Recent Executive Orders Regarding Financial Services

On Tuesday, May 19^th, President Trump issued two Executive Orders regarding financial services. The first, Integrating Financial Technology Innovation into Regulatory Frameworks, addresses the role of fintechs in the financial system, including supporting bank-fintech partnerships, charters, and access to Federal Reserve payment systems. The second, Restoring Integrity to America’s Financial System, covers banking products and services provided to immigrants and related BSA/AML and ability-to-repay requirements. Neither will result in immediate changes. Rather, the EOs direct the federal financial regulators to take certain actions within set time periods.

Executive Order, “Integrating Financial Technology Innovation into Regulatory Frameworks”

Due to perceived burdensome and fragmented regulations that create barriers to entry, the EO’s goal is to level the playing field for fintech firms by modernizing the regulatory environment. The EO includes three key directives:

1. Regulatory Review (90/180-Day Timeline)

Within 90 days, each federal financial regulator must review existing regulations, guidance, supervisory practices, and application processes to identify those that could be updated to facilitate innovation and competition for fintech firms. The review must look at rules that impede fintech-bank partnerships and barriers to fintechs obtaining bank charters, credit union charters, or deposit insurance. Within 180 days, regulators must then take steps to actually encourage innovation based on that review.

2. Federal Reserve Access Study (120-Day Timeline)

The EO directs the Federal Reserve to conduct a comprehensive evaluation of the legal and policy framework governing access to Reserve Bank payment accounts and services by uninsured depository institutions and non-bank financial companies – including those engaged in digital assets and novel financial activities. The Fed must report on its legal authority to extend such access, options for expanding it, and any legislative or regulatory changes that would be needed. The EO also asks the Fed to assess whether individual Federal Reserve Banks have independent legal authority to grant or deny access on their own, and what FRB-level policies exist to ensure consistent treatment of applicants.

3. Streamlined Application Process for Fed Payment Access

To the extent the Fed determines existing law permits direct access for fintech and digital asset firms to Reserve Bank payment accounts, the EO asks the Fed to establish transparent application procedures and make determinations on complete applications within 90 days.

Executive Order, “Restoring Integrity to America’s Financial System”

The EO is framed around two concerns: (1) that the financial system is being exploited to facilitate illicit cross-border activity, including terrorist financing, narcotics trafficking, and human trafficking; and (2) that banks and other financial institutions face structural credit risks from extending loans and financial services to undocumented immigrants who may lose wages due to deportation or employer compliance with immigration law. The EO includes five key directives:

1. Treasury Advisory on Red Flags (60-Day Timeline)

Within 60 days, the Treasury Secretary must issue a formal advisory to financial institutions identifying red flags and suspicious activity patterns tied to undocumented workers and their employers. The advisory must cover patterns such as payroll tax evasion, use of shell companies or nominee accounts to obscure payments, use of unregistered money service businesses to make off-the-books wage payments, structuring and micro-structuring of cash transactions, labor trafficking indicators, and the use of Individual Taxpayer Identification Numbers (ITINs) in lieu of Social Security numbers as a potential risk factor warranting enhanced due diligence.

2. Customer Due Diligence Rulemaking (90-Day Timeline)

Within 90 days, Treasury must propose changes to Bank Secrecy Act regulations to strengthen risk-based customer due diligence requirements, including ensuring that institutions maintain the authority to obtain information relevant to whether account holders possess lawful immigration status and employment authorization when such information is relevant to assessing fraud, identity misrepresentation, sanctions evasion, or other illicit financial activity.

3. Customer Identification Program Review (180-Day Timeline)

Within 180 days, Treasury and the banking regulators must consider further changes to Bank Secrecy Act regulations strengthening customer identification program requirements, including accounting for the risks that foreign consular identification cards pose to the U.S. financial system.

4. CFPB Ability-to-Repay Rule (60-Day Timeline)

Within 60 days, the CFPB must consider clarifying that potential deportation and loss of wages are factors that could adversely affect a non-work-authorized borrower's ability to repay a loan, and that lenders may consider such factors as part of a reasonable and good-faith underwriting determination. Notably, according to press reports, the CFPB has already signaled that it’s moving quickly on this and has submitted a proposed rule to OMB for review.

5. Credit Risk Guidance from Banking Regulators (60-Day Timeline)

Within 60 days, each federal financial regulator must issue guidance on managing the credit risks posed by extending loans and financial services to non-work-authorized immigrants.