S. 4206 — Know Your American Customer Act

This section requires covered institutions—insured depository institutions and insured credit unions—to verify U.S. citizenship or lawful presence before opening accounts for covered individuals (i.e., persons opening accounts, certain existing holders of temporary-status accounts opened 90 days after enactment, or controllers of legal entity account openers), effective 90 days after enactment. Requires new account applicants to present specified documents (e.g., REAL ID-compliant state driver's license or ID, U.S. passport, birth certificate, naturalization certificate, Permanent Resident Card, or valid foreign passport with Form I-94), including for joint holders or authorized signers added later; exempts individuals with preexisting accounts at the same institution. For covered individuals with temporary authorized stay, requires certification (modeled on nonresident alien requirements under Internal Revenue Code chapter 3) identifying stay expiration and basis; upon expiration, provides 30 days of full account access followed by 60 days of restricted transactions, after which the institution must freeze or close the account if lawful presence is not updated (with distributions or transfers preserved).

This section amends criminal penalties for willful violations of the Bank Secrecy Act (BSA) (31 U.S.C. 5322) by adding subsection (f), which— (1) defines "active account" as an account allowing transactions (excluding those restricted or frozen under BSA section 5318(r)); (2) imposes penalties of a fine up to $1 million, imprisonment up to one year, or both on individuals not lawfully present in the United States (or subject to a removal order) who open or maintain an active account at a covered institution (as defined in section 5318(r)), or who do so through a legal entity or by directing another person—except for those whose authorized stay expired within the prior 90 days or with a pending asylum application; (3) prohibits penalties under subsections (a) or (b) solely for a violation of section 5318(r) (which restricts accounts for individuals not lawfully present); and (4) specifies that this provision does not limit criminal liability for other federal law violations independent of section 5318(r). (As background, the BSA requires financial institutions to report suspicious activities and certain transactions to combat money laundering and illicit finance.)