The Trump administration is working toward cutting illegal migrants off from federal tax benefits and money transfer services, Treasury Secretary Scott Bessent said Friday.
“At [President Trump’s] direction, we are working to cut off federal benefits to illegal aliens and preserve them for U.S. citizens,” Bessent wrote on X.
As part of the effort, the Treasury Department will propose new regulations “clarifying that the refunded portions of certain individual income tax benefits are no longer available to illegal and other non-qualified aliens, covering the Earned Income Tax Credit, the Additional Child Tax Credit, the American Opportunity Tax Credit, and the Saver’s Match Credit,” according to the the Trump administration official.
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) ostensibly prohibits illegal immigrants from obtaining most taxpayer-funded benefits.
However, in a February executive order barring illegal immigrants from access to federally funded benefits, Trump argued that in the decades since PRWORA’s passage, “numerous administrations have acted to undermine the principles and limitations directed by the Congress.”
Treasury aims to classify federal tax benefits as “federal public benefits” within the meaning of PRWORA in its proposed rule.
The department noted last week that the Department of Justice’s Office of Legal Counsel “recently issued an opinion adopting this interpretation.”
Treasury’s final regulations are expected to apply beginning in tax year 2026.
In a separate social media post, Bessent warned that illegal migrants “use our financial institutions to move their illicitly obtained funds.”
Describing that practice as “exploitation,” the Treasury secretary vowed: “It will end.”
“[President Trump] is right — if you’re here illegally, there’s no place for you in our financial system,” Bessent wrote.
The post came on the same day the Treasury’s Financial Crimes Enforcement Bureau issued an alert to money services businesses — such as check cashers, remittance processors and digital payment processors — asking them to be “vigilant in identifying suspicious financial activity involving illegal aliens who present significant threats to national security and public safety.”
The alert noted that money services businesses (MSBs) are generally required to file a suspicious activity report for a transaction that involves at least $2,000 and may violate federal law, including a “cross-border transfer of funds derived from unlawful employment or otherwise derived from funds the MSB knows, suspects, or has reason to suspect were illicitly obtained in the United States.”
Last week, City Journal reported that millions of dollars in taxpayer money — stolen as part of a series of massive Minnesota welfare fraud schemes — may have been funneled to Somalia-based terror group al-Shabab.
The report, citing former state fraud investigators, state lawmakers and federal counterterrorism officials, noted that the vast majority of the defendants in several of the high-profile fraud scandals are Somali or Somali American, and that the money makes its way to the terror group, sometimes unintentionally, when the ill-gotten welfare funds are sent to Somalia by Somalis committing fraud in Minnesota.
