Reported by Matthew T. Smith

The Financial Crimes Enforcement Network (FinCEN) recently issued a Geographic Targeting Order (GTO), effective April 14, 2025, to fight money laundering tied to Mexican drug cartels. The GTO requires money services businesses (MSBs) in 30 ZIP codes across California and Texas to report cash transactions over $200 to FinCEN, a substantial increase in reporting obligations. This action reflects the federal government’s more aggressive stance toward financial crime enforcement along the Southwest border, with the stated goal of disrupting illicit activities linked to cross-border criminal organizations.

However, the GTO quickly faced legal challenges. The Texas Association for Money Services Businesses (TAMSB) filed a complaint arguing that the $200 reporting threshold imposes an overwhelming administrative burden, potentially leading to business closures and loss of clientele. TAMSB also claimed the order violates the Administrative Procedures Act (APA) and the Fifth Amendment by targeting specific ZIP codes without due process. A federal court granted TAMSB a temporary restraining order (TRO), finding a likelihood of success on the merits and risk of irreparable harm, though the relief currently applies only to TAMSB members and remains under further legal review.

A similar challenge emerged in Southern California from a San Diego-based MSB and its owner, who argued that the GTO also violates the Fourth Amendment by functioning as a general warrant without individualized suspicion. They emphasized that the order’s blanket approach unjustly intrudes on customers’ privacy and would impose excessive compliance costs. The court granted another TRO, citing likely success on procedural and constitutional grounds, and scheduled a mid-May hearing for a preliminary injunction. These lawsuits underscore that the GTO’s implementation will be legally contested, requiring the administration to defend its legality across several constitutional and administrative law fronts.

Read full report: https://www.moneylaunderingnews.com/2025/04/fincens-southwest-border-geographic-targeting-order-faces-challenges-in-texas-and-southern-california/