Overview
- The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration issued joint guidance that warns loans backed by income from work without legal authorization can pose higher credit risk.
- The guidance, which was issued Monday, is nonbinding and reiterates supervisors' expectations that banks identify, measure, monitor and control these risks through sound underwriting and know‑your‑customer procedures.
- Regulators framed specific risks as possible job loss if a borrower is removed from the country, an inability to obtain lawful employment, and concentrated exposure in certain employers or regions.
- The action implements President Donald Trump’s May executive order and follows a May FinCEN advisory that flagged identity theft, payroll‑tax fraud and money‑laundering tied to unauthorized workers.
- Advocates and industry groups warn the guidance could chill financial access for people living in the country without authorization by prompting higher down payments, higher rates, tighter approval standards or account exits, while publicly available data on how many are banked is limited.