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Lending to individuals who are not legally authorized to work in the U.S. may present elevated credit risk to financial institutions, the FDIC, Office of the Comptroller of the Currency and National Credit Union Administration said earlier this month in joint guidance.
Earlier this year, President Trump issued an executive order directing regulators to provide guidance warning financial institutions “to be vigilant against risks presented by the unlawful employment of illegal aliens.” The new joint guidance by the agencies implements that order by reminding financial institutions of their obligations regarding credit risk management, particularly with respect to borrowers who are not legally authorized to work in the U.S.
Other agencies have also taken steps to comply with the executive order. The Consumer Financial Protection Bureau released guidance in June stating that creditors may be legally obligated to consider a consumer’s immigration status for mortgage loans and credit cards. Around the same time, the Financial Crimes Enforcement Network FDIC, OCC and NCUA, in coordination with the IRS, issued an advisory warning financial institutions to be vigilant against potential illicit activity involving unlawful employment of undocumented immigrants.