Federal judges have blocked the government’s attempt to scrutinize $200 cash transactions in border communities, delivering a major victory for small business owners and privacy advocates against what critics call financial overreach.
At a Glance
- Federal judges in California and Texas temporarily halted enforcement of a new rule requiring reporting of cash transactions of $200 or more in certain border areas
- The Treasury Department’s FinCEN had drastically reduced the reporting threshold from $10,000 to $200 in 30 ZIP codes across California and Texas
- Small business owners argue the rule imposes excessive paperwork and unfairly targets legitimate transactions in largely Latino border communities
- Data shows law enforcement accessed less than 3% of Currency Transaction Reports filed from 2014-2023, raising questions about effectiveness
- The Institute for Justice is supporting plaintiffs seeking to make the restraining order permanent
Border Communities Win Temporary Reprieve From Financial Surveillance
In a significant legal development, federal judges have temporarily blocked the Biden administration’s controversial order that would have required businesses along the southern border to report cash transactions as low as $200. U.S. District Judge Janis Sammartino in California and Judge Fred Biery in San Antonio issued temporary restraining orders against the Financial Crimes Enforcement Network’s (FinCEN) Geographic Targeting Order (GTO), which would have dramatically lowered the reporting threshold from the standard $10,000 to just $200 in targeted border communities.
The original reporting mandate, which primarily affects money service businesses in seven counties across Texas and California, was presented as a necessary measure to combat money laundering by Mexican drug cartels. However, critics have argued it would primarily impact legitimate transactions in communities where cash usage is common and necessary, particularly among low-income and unbanked residents.
Small Business Owners Fight Back Against Financial Overreach
The legal challenge has been led by small business owners in border communities who would bear the brunt of the new requirements. These plaintiffs argue that the drastically lowered threshold imposes an excessive administrative burden, requiring detailed documentation for routine transactions that are common in their communities. For many border businesses where cash transactions are the norm, the rule would transform everyday commerce into a paperwork nightmare while subjecting their customers to unprecedented levels of financial surveillance.
Judge Sammartino found that the San Diego plaintiffs demonstrated “a substantial likelihood of success on the merits of their claims” that the order was both unlawfully issued and arbitrary in its application. The Institute for Justice, which is supporting the legal challenge, has been vocal about the overreach represented by the order and its disproportionate impact on specific communities.
“The government’s order enlists these businesses to carry out an unprecedented and sweeping government surveillance system, and buried them in paperwork in the process,” said Institute for Justice Senior Attorney Rob Johnson.
— J Michael Waller (@JMichaelWaller) March 18, 2025
Questions About Effectiveness and Targeting
Critics have raised significant concerns about both the effectiveness and fairness of FinCEN’s approach. Data reveals that law enforcement accessed less than 3% of Currency Transaction Reports filed from 2014 through 2023, raising questions about the utility of collecting vast amounts of financial data. Furthermore, while FinCEN’s own report indicates that 57% of suspicious transaction reports came from banks, the new mandate exclusively targeted money services businesses in predominantly Latino communities.
A retired DEA agent cited in reports suggested that sophisticated criminal enterprises have largely moved beyond cash transactions for money laundering operations, increasingly utilizing cryptocurrency and dark web transactions that would not be captured by the reporting requirements. Judge Biery himself expressed skepticism during court proceedings about whether the Geographic Targeting Order would effectively combat drug-related financial crimes.
— Richard Collins, The Internet Foundation (@RichardKCollin2) April 6, 2025
Growing Pushback Against Financial Surveillance
The temporary restraining orders represent what some observers see as the beginning of a potential broader pushback against expanding financial surveillance. Since the Bank Secrecy Act was enacted decades ago, the scope of government monitoring of financial transactions has steadily increased. Inflation has effectively lowered the real value of reporting thresholds over time, bringing more routine transactions under scrutiny without corresponding changes to the law.
State representatives and business owners in affected communities have called for more inclusive discussions about how to address security concerns without imposing undue burdens on legitimate businesses and consumers. As the case proceeds, the Institute for Justice will be seeking to make the temporary restraining orders permanent, potentially establishing an important precedent about limits on government financial surveillance powers, particularly when applied in ways that appear to target specific communities.
