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