[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4206 Introduced in Senate (IS)]

<DOC>






119th CONGRESS
  2d Session
                                S. 4206

  To amend title 31, United States Code, to require certain financial 
institutions to verify the citizenship and legal status of individuals, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 25, 2026

  Mr. Cotton introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
  To amend title 31, United States Code, to require certain financial 
institutions to verify the citizenship and legal status of individuals, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Know Your American Customer Act''.

SEC. 2. VERIFICATION OF CITIZENSHIP AND LEGAL STATUS.

    Section 5318 of title 31, United States Code, is amended by adding 
at the end the following:
    ``(r) Verification of Citizenship and Legal Status.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Covered individual.--The term `covered 
                individual' means any natural person who--
                            ``(i) seeks to open an account at a covered 
                        institution;
                            ``(ii)(I) who holds an account at a covered 
                        institution that was opened on or after the 
                        date that is 90 days after the date of 
                        enactment of this subsection; and
                            ``(II) whose eligibility for such account 
                        was established through documentation of 
                        authorization to temporarily reside in the 
                        United States in compliance with paragraph 
                        (2)(C); or
                            ``(iii) is identified as the individual 
                        exercising substantial control over a legal 
                        entity, as described in section 5336, that 
                        seeks to open an account at a covered 
                        institution.
                    ``(B) Covered institution.--The term `covered 
                institution' means--
                            ``(i) an insured depository institution; 
                        and
                            ``(ii) an insured credit union.
                    ``(C) Distributions or transfers.--The term 
                `distributions or transfers' means any payment, refund, 
                deposit, or other funds that would otherwise be 
                directed to an account that has been frozen or closed 
                under this subsection.
                    ``(D) Insured credit union.--The term `insured 
                credit union' has the meaning given the term in section 
                101 of the Federal Credit Union Act (12 U.S.C. 1752).
                    ``(E) Insured depository institution.--The term 
                `insured depository institution' has the meaning given 
                the term in section 3 of the Federal Deposit Insurance 
                Act (12 U.S.C. 1813).
                    ``(F) Lawful presence; lawfully present in the 
                united states.--The terms `lawful presence' and 
                `lawfully present in the United States', with respect 
                to an individual, mean that the individual is--
                            ``(i) a citizen or national of the United 
                        States; or
                            ``(ii) an alien--
                                    ``(I) who has been inspected and 
                                admitted or paroled into the United 
                                States under the Immigration and 
                                Nationality Act (8 U.S.C. 1101 et 
                                seq.); and
                                    ``(II) whose period of authorized 
                                stay has not expired.
                    ``(G) Period of authorized stay.--The term `period 
                of authorized stay' means the period during which an 
                alien is authorized by the Secretary of Homeland 
                Security to be present in the United States, as 
                evidenced by a document issued by the Department of 
                Homeland Security, including an Arrival/Departure 
                Record (Form I-94) (or an equivalent document).
            ``(2) Eligibility to open and maintain an account.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C), a covered institution may not open or 
                maintain an account for any covered individual who is 
                not lawfully present in the United States.
                    ``(B) Verification requirement.--
                            ``(i) New accounts.--
                                    ``(I) In general.--Except as 
                                provided in clause (ii), beginning on 
                                and after the date that is 90 days 
                                after the date of enactment of this 
                                subjection, a covered individual shall 
                                present 1 of the following, which may 
                                be an original or certified copy, to 
                                open an account at a covered 
                                institution:
                                            ``(aa) A driver's license 
                                        or identification card issued 
                                        by a State that is compliant 
                                        with section 202 of the REAL ID 
                                        Act of 2005 (division B of 
                                        Public Law 109-13; 49 U.S.C. 
                                        30301 note).
                                            ``(bb) A United States 
                                        passport or passport card.
                                            ``(cc) A birth certificate 
                                        issued by the vital records 
                                        office of a State, territory, 
                                        or the District of Columbia.
                                            ``(dd) A Certificate of 
                                        Naturalization (Form N-550, 
                                        Form N-570, or Form N-578).
                                            ``(ee) A Certificate of 
                                        Citizenship (Form N-560 or Form 
                                        N-561).
                                            ``(ff) A Consular Report of 
                                        Birth Abroad (Form FS-240) or 
                                        Certification of Report of 
                                        Birth (Form DS-1350).
                                            ``(gg) A Permanent Resident 
                                        Card (Form I-551).
                                            ``(hh) A valid, unexpired 
                                        foreign passport with a valid 
                                        Arrival/Departure Record (Form 
                                        I-94) or nonimmigrant visa 
                                        demonstrating lawful admission 
                                        and lawful presence.
                                            ``(ii) A Social Security 
                                        Administration proof-of-
                                        earnings card or statement, 
                                        presented with a valid driver's 
                                        license or identification card 
                                        issued by a State regardless of 
                                        whether such license or card 
                                        was issued in accordance with 
                                        section 202 of the REAL ID Act 
                                        of 2005 (division B of Public 
                                        Law 109-13; 49 U.S.C. 30301 
                                        note).
                                            ``(jj) A valid 
                                        identification card issued by 
                                        the Department of Defense to a 
                                        member of the uniformed 
                                        services or to a dependent of 
                                        such a member.
                                            ``(kk) Any other document 
                                        determined by the Secretary of 
                                        Homeland Security, by 
                                        regulation, to be sufficient 
                                        evidence of United States 
                                        citizenship or lawful presence.
                                    ``(II) Authorized users.--Any 
                                individual who does not maintain an 
                                account at the covered institution and 
                                who is added as a joint holder or 
                                authorized signer on an account at such 
                                institution after the date described in 
                                subclause (I) shall be subject to the 
                                verification requirements of that 
                                subclause.
                            ``(ii) Exception.--Clause (i) shall not 
                        apply to an individual who maintains an 
                        account, before the date described in that 
                        clause, at the same covered institution the 
                        individual seeks to open an account.
                    ``(C) Individuals with limited period of authorized 
                stay.--
                            ``(i) Documentation of authorized stay.--
                        Any covered individual whose period of 
                        authorized stay in the United States is 
                        temporary, as of the date on which the 
                        individual opens an account at a covered 
                        institution, shall provide the covered 
                        institution with a certification, on a form 
                        prescribed by the Secretary of the Treasury, 
                        that--
                                    ``(I) identifies the expiration 
                                date of such authorized stay;
                                    ``(II) describes the basis for such 
                                stay; and
                                    ``(III) is modeled after the 
                                certification requirements applicable 
                                to nonresident aliens under chapter 3 
                                of the Internal Revenue Code of 1986.
                            ``(ii) Grace period and account closure.--
                                    ``(I) In general.--Except as 
                                provided in subclause (III), beginning 
                                on the last day of the period of 
                                authorized stay of a covered individual 
                                described in clause (i)(I), the covered 
                                individual shall retain full access to 
                                the account for a period of 30 days, 
                                after which, if the covered individual 
                                has not provided updated documentation 
                                of lawful presence, the covered 
                                institution shall restrict transactions 
                                involving the account of the covered 
                                individual for a period of 60 days in 
                                accordance with subclause (II).
                                    ``(II) Transaction limitations.--
                                During the 60-day period described in 
                                subclause (I), the covered institution 
                                shall--
                                            ``(aa) permit incoming 
                                        deposits, direct deposits, and 
                                        other credits to the account; 
                                        and
                                            ``(bb) prohibit all 
                                        withdrawals, outgoing 
                                        transfers, debit or credit card 
                                        transactions, and wire 
                                        transfers.
                                    ``(III) Full access.--If the 
                                covered individual provides updated 
                                documentation of lawful presence during 
                                the 30-day or 60-day period described 
                                in subclause (I) in accordance with 
                                clause (i), the covered institution 
                                shall restore full access to the 
                                account of the covered individual.
                            ``(iii) Account closure.--If the covered 
                        individual does not provide updated 
                        documentation of lawful presence before the end 
                        of the 60-day restricted period described in 
                        clause (ii)(I), the covered institution shall 
                        close the account in accordance with 
                        regulations promulgated under paragraph (4).
                            ``(iv) Accounts opened by legal entities.--
                        The requirements of this paragraph shall not 
                        apply to accounts opened by legal entities.
            ``(3) Frozen or closed account procedures.--
                    ``(A) In general.--Except as provided in paragraph 
                (2)(C), a covered institution shall freeze or close the 
                account of any covered individual who is not lawfully 
                present in the United States or who is otherwise 
                determined to be ineligible under this subsection.
                    ``(B) Applicability.--Any applicable provision of 
                law (including regulations) regarding the closure of an 
                account shall apply to an account frozen under this 
                paragraph.
            ``(4) Penalty.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), any covered institution that violates 
                this subsection shall be subject to a civil penalty.
                    ``(B) Safe harbors.--No covered institution may be 
                subject a civil penalty for a violation of this 
                subsection if the covered institution--
                            ``(i) makes a good-faith effort to comply 
                        with this subsection, and the regulations 
                        promulgated under this subsection;
                            ``(ii) accepts any document listed in 
                        subparagraph (B)(i)(I) and relies on such 
                        document, including in any good-faith closure 
                        or freezing of an account under paragraph (3); 
                        or
                            ``(iii) accepts a driver's license or 
                        identification card issued by a State that 
                        requires proof of lawful presence or United 
                        States citizenship as a condition for issuance.
            ``(5) Enforcement.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Secretary of the Treasury, acting 
                through the Director of the Financial Crimes 
                Enforcement Network, shall enforce the provisions of 
                this subsection.
                    ``(B) Insured credit unions.--With respect to 
                insured credit unions, the Secretary of the Treasury 
                shall coordinate enforcement with the National Credit 
                Union Administration.
            ``(6) Rulemaking.--
                    ``(A) Interim guidance.--
                            ``(i) In general.--Not later than 30 days 
                        after the date of enactment of this subsection, 
                        the Secretary of the Treasury shall issue 
                        interim guidance carrying out this subsection.
                            ``(ii) Force and effect.--The interim 
                        guidance issued under this subparagraph shall 
                        have the force and effect of a rule promulgated 
                        under section 553 of title 5 until superseded 
                        by final regulations under subparagraph (B).
                            ``(iii) Inapplicability.--Chapter 35 of 
                        title 44 shall not apply to any collection of 
                        information required under the interim guidance 
                        issued under this subparagraph.
                    ``(B) Final regulations.--Not later than 90 days 
                after the date of enactment of this subsection, the 
                Secretary of the Treasury shall promulgate final 
                regulations carrying out this subsection, including--
                            ``(i) the procedures and timing for 
                        freezing and closing accounts;
                            ``(ii) the notice requirements applicable 
                        to account holders;
                            ``(iii) the handling of distributions or 
                        transfers directed to frozen or closed 
                        accounts, including procedures for redirecting 
                        incoming payments; and
                            ``(iv) the disbursement or transfer of 
                        remaining balances to another financial 
                        institution or foreign financial institution 
                        designated by the individual.
            ``(7) Applicability.--Nothing in this subsection shall 
        apply to, restrict, or impose any additional verification 
        requirements on--
                    ``(A) accounts held by nonresident aliens (as 
                defined in section 7701(b)(1)(B) of the Internal 
                Revenue Code of 1986) who are not physically present in 
                the United States;
                    ``(B) accounts maintained by foreign persons, 
                foreign corporations, foreign governments, or other 
                foreign entities not resident or physically present in 
                the United States;
                    ``(C) deposits or accounts at branches or agencies 
                of foreign banks in the United States, to the extent 
                attributable to non-resident or foreign sources;
                    ``(D) any other foreign capital inflows, 
                correspondent accounts, or international banking 
                liabilities to foreign residents, as reported under the 
                Treasury International Capital system or similar 
                frameworks.
            ``(8) Effect on state law.--The provisions of this section 
        shall supersede any provisions of the law of any State relating 
        to the verification of the lawful residency of covered 
        individuals by financial institutions chartered, licensed, or 
        operating in the United States.''.

SEC. 3. LIMITATION ON CRIMINAL PENALTIES.

    Section 5322 of title 31, United States Code, is amended by adding 
at the end the following:
    ``(f)(1) In this subsection--
            ``(A) the term `active account'--
                    ``(i) means an account with which an individual may 
                conduct transactions; and
                    ``(ii) does not include an account that has been 
                restricted or frozen under section 5318(r); and
            ``(B) the terms `covered institution', `lawfully present', 
        and `period of authorized stay' have the meanings given the 
        terms in section 5318(r).
    ``(2)(A) Except as provided in subparagraph (B), Any individual who 
is not lawfully present in the United States, or whose removal has been 
ordered under chapter 4 of title II of the Immigration and Nationality 
Act (8 U.S.C. 1221 et seq.), and who opens or maintains an active 
account at a covered institution, shall be fined not more than 
$1,000,000, imprisoned for not more than 1 year, or both. This 
paragraph does not apply to any individual whose period of authorized 
stay expired within the preceding 90 days, or who has filed an 
application for asylum under section 208 of the Immigration and 
Nationality Act (8 U.S.C. 1158) that has not been finally adjudicated.
    ``(B) Subparagraph (A) shall not apply to any individual--
            ``(i) whose period of authorized stay expired within the 
        preceding 90 days; or
            ``(ii) who has filed an application for asylum under 
        section 208 of the Immigration and Nationality Act (8 U.S.C. 
        1158) that has not been finally adjudicated.
    ``(3) Any individual who is not lawfully present in the United 
States, or whose removal has been ordered under chapter 4 of title II 
of the Immigration and Nationality Act (8 U.S.C. 1221 et seq.), and who 
opens or maintains an account at a covered institution through a legal 
entity, or who directs another person to do so on the behalf of the 
individual, shall be fined not more than $1,000,000, imprisoned for not 
more than 1 year, or both.
    ``(4) Notwithstanding subsections (a) and (b), no person shall be 
subject to criminal penalties under this section solely for a violation 
of section 5318(r).
    ``(5) Nothing in this subsection shall be construed to limit 
criminal liability for any criminal violation of Federal law arising 
independently of a violation of section 5318(r).''.
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