Cash Crackdown BACKFIRES — Invasive?!

Judge strikes down Treasury Department’s invasive $200 cash reporting requirement at border, ruling it completely ineffective at stopping cartel money laundering while unfairly burdening legitimate businesses.

Key Takeaways

• A federal judge temporarily halted enforcement of a Treasury Department “Geographic Targeting Order” that lowered cash transaction reporting from $10,000 to just $200 in certain border ZIP codes
• Two small businesses successfully argued the policy harmed their operations and deterred customers concerned about privacy when conducting small transactions
• Judge Leon Schydlower ruled the policy ineffective since criminal organizations could easily evade it by moving operations to nearby ZIP codes not under scrutiny
• This marks the third federal court rejection of the controversial border financial monitoring policy
• The temporary restraining order currently only applies to the two plaintiff businesses and expires July 8, though it may be extended

Border Businesses Win Relief From Burdensome Financial Reporting

In a significant victory for small businesses operating near the southern border, a federal judge in Texas has temporarily blocked the enforcement of an intrusive financial reporting requirement imposed by the Treasury Department. The policy, known as a “Geographic Targeting Order” (GTO), had dramatically reduced the threshold for mandatory cash transaction reporting from $10,000 to just $200 in specific border ZIP codes. This drastic reduction placed substantial administrative burdens on legitimate businesses while failing to achieve its stated purpose of disrupting cartel money laundering operations.

The lawsuit was brought by two businesses directly impacted by the policy: Valuta Corporation, Inc., and Payan’s Fuel Center, Inc. Both companies argued that the extremely low reporting threshold was driving away customers who had legitimate privacy concerns about even small transactions being reported to the government. The businesses demonstrated that the policy was causing real economic harm to their operations while providing questionable security benefits. U.S. District Judge Leon Schydlower agreed with their assessment and issued the temporary restraining order.

Judge Highlights Fatal Flaws in Treasury’s Approach

Judge Schydlower’s ruling identified fundamental flaws in the Treasury Department’s targeting strategy. Most notably, he pointed out that criminal organizations could easily circumvent the heightened scrutiny simply by conducting their business in nearby ZIP codes not covered by the order. This glaring loophole essentially rendered the policy ineffective at catching sophisticated money laundering operations while simultaneously placing significant burdens on legitimate businesses trying to serve their communities in already economically challenged border regions.

This ruling marks the third time federal courts have rejected similar Treasury Department attempts to implement these Geographic Targeting Orders. Previous temporary restraining orders were issued by U.S. Judges Janis Sammartino in California and Fred Biery in Texas, demonstrating a consistent judicial view that these policies are problematic. While the administration has argued these measures are necessary to combat illicit financial activities, the courts have consistently found they fail to meet basic standards for effectiveness and proportionality.

Limited Relief with Potential Broader Implications

The current temporary restraining order is narrow in scope, providing relief only to the two businesses that filed the lawsuit. The order is set to expire on July 8, though there is a possibility it could be extended following further court proceedings. However, the judge’s reasoning could have broader implications for similar Treasury Department policies targeting border communities. The fundamental criticism that these policies create substantial burdens while being easily circumvented by sophisticated criminal enterprises undermines the entire approach.

Border communities have long complained that they face disproportionate scrutiny and regulatory burdens compared to the rest of the country. These businesses often operate in economically challenged areas where additional administrative requirements can significantly impact their ability to compete and serve their communities. The repeated judicial rejection of these Treasury Department orders suggests a growing recognition that border security measures must be both effective and proportionate, rather than simply adding bureaucratic hurdles for legitimate business owners.