Treasury’s FinCEN Warns Banks on Payroll Fraud Tied to Unauthorized Workers

The Treasury Department’s Financial Crimes Enforcement Network issued an advisory on June 5, 2026, urging banks to detect payroll schemes, identity theft, and money laundering linked to the hiring of unauthorized workers. The move follows a May executive order from President Trump directing financial institutions to scrutinize the citizenship status of account holders. The advisory stops short of a feared mandate to collect customer citizenship data, a requirement the banking industry successfully lobbied against due to high compliance costs. Instead, lenders are asked to monitor for more than a dozen “red flags” without a blanket debanking directive. Treasury Secretary Scott Bessent said the administration will not allow illegal aliens to “steal billions of dollars from hardworking American taxpayers.” The guidance adds compliance burden but eases initial regulatory expectations, aiming to limit access to the U.S. financial system for those without legal status.