President Trump issued two Executive Orders this week aimed at reducing waste and fraud within America’s financial systems as well as modernizing the processes for how the federal government handles payments.
Increasing Oversight of Improper Government Payments
The first Executive Order (EO) is Protecting America’s Bank Account Against Fraud, Waste, and Abuse. The primary goal of this EO is to curtail financial fraud and improper payments in federal operations.
It requires the Department of the Treasury to implement robust oversight and verification protocols, thereby safeguarding the United States General Fund. By centralizing the disbursing functions and standardizing financial management systems, the order seeks to mitigate financial inefficiencies, waste and fraud.
The EO cites some figures as evidence of the need for more oversight of Treasury operations. It says that in Fiscal Year 2024, $33.9 trillion flowed into the General Fund and $33.6 trillion flowed out of the account, including $5.87 trillion (less net interest) in benefits, grants, loans, vendor payments, and other disbursements. The EO also states that the Government Accountability Office estimates that the federal government loses between $233 and $521 billion each year due to fraud.
Key points of the EO include:
- Enhanced Verification Processes: The Secretary of the Treasury, in collaboration with the Office of Management and Budget, will update guidance to ensure all agency payments are subject to pre-certification verification to prevent fraud and improper payments. Verification checks include ensuring that sufficient funds are available before obligations are incurred, verifying payee information, standardizing information reporting formats, confirming funds are being disbursed from appropriate sources, and implementing other verification and certification measures.
- Data Accessibility: The order calls for minimizing administrative barriers to data access, enabling better fraud prevention while ensuring compliance with privacy laws. The Secretary of the Treasury, in consultation with the OMB Director, will issue guidance to agency heads on providing data access for fraud detection, improper payment prevention, and payment information verification to the extent permissible by law.
- Consolidation of Financial Systems: Agencies are directed to consolidate their core financial systems, reducing duplicative efforts and enhancing financial traceability.
- Reduction of Non-Treasury Disbursing Offices (NTDOs): The order aims to centralize disbursing authority within the Department of the Treasury, reducing NTDOs and improving financial reporting and accountability.
- Reporting and Compliance Requirements: Agencies must submit comprehensive compliance plans detailing their strategies for transitioning authority, updating systems, and adhering to new verification procedures.
Transitioning to Electronic Payments
A related Executive Order issued by Trump the same day was Modernizing Payments To and From America’s Bank Account. This EO mandates that the federal government transition to using electronic payments instead of paper checks.
Among the reasons cited by the EO for the need to update the government’s payment processes are added delays, unnecessary costs, lost payments, and increased risk of fraud. The EO notes, for example, that mail theft complaints from checks stolen out of the mail are on the rise and that checks from the Treasury Department are 16 times more likely to be reported lost or stolen than electronic payments.
Starting September 30, 2025, the EO directs the Treasury Secretary to stop issuing paper checks for all Federal disbursements inclusive of intragovernmental payments, benefits payments, vendor payments, and tax refunds with some exceptions.
All executive departments and agencies are directed to instead transition to electronic payments including direct deposit, prepaid card accounts, and other digital payment options. All payments made to the federal government, such as fees, fines, loans, and taxes, are to be made electronically as well.
The EO makes exceptions for the following:
- Individuals who do not have access to banking services or electronic payment systems;
- Certain emergency payments where electronic disbursement would cause undue hardship;
- National security- or law enforcement-related activities where non-EFT transactions are necessary or desirable; and
- Other circumstances as determined by the Secretary of the Treasury, as reflected in regulations or other guidance.
Individuals or entities qualifying for an exception shall be provided alternative payment options.
The EO directs the Treasury Secretary to lead a public awareness campaign to inform Federal payment recipients of the transition to electronic payments, including guidance on accessing and setting up digital payment options.
