Know Your American Customer Act
- Sponsor
- Rep. Self, Keith [R-TX-3]
- Committees
- Financial Services Committee (primary)
- Last action
- May 14, 2026
Bottom line
This bill requires financial institutions to verify the immigration status of account holders, aiming to prevent individuals not lawfully present in the U.S. from accessing banking services, with penalties for non-compliance for both institutions and individuals.
What it actually does
This bill amends title 31, United States Code, to mandate that insured depository institutions and credit unions verify the citizenship and legal status of individuals seeking to open new accounts or those with temporary authorization for existing accounts. It establishes procedures for restricting and ultimately closing accounts if an individual's authorized stay expires and they fail to provide updated lawful presence documentation. Furthermore, the bill introduces civil penalties for non-compliant financial institutions and criminal penalties for individuals not lawfully present who open or maintain active accounts.
Proponents argue
Supporters argue this bill strengthens national security and financial integrity by preventing individuals not lawfully present in the U.S. from using the financial system, potentially curbing illicit financial activities and ensuring that financial services are reserved for citizens and legal residents. They may also contend it closes a perceived loophole where individuals without legal status can easily access banking services, thereby reinforcing immigration laws.
Opponents contend
Opponents might argue that this bill would create significant administrative burdens for financial institutions, lead to discrimination against certain populations, and potentially exclude vulnerable individuals from essential financial services, pushing them into unregulated cash economies. Critics could also raise concerns about privacy, data security, the potential for wrongful account closures, and the severity of criminalizing basic financial activities.
The bill is relatively short and its core provisions are clearly stated, making it accessible for an informed reader to understand its primary impacts within a reasonable timeframe.
Section 2, amending 31 U.S.C. 5318(r)(1)
Establishes Key Definitions for Verification
This section defines critical terms that govern the bill's application. 'Covered individual' includes natural persons opening accounts or exercising substantial control over legal entities. 'Covered institution' refers to insured depository institutions and insured credit unions. 'Lawful presence' is defined as U.S. citizens/nationals or aliens inspected, admitted, or paroled with an unexpired authorized stay. These definitions determine who and what entities are subject to the new verification requirements.
Supporters argue
Supporters argue that clear and precise definitions are essential for effective implementation and consistent application of the law, ensuring that financial institutions understand their obligations and individuals understand their eligibility criteria.
Critics contend
Opponents might argue that the definitions, particularly of 'covered individual' and 'lawful presence,' are overly broad or could lead to confusion and unintended consequences, potentially ensnaring individuals who should not be subject to these restrictions.
Tradeoffs
This provision balances the need for clear legal definitions to enforce immigration status verification with concerns about potential overreach or ambiguity that could impact legitimate financial activities.
Section 2, amending 31 U.S.C. 5318(r)(2)(A) and (B)
Mandates Lawful Presence for Account Holders and Verification Requirements
This provision prohibits covered institutions from opening or maintaining accounts for individuals not lawfully present in the U.S. For new accounts opened 90 days after enactment, it requires individuals to present specific documents proving U.S. citizenship or lawful presence, such as a REAL ID-compliant driver's license, U.S. passport, birth certificate, or Permanent Resident Card. Individuals added as joint holders or authorized signers on accounts after this date are also subject to these verification requirements.
Section 2, amending 31 U.S.C. 5318(r)(2)(C)
Establishes Grace Period and Account Closure for Temporary Authorized Stay
This provision outlines a process for individuals with temporary authorized stay. Upon opening an account, they must certify their expiration date. If their authorized stay expires, they receive a 30-day grace period with full account access, followed by a 60-day period where only incoming deposits are permitted (withdrawals and outgoing transfers are prohibited). If updated lawful presence documentation is not provided by the end of the 60-day restricted period, the account must be closed.
Section 2, amending 31 U.S.C. 5318(r)(4)
Establishes Civil Penalties for Institutions and Safe Harbors
This provision subjects covered institutions to civil penalties for violating the new verification requirements. However, it also provides 'safe harbors' from these penalties if an institution makes a good-faith effort to comply, accepts any of the specified documents, or accepts a state-issued driver's license/ID card that itself requires proof of lawful presence or citizenship for issuance.
Section 3, amending 31 U.S.C. 5322(f)
Imposes Criminal Penalties for Unlawful Account Maintenance
This provision establishes criminal penalties for individuals not lawfully present in the U.S., or those with removal orders, who open or maintain an 'active account' at a covered institution. Penalties include fines up to $1,000,000, imprisonment up to 1 year, or both. Exceptions are made for individuals whose authorized stay expired within the preceding 90 days or those with pending asylum applications. Similar penalties apply to individuals using legal entities to open or maintain accounts while not lawfully present.
This subsection explicitly states that the new verification requirements do not apply to accounts held by nonresident aliens not physically present in the U.S., accounts maintained by foreign persons/entities not resident or physically present in the U.S., deposits at foreign bank branches attributable to non-resident sources, or other foreign capital inflows/international banking liabilities.
Section 2, amending 31 U.S.C. 5318(r)(7)
Why it matters:This is likely standard legislative practice to clarify scope and exemptions, but its placement could lead to initial misinterpretations of the bill's broadness.
Case for: Supporters would argue this carve-out is essential to prevent unintended disruption to international finance and to ensure the bill's focus remains on individuals physically present in the U.S. financial system, rather than legitimate foreign capital flows.
Case against: Opponents might argue that while necessary, the existence of such broad exemptions highlights the complexity and potential for unintended consequences when applying immigration status checks to financial systems, or that it creates a two-tiered system.
Estimated impact: Prevents significant disruption to international banking and foreign investment in the U.S. by explicitly excluding non-resident foreign entities and capital from these new verification requirements.
This subsection states that the provisions of this section shall supersede any provisions of the law of any State relating to the verification of the lawful residency of covered individuals by financial institutions chartered, licensed, or operating in the United States.
Section 2, amending 31 U.S.C. 5318(r)(8)
Why it matters:This is a standard preemption clause, often placed at the end of a section to clarify federal supremacy. Its placement is typical but still makes it less prominent.
Case for: Proponents would argue that federal preemption is necessary to ensure uniform application of the law across all states and prevent a patchwork of conflicting state regulations, which would create confusion and compliance challenges for financial institutions operating nationwide.
Case against: Opponents, particularly those advocating for states' rights, might argue that this provision unnecessarily preempts state authority in an area where states might wish to implement different or more tailored approaches, or that it removes a potential avenue for states to offer more inclusive financial services.
Estimated impact: Ensures a single, federal standard for immigration status verification in banking, preventing states from enacting conflicting or more lenient (or stricter) laws on this specific issue.