Sponsor
Thomas Bryant Cotton
Senator · R-AR
Senator · R-AR
Official title: Amend title 31, United States Code, to require certain financial institutions to verify the citizenship and legal status of individuals, and for other purposes.
Introduced March 25, 2026 by Thomas Bryant Cotton · Last progress March 25, 2026
The bill tightens bank-account eligibility and clarifies federal standards to reduce fraud and legal uncertainty for institutions, but it does so by restricting immigrant access to banking, increasing privacy risks, and imposing compliance costs that can disrupt wages, benefits, and services for vulnerable households.
Banks, taxpayers, and the financial system face lower risk of fraud, money laundering, and other illicit finance because accounts are restricted to individuals lawfully present.
Banks and credit unions get clearer federal definitions and standards (e.g., 'active account', 'covered institution', 'lawfully present') to verify customers, reducing legal uncertainty about compliance obligations.
Covered institutions receive procedural protections (safe-harbors and an interim/final regulatory process) that lower the risk of arbitrary enforcement when they follow Treasury guidance.
Noncitizens not lawfully present, and some immigrants with lapsed or missing documentation, could be denied new accounts or have accounts frozen/closed, cutting off access to wages, benefits, and bill-payment mechanisms and increasing reliance on cash and theft/safety risks.
Households — especially low-income and mixed-status families — may face delays, redirection, or loss of electronic deposits (paychecks, tax refunds, benefits) when accounts are frozen or redirected, causing immediate hardship and interruptions to essential payments.
Immigrants with recently expired work authorization, pending asylum applications, or otherwise unclear status may be chilled or confused about banking eligibility despite limited exceptions, deterring them from using bank services.
Based on analysis of 3 sections of legislative text.
Requires banks and insured credit unions to verify citizenship or lawful presence before opening/maintaining many accounts and creates criminal penalties for prohibited account maintenance.
Requires banks and insured credit unions to verify that most account holders are U.S. citizens, nationals, or lawfully present before opening or continuing certain accounts and lets institutions freeze, close, or withhold distributions from accounts when verification fails. It creates new criminal penalties for non‑lawfully present individuals (and those who help them) who open or maintain active bank accounts at covered institutions, with some narrow exceptions and definitions tied to existing immigration and banking statutes. Verification requirements for new accounts take effect 90 days after enactment, the bill defines key terms and procedures for verification and temporary authorized-stay documentation, and it exempts existing account holders from the new-document requirement; penalties include fines and up to one year imprisonment for prohibited account maintenance or use of intermediaries to open such accounts.