U.S. bank regulators warn firms on lending to undocumented workers

U. S. bank regulators warn firms on lending to undocumented workers People walk around the Financial District on the morning after Zohran Mamdani’s election win in New York City, U.

S. , November 5, 2025. REUTERS/Angelina Katsanis · Reuters By Pete Schroeder Mon, July 13, 2026 at 4:35 PM GMT+2 1 min read By Pete Schroeder WASHINGTON, July 13 (Reuters) - Banks should be cautious of lending to people not legally authorized to work ‌in the United States, as their income may be less ‌reliable or they may be deported, a pair of U.

S. bank regulators cautioned ​the industry Monday. In new guidance, the Office of the Comptroller of the Currency, which supervises the nation's largest banks, and the Federal Deposit Insurance Corporation said non-citizens working in the U.

S. illegally may have "less reliable" ‌income and as a ⁠result may be a higher credit risk. The National Credit Union Association, which monitors credit unions, also ⁠issued the guidance.

More from Yahoo Scout What guidance did bank regulators issue regarding undocumented workers? What credit risks do banks face with unauthorized workers? How does Trump's executive order affect banking practices?

Which regulatory agencies issued this new banking guidance? "When a borrower's income is derived from employment that is not legally authorized, the source of repayment may be less reliable ​and may ​present increased credit risk," the guidance ​stated. Among reasons repayment could ‌be riskier include loss of employment due to nonlegal status, an inability to become legally employed, or a borrower's removal from the United States.

The guidance, which is nonbinding and does not impose new requirements on banks but rather reminds them of existing obligations, is ‌an effort to implement an executive ​order signed by President Donald Trump in ​May. That order focused on ​the potential misuse of financial services by people living ‌in the U. S.

illegally and ​directed the Treasury ​Department and other agencies to identify potential red flags for the industry. That order was a lighter touch than one feared ​by the banking ‌industry and considered by the Trump administration, which would have ​directed banks to collect citizenship data on accountholders.