FinCEN advisory urges banks to flag payroll fraud tied to unauthorised workers

US Treasury’s financial crimes unit has asked banks to help spot payroll schemes linked to people living in the country illegally. The request forms part of the Trump administration’s wider push on immigration enforcement. The Financial Crimes Enforcement Network, known as FinCEN, issued an advisory on Friday. It urged banks to watch for patterns that may show fraud.

Representative image

FinCEN told financial institutions to look for identity theft, payroll tax fraud, and money laundering tied to hiring unauthorised workers. The agency said such schemes can depend on access to US banks and other financial services. The advisory also lists more than a dozen "red flags\". These signs may suggest a customer is in the US illegally.

Trump administration immigration order and FinCEN advisory

The advisory followed an executive order signed by President Donald Trump in May. The order asked banks to take a closer look at customer citizenship. It also directed bank regulators and government departments to search for clues. These clues may show people without legal status opening accounts. They may also include obtaining loans or credit cards.

Officials said the measures are aimed at misuse of the financial system. Treasury Secretary Scott Bessent said in a statement: \"the Trump administration will not allow illegal aliens to abuse financial institutions to steal billions of dollars from hardworking American taxpayers.\" Bessent also said schemes to pay unlawful workers rely on financial access. \"Schemes to pay unlawful workers often rely upon access to the US financial system, including US banks,\" Bessent said.

Bank lobbying on citizenship checks and FinCEN advisory

Earlier reports said the White House was drafting a tougher order. Those reports suggested it would require banks to collect citizenship details. The final order was softer than many banks had expected. It offered guidance rather than a binding rule. The banking industry had lobbied for months against a mandatory approach.

Banks argued a mandate would raise costs and add major paperwork. Since banks do not collect citizenship or immigration status, risk data is limited. There are no reliable public figures on the financial risk involved. The final order avoided encouraging broad account closures. Still, the order and advisory may deter illegal residents from using US finance.

FinCEN’s advisory now asks banks to apply extra care when reviewing suspicious patterns. It ties its warning to possible hiring of unauthorised workers. It also points to related tax and laundering risks. The approach leaves banks without a strict requirement to record citizenship. Even so, regulators are signalling closer scrutiny of such activity.

With inputs from PTI