[US] Potential implications for global mobility programs from Executive Order on financial integrity

Last month in the US, the White House issued an Executive Order on financial integrity, which could have implications for global mobility programs, KPMG reports.

Executive Order 14406, “Restoring Integrity to America’s Financial System directs the U.S. Treasury Department and other federal financial regulators to review policies and consider changes that would strengthen customer identification requirements for financial institutions and increase scrutiny of financial activities associated with payroll tax evasion, the use of Individual Taxpayer Identification Numbers (ITINs) for account opening or obtaining credit products, and other related compliance risks.

According to KPMG, the order is a policy signal rather than an immediate change to any law, rule, or regulation. It primarily targets unauthorised employment and illicit financial activities. However, if these proposed changes ultimately translate into new compliance rules or stricter banking regulations, multinational employers and their global mobility programs are likely to see tangible operational challenges.

If regulatory agencies and financial institutions implement its recommendations, international assignees could reportedly face banking and lending friction. KPMG says that global mobility arrangements - which often involve split payrolls, cross-border payments, and the use of ITINs - could unintentionally fall within the broader sweep of these policy initiatives.

A key aspect of the directive, for global mobility programs, is the call for stricter know-your-customer (KYC) practices, including heightened scrutiny of the use of ITINs to open bank accounts or obtain loans and other consumer credit products. 

In addition, it considers that reliance on an ITIN in place of a Social Security Number (SSN) could prompt requests for additional documentation, such as evidence of lawful immigration status or work authorisation. 

The order reportedly establishes a phased 60-day, 90-day, and 180-day timeline for the Treasury Department, the Consumer Financial Protection Bureau (CFPB) and other federal financial regulators to issue advisories, guidance, and proposed regulatory changes related to customer due diligence, customer identification, and credit risk.

Source: KPMG 

Last month in the US, the White House issued an Executive Order on financial integrity, which could have implications for global mobility programs, KPMG reports.

Executive Order 14406, “Restoring Integrity to America’s Financial System directs the U.S. Treasury Department and other federal financial regulators to review policies and consider changes that would strengthen customer identification requirements for financial institutions and increase scrutiny of financial activities associated with payroll tax evasion, the use of Individual Taxpayer Identification Numbers (ITINs) for account opening or obtaining credit products, and other related compliance risks.

According to KPMG, the order is a policy signal rather than an immediate change to any law, rule, or regulation. It primarily targets unauthorised employment and illicit financial activities. However, if these proposed changes ultimately translate into new compliance rules or stricter banking regulations, multinational employers and their global mobility programs are likely to see tangible operational challenges.

If regulatory agencies and financial institutions implement its recommendations, international assignees could reportedly face banking and lending friction. KPMG says that global mobility arrangements - which often involve split payrolls, cross-border payments, and the use of ITINs - could unintentionally fall within the broader sweep of these policy initiatives.

A key aspect of the directive, for global mobility programs, is the call for stricter know-your-customer (KYC) practices, including heightened scrutiny of the use of ITINs to open bank accounts or obtain loans and other consumer credit products. 

In addition, it considers that reliance on an ITIN in place of a Social Security Number (SSN) could prompt requests for additional documentation, such as evidence of lawful immigration status or work authorisation. 

The order reportedly establishes a phased 60-day, 90-day, and 180-day timeline for the Treasury Department, the Consumer Financial Protection Bureau (CFPB) and other federal financial regulators to issue advisories, guidance, and proposed regulatory changes related to customer due diligence, customer identification, and credit risk.

Source: KPMG