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U.S. President Donald Trump waves as he boards Air Force One at Beijing Capital International Airport in Beijing, China, on May 15. / AP·Yonhap

U.S. President Donald Trump has issued a new executive order designed to restrict immigrants and undocumented individuals from accessing the American financial system, The Wall Street Journal reported on May 19 (local time).

According to the WSJ, President Trump directed regulatory agencies to review the "Know Your Customer" (KYC) regulations, which are designed to combat money laundering and terrorist financing.

The WSJ noted that the executive order requires banks to gather more information regarding their customers' immigration status, marking a broader effort by the administration to block undocumented individuals from utilizing the U.S. banking system.

The White House singled out Chinese money laundering networks and Mexican drug cartels to justify the overhaul of the KYC rules.

Under current KYC regulations, U.S. banks must collect specific identifiers, including passports and Social Security numbers. However, the existing rules do not mandate the collection of specific citizenship or immigration status, nor do banks routinely share such data with the federal government. Furthermore, no existing regulations prohibit non-citizens from opening bank accounts.

The proposed modifications would grant financial institutions the authority to obtain additional information from customers when necessary, including documentation related to legal immigration status and employment authorization.

Nevertheless, the latest measure is scaled back compared to a proposal considered in February. That initial draft would have forced banks to collect citizenship details for both new and existing customers.

At the time, the banking sector pushed back, voicing concerns over a lack of legal basis and heavy compliance costs. Industry representatives argued that verifying the immigration status of customers is practically challenging and financially burdensome.

Treasury Secretary Bessent defended the move. Speaking at a dinner hosted by a media outlet in April, he emphasized, "I don’t think this is unreasonable. Isn’t it stranger that we don't know who is in our financial system?"