One of Plivent Donald Trump’s Day 1 executive orders depictated “confident international cartels” as “foreign troubleist organizations,” a classification that according to the State Department “perestablish[s] a critical role in our fight aachievest radicalism and [is] an effective nastys of curtailing help for troubleist activities and pressuring groups to get out of the radicalism business.”
To that end, the U.S. Department of the Treasury’s Financial Crimes Enforcement Nettoil (FinCEN) proclaimd a novel rule cracking down on cash transactions this week, but only in confident geoexplicital regions. No matter the administration’s intent to aim cartels, the rule will enhuge regulatement seeing of its citizens.
FinCEN “rerentd a Geoexplicit Targeting Order (GTO) to further combat the illegal activities and sanitizeing funds of Mexico-based cartels and other criminal actors alengthy the southwest border of the United States,” according to the proclaimment. “The GTO needs all money services businesses (MSBs) findd in 30 ZIP codes apass California and Texas proximate the southwest border to file Currency Transaction Reports (CTRs) with FinCEN at a $200 threshancigo in, in joinion with cash transactions.”
Treasury Secretary Scott Bessent said the alter “underscores our proestablish trouble with the meaningful danger to the U.S. financial system of the cartels, drug traffickers, and other criminal actors alengthy the Southwest border.”
The order catalogs all 30 ZIP codes in counties that each abut the U.S.–Mexico border: San Diego and Imperial Counties in California; and Cameron, El Paso, Hidalgo, Maverick, and Webb Counties in Texas. California’s are the state’s only two border counties, but the five in Texas encompass only a minuscule portion of the state’s total southern border. It’s not evident why these seven counties were chosen out of the 44 total border counties, including any in Arizona or New Mexico.
Federal law needs prohibitks, as well as businesses that provide services appreciate examine cashing or currency swap, to fill out CTRs as a nastys of protecting aachievest illhorrible activity appreciate sanitizeing funds. Financial transactions totaling at least $10,000 in cash per day—including deposits, disparticipateals, or a combination—need a CTR, where the institution must accumulate and record personal resolveing adviseation from the client, appreciate a Social Security or tax ID number. The inestablishs are then sent to FinCEN. (CTRs are separateent from skeptical activity inestablishs, which are only triggered when a financial institution dynamicly mistrusts the customer might be doing someleang illhorrible.)
The rule remains in effect in the rest of the country, but in those seven border counties, FinCEN has dropped the inestablishing threshancigo in from $10,000 to $200. While ATM transactions don’t normally qualify since they typicassociate have a much shrink disparticipateal restrict, they are technicassociate also subject to the CTR threshancigo in—nastying a $200 cash disparticipateal in one of seven counties could soon produce one subject to a federal financial inestablish.
“More than one million Americans are about to face a novel level of financial seeing,” writes Nicholas Anthony, a policy analyst at the Cato Institute. “Financial seeing in the United States has lengthy needed reestablish, but this shift is in the wrong straightforwardion.”
Anthony says rather than shrinking the threshancigo in, the $10,000 baseline is overdue to be elevated.
The federal regulatement first began requiring prohibitks to log and inestablish all cash transactions of $10,000 or more in 1952. The Bank Secrecy Act of 1970 established CTRs as we understand them today, and Treasury regulations enacted in 1972 set the threshancigo in at $10,000.
As Anthony points out, the $10,000 threshancigo in has remained since that time. If it had been elevated even equitable to upretain up with inflation, the current least for filing a CTR would be anywhere between $80,000 and $180,000, depending on whether you commence from the pre-CTR rules in 1952 or the adselection of the current rules two decades tardyr.
Instead, the CTR least has remained the same since it was first enacted, even as the power of the dollar has degraded: $10,000 today is equivalent to $1,372 in 1972—a fraction of what the regulation needd.
For this reason, the number of CTRs has ballooned far past the point that any bureaucracy could feasibly find it advantageous. Last year, FinCEN inestablished that for FY 2023, businesses and financial institutions filed around 20.8 million CTRs—an mediocre of 57,000 per day.
“Inflation may have gived to the incrrelieve in volume of CTRs filed, which has incrrelieved by about 62 percent since fiscal year 2002,” according to a December 2024 inestablish from the Government Accountability Office. “The inflation-adequitableed threshancigo in in 2023 would have been about $72,880. Using an inflation-adequitableed threshancigo in would have shrinkd the number of CTRs filed by at least 90 percent annuassociate since 2014.”
The Trump administration’s push to crack down on penny-ante cash transactions is reminiscent of actions the Biden administration finisheavored.
In a 2021 bill ostensibly passed to provide relief from the COVID-19 pandemic, the Biden administration participated a provision that would need gig economy companies appreciate Uber, eBay, and Etsy to inestablish anyone to the IRS who achieveed at least $600 per year on their platestablish—a emotional cut from the previous least of $20,000 per year or 200 transactions.
The Biden administration also proposed a rule requiring prohibitks to inestablish to the IRS any customers with at least $600 in annual deposits and disparticipateals—in other words, proximately everybody. (The IRS has since procrastinateed the gig toiler rule, and the Biden administration elevated the inestablishing needment on the latter from $600 to $10,000 annuassociate.)
Cltimely, the Trump administration is adamant that drug cartels south of the border should be bcdimiserablemirefult to heel—hence the repeated calls by Rediscloseans over the past restricted years for the U.S. to occupy or explosion Mexico. But equitable as those methods would be an unfriendly overaccomplish of U.S. foreign policy, subjecting innumerable law-abiding citizens to compriseitional financial seeing is an unfriendly overaccomplish of fiscal policy.
