The U.S. Department of the Treasury announced on Apr. 9 that it will introduce new rules for the Community Development Financial Institutions (CDFI) Fund to ensure compliance with federal law and prevent taxpayer-funded benefits from being provided to illegal aliens. The department also outlined reforms aimed at ensuring certified CDFIs comply with federal anti-discrimination laws.
The move is intended to address concerns about the proper use of federal public benefits and adherence to legal requirements regarding eligibility and non-discrimination. According to Treasury, these steps are part of a broader effort to safeguard taxpayer money and uphold legal standards in federally funded programs.
Secretary of the Treasury Scott Bessent said, “Under President Trump’s leadership, we are enforcing the law and preventing the abuse and misuse of CDFI Fund grants intended solely for American citizens and lawful residents.” Bessent added, “Treasury will continue to use its authority to prevent waste, fraud, and abuse in all forms, including by safeguarding taxpayer money awarded by the CDFI Fund.”
A forthcoming notice of proposed rulemaking will clarify that certain benefits distributed through the CDFI Fund are considered "federal public benefits" under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). As a result, illegal aliens or other non-qualified individuals would not be eligible for these federally funded benefits.
Additionally, new provisions will be added to CDFI Fund agreements requiring certified institutions not to engage in practices that violate federal anti-discrimination laws. Certified CDFIs must adopt policies designed for compliance with these requirements, certify their existence annually, administer them accordingly, and make them available for review upon request by the fund.
In cases where organizations do not comply with these agreements, Treasury stated that it intends to use all available remedies permitted by law. These may include decertification as a CDFI entity, termination or recapture of funds previously awarded but unused or misused.
