Summary: Trump order directs treasury to advise banks on red flags Focus on payroll tax evasion and off-the-books wage payments Use of ITIN without verified legal presence flagged Non-citizens in the U.S. will face greater scrutiny on their banking activities following an executive order by President Donald Trump on May 19, but the directive was less extensive than a previous proposal floated by Treasury requiring banks to collect clients’ citizenship information. The Trump administration has proposed a number of policies that have sideswiped banks, including the idea floated earlier in the year to collect citizenship data. In January, Trump also blindsided the industry by calling for credit card providers to cap interest rates in a bid to address cost-of-living concerns, and he has targeted Wall Street banks for discriminating against conservatives, a claim they deny. The latest order, issued May 19, however, fell short of calling for citizenship data. Instead it directs the Treasury secretary to issue an advisory to banks to identify red flags tied to payroll tax evasion, concealment of true account ownership, off-the-books wage payments, labor trafficking and the use of individual taxpayer identification numbers to open accounts or obtain credit without verified legal presence in the U.S. The proposal was seen as an example of the administration listening to industry, an executive in a large bank that asked for anonymity said, adding it showed the administration was open to change. Senior industry executives had warned that requiring banks to collect data on their customers’ citizenship or immigration status would be costly and disruptive. “Obviously, the administration wants greater controls on immigration, but the bank regulators have always wanted as many financial transactions to go through the traditional financial systems,” said Ed Mills, a Washington policy analyst with Raymond James. “This would have removed a lot of individuals from the financial system, which could create a national security risk as well,” he added. Banks considered that checking the immigration status and citizenship of all current clients would be very burdensome and nearly impossible, Reuters reported last month. Trade groups have explained that such an order could lead to debanking of millions of customers and reduce financial access to Americans. Among the examples of red flags cited by the latest order are accounts in the names of shell companies and use of specific platforms to disguise wage payments, and repetitive cash withdrawals. The use of Individual Taxpayer Identification Numbers (ITIN) should also be flagged when not accompanied by a Social Security number or a work visa. The White House also said Treasury and regulators should propose changes to the Bank Secrecy Act to make it easier to obtain information about clients, singling out documents issued by foreign consulates as risky. (Reporting by Nupur Anand and Tatiana Bautzer in New York and Chandni Shah in Bengaluru; Editing by Megan Davies, Mark Porter and Lincoln Feast.)

Summary: US Supreme Court rejects appeals from six pharmaceutical companies Plan part of Biden’s inflation Reduction Act targets Medicare drug prices Lower courts upheld legality of drug price negotiation and excise taxes The U.S. Supreme Court declined on May 18 to hear a pharmaceutical industry challenge to a plan to curb Medicare drug prices adopted during Democratic former President Joe Biden’s administration that drugmakers argued illegally forces them to accept steep discounts and jeopardizes innovation. The justices turned away appeals by Novo Nordisk, AstraZeneca, Janssen Pharmaceuticals, Bristol Myers Squibb, Novartis and Boehringer Ingelheim. They left in place decisions by lower courts rejecting various legal claims against the drug price negotiation plan, which was part of Biden’s signature Inflation Reduction Act of 2022. Aiming to rein in the rising cost of prescription drugs, the law targets for price negotiation certain medications that have resulted in high expenditures for Medicare, the U.S. government health insurance program for people 65 or older. The plan could impact costs for patients as drug coverage affects out-of-pocket payments and premiums for Medicare beneficiaries. Americans pay more for pharmaceuticals than people in any other nation. The law requires a drugmaker to negotiate a maximum price for specific medicines directly with the Centers for Medicare & Medicaid Services (CMS), the federal agency that runs Medicare, or withdraw all of its drugs from those programs. Failure to reach an agreement on price can result in steep daily excise taxes. Despite multiple lawsuits, the first negotiated prices on 10 drugs went into effect this year. Republican President Donald Trump’s administration is defending against the industry’s challenges and cited the plan as part of its efforts to reduce prescription drug costs. “Under President Trump’s leadership, CMS is taking strong action to target the most expensive drugs in Medicare,” CMS Administrator Mehmet Oz said in January, touting the latest drugs selected for negotiation. The six companies whose appeals are before the Supreme Court sued after CMS targeted their medications for price curbs. They made various legal claims, many grounded in their contention that the drug pricing plan is not a negotiation at all, but rather a scheme to impose upon them government-dictated price controls. The drugmakers variously argued that the plan violates the U.S. Constitution’s Fifth Amendment by undermining their due process rights or taking their property without compensation, and the First Amendment guarantee of free speech by forcing them to convey the government’s views on what constitutes fair drug prices. Novo Nordisk, a Danish pharmaceutical company whose insulin products were targeted by Medicare, also argued that the law improperly delegates legislative authority to an executive branch agency, violating the Constitution’s separation of powers among the different branches of government. The Philadelphia-based 3rd U.S. Circuit Court of Appeals sided with the U.S. government in five of the companies’ lawsuits, while the Manhattan-based 2nd U.S. Circuit Court of Appeals also sided with the government in the case of German drugmaker Boehringer Ingelheim. (Reporting by Andrew Chung in New York; Editing by Will Dunham)

Summary: Trump dismissed $10 billion lawsuit against IRS Judge Kathleen Williams questioned parties' antagonism Former IRS contractor Charles Littlejohn pleaded guilty U.S. President Donald Trump voluntarily dismissed his $10 billion lawsuit against the Internal Revenue Service, according to a May 18 court filing. Terms of the dismissal were not immediately available, including whether the parties have settled. The White House did not immediately respond to requests for comment. Trump, his adult sons Donald Trump Jr. and Eric Trump, and the Trump Organization, sued the IRS in January, arguing the agency should have done more to prevent a former contractor from disclosing their tax returns to media outlets during the president’s first term. Trump has long said the U.S. government was weaponized against him by political opponents, and has used the legal system to seek retribution and compensation since returning to the White House last year. The case arose from former IRS contractor Charles Littlejohn’s leak of Trump’s tax returns to media outlets, including the New York Times and ProPublica, in 2019 and 2020. These returns showed that Trump paid little or no income taxes in many years, the Times reported in 2020. Prosecutors charged Littlejohn in 2023 with leaking tax records of Trump and thousands of other wealthy Americans to the media, saying he was motivated by a political agenda. Littlejohn later pleaded guilty to improper disclosures, and a judge sentenced him to five years in prison. Trump filed the lawsuit personally, not in his official capacity as president. The litigation against the IRS has raised novel legal questions, including conflicts of interest, about whether a president can sue his own government. Under the U.S. Constitution, federal courts may only hear genuine disputes between litigants with opposing stakes in the outcome. U.S. District Court Judge Kathleen Williams in Miami, who oversees Trump’s lawsuit, wrote last month that it was unclear whether the parties to the lawsuit were “truly antagonistic to each other.” Williams had set a court hearing for May 27 to hear arguments on whether she should dismiss the case on those grounds. (Reporting by Susan Heavey, Katharine Jackson and Jan Wolfe in Washington, D.C.; Editing by Chizu Nomiyama)