Don't let Washington politicians turn your local bank into a government spy

Proposed banking citizenship mandate could worsen debanking crisis and create privacy risks through expanded federal data collection, critics warn.

Vance Ginn, Ph.D., is president of Ginn Economic Consulting and previously served as chief economist of the White House’s Office of Management and Budget during the first Trump administration. Follow him on X @VanceGinn or visit vanceginn.com.

Banks already operate under serious identity verification mandates. Federal Customer Identification Program requirements under 31 CFR 1020.220 require banks to collect identifying information and use risk-based procedures to verify identity so they can form a "reasonable belief" that they know the customer's true identity. Identity verification is already the law. This proposal adds a new, separate layer: citizenship classification at scale.

That means unforeseen costs imposed on people who are already complying with the law. Banks will need new systems, new staff training, new vendors, new audits and new exception-handling processes for customers who cannot meet the new demands immediately. Compliance costs do not stay at the bank. They show up in higher fees, fewer low-cost accounts and worse service.