdens substantially greater in magnitude than even the requirements for new accounts. It is difficult to quantify what this might look like given the lack of readily available public data on the volume of existing accounts. One can, however, sketch out a rough, minimal estimate utilizing some data at hand.

For instance, in the most recent edition of the Federal Deposit Insurance Corporation’s “National Survey of Unbanked and Underbanked Households,” the agency found that: “95.8 percent of U.S. households—representing about 128.0 million households—were banked in 2023.” Taking the very conservative assumptions that: A) each of these households has simply one account open, B) this remains a representative sample of that population, and C) one uses the low-end Form I-9 per-response time, such a compliance regime would involve 85.3 million hours of paperwork. Under the $76.75 per-hour cost rate, that would be $6.5 billion in commensurate costs – again, at the very minimum.

That is just for the basic, nuts-and-bolts administrative burdens involved, though. The broader economic effects could be even more profound, if somewhat nebulous. To the extent that the banks in question find it financially viable, there is not any inherent reason – outside of perhaps some very clear and extraordinary national security concerns – for the citizenship status of an individual to factor into the pure business transaction that is the opening and maintaining of a bank account. As such, government action on the matter necessarily brings exogenous effects. These may be difficult to quantify at the moment, but it is worth considering some of the qualitative effects this kind of policy may produce.

A maximalist position by the administration that formally and forcibly bans non-citizen accounts is not likely to stand up to legal scrutiny (at least, not without further congressional action) – much less practical reality. As the American Action Forum has discussed before, however, there are plenty of examples of banks closing accounts (or “debanking” customers) due to vague, informal government pressure on specific political issues. This would be the most likely outcome under this policy – and an ironic one at that, given the Trump Administration’s and Republican lawmakers’ notional opposition to such practices in recent years. Additionally, even if the verification requirement is purely for informational purposes, such a policy could have some chilling effect with non-citizens (regardless of their legal residency status) deciding to forgo depositing their funds with covered institutions out of privacy concerns. This would have some impact on affected banks’ balance sheets.

CONCLUSION

Details remain scant on the exact parameters of this new initiative from the Trump Administration. The general direction of the policy being floated in hardly surprising, however. Whether it be in rulemakings such as the aforementioned proposed verification requirements for public housing, or other items such as guidance restricting non-citizens from small business lending programs, this administration is continuing its pursuit of aggressive immigration measures across essentially any arm of the administrative state it can find. Broadly subjecting the nation at-large to onerous reporting requirements for the simple act of opening and maintaining a bank account, however, would involve direct burdens in the tens of millions of hours and billions of dollars in costs – with greater economic chaos likely to ensue.

[1] The hourly burden estimates here exclude the 2,680,750 hours attributed to data entry for new accounts under the current CIP to avoid double counting the time burden of recording data that would likely be included in citizenship verification anyways. Furthermore, the cost estimates include an additional $21.4 million in costs via the $0.40 per response cost that the passport application estimate attributes to printing the “front and back copy of U.S. citizenship/nationality evidence.”