In the last few weeks, the Financial Crimes Enforcement Network (FinCEN) has circulated several instructions focusing on money services businesses operating in the southwest United States, answering the current Administration’s call for increased security measures in that area.
On March 11, FinCEN issued a Geographic Targeting Order (GTO) adding more requirements to certain money services businesses (MSBs) operating along the southwest United States border in Texas and California. Federal law permits the Secretary of the Treasury to issue a GTO if he finds that additional measures are needed to properly comply with the Bank Secrecy Act. A GTO lasts 180 days, unless extended.
The Secretary’s GTO requires MSBs, as defined by 31 CFR 1010.100(ff), operating in seven counties in Texas and California[1] to file Currency Transaction Reports (CTRs) for any transactions transmitting more than $200 in cash. Such transactions include deposits, withdrawals, exchanges of money, or other payments or transfers involving currency. Typically, an MSB would only be required to report such transactions for currency transactions totaling over $10,000. The drastically reduced threshold for CTR filing in this area reflects the Trump Administration’s increased focus on “combatting drug cartels and stopping the flow of deadly drugs into the United States” across the southwest border, according to FinCEN’s press release. The GTO does not affect the threshold for Suspicious Activity Report (SAR) filing, which remains at $2,000, but encourages MSBs to voluntarily file SARs for transactions over $200 that appear orchestrated to evade the new CTR filing requirements.
On March 24, FinCEN issued an FAQ explaining the GTO. It provides the additional background that FinCEN issued the GTO in response to the Treasury and State Departments, at the request of President Trump in a January 20, 2025, Executive Order, designating six Mexican drug cartels Foreign Terrorist Organizations or Specially Designated Global Terrorists. The FAQ also clarifies that the period of increased scrutiny runs from April 14, 2025, to September 9, 2025. MSBs must still comply with longstanding Bank Secrecy Act (BSA) requirements to report transactions over $10,000; the GTO simply requires additional reporting in this geographic location. MSBs must e-file CTRs through the BSA’s e-filing system and enroll in the system if they are not already. Perhaps most importantly, the FAQ highlights both civil and criminal fines for violation of the Order: (1) the greater of either (i) $71,545 or (ii) the amount involved in the transaction (up to $286,184) for civil penalties, including that a separate penalty may be applied for each violation; and/or (2) a fine of not more than $250,000 and/or imprisonment for not more than 5 years for criminal penalties.
Finally, on March 31, FinCEN issued an alert for financial institutions to be on the lookout for “bulk cash smuggling” along the southwest border. The alert explains that Mexico-based transnational criminal organizations are using a new technique to launder illicit funds—first smuggling the funds from the United States into Mexico, then using armored car carriers to carry the cash back from Mexico into the United States for deposit into a U.S. bank or for further transportation through a money services business for the benefit of the criminal organization. The alert issues ten red flags—five for depository institutions and five for armored car services—to consider, including the shipment and/or credit of large amounts of cash to a Mexico-based business or a business operating along the southwest border, missing information about the transfer or reluctance to provide such information, and the shipment of large amounts of cash all over the United States seemingly without an underlying lawful purpose.[2]
McGuireWoods has direct experience advising clients in CTR, SAR, and other FinCEN requirements in this geographic area and regularly defends clients against FinCEN in such matters.
[1] The counties and accompanying zip codes are as follows:
- Imperial County, California: 92231, 92249, 92281, 92283
- San Diego County, California: 91910, 92101, 92113, 92117, 92126, 92154, 92173
- Cameron County, Texas: 78520, 78521
- El Paso County, Texas: 79901, 79902, 79903, 79905, 79907, 79935
- Hidalgo County, Texas: 78503, 78557, 78572, 78577, 78596
- Maverick County, Texas: 78852
- Webb County, Texas: 78040, 78041, 78043, 78045, 78046.
[2] The full list of red flags is:
“Red Flags for Depository Institutions: (1) A large volume of cash is delivered to a U.S.-based financial institution via an ACS on behalf of a customer who operates a Mexico-based business, a business located near the U.S. southwest border, or a U.S.-based company with an affiliated Mexico-based business. Following the delivery, the customer then rapidly moves the funds to a financial institution based in Mexico, makes transfers to another business in the United States they own and operate, or purchases a large volume of goods. (2) Large volumes of cash are transported by an ACS or passenger vehicles to an U.S.-based MSB located along the southwest border and rapidly transferred to Mexico. (3) A customer that owns a Mexico-based business, or a customer with an affiliated Mexico-based business, receives a large credit from a U.S.-based ACS into their account at a U.S.-based financial institution. (4) A customer that owns a Mexico-based business receives a large credit into their account at a U.S. based financial institution after depositing bulk cash into the U.S.-based financial institution’s vault at a U.S.-based ACS secure storage facility. (5) A customer that owns a Mexico-based business receives a large cross-border wire transfer to their account at a U.S.-based financial institution from a Canada-based financial institution.
Red Flags for Armored Car Services: (6) A business in Mexico, near the southwest border of the United States, organizes the transportation of a large volume of cash to multiple locations throughout the United States by an ACS or air transport, for no business or apparent lawful purpose, before it is finally delivered to a U.S.-based financial institution or a Federal Reserve Bank location. (7)A Mexico-based business transporting cash into the United States is reluctant to provide information, or provides inconsistent information, on who is the currency originator or where the funds are destined in Part II of a FinCEN Form 105 (CMIR). (8) A non-bank Mexico-based business organizes the transport of large volumes of USD into the United States, that are not commensurate with the size of the business or the business profile. (9) A shipment of bulk cash is delivered via a Mexico or Canada-based ACS to a U.S.-based ACS without accompanying instructions or explanation for the purpose of the transaction. The U.S.-based ACS then receives a request to transport the funds to a financial institution. (10) A Mexico-based business or individual requests that bulk cash be transported or accepted by a U.S. financial institution but does not provide a clear explanation of the source of the funds.”