FR 2025-04099

The document in discussion is a notice issued by the Financial Crimes Enforcement Network (FinCEN), a part of the U.S. Treasury Department. It establishes a Geographic Targeting Order (GTO) affecting certain money services businesses along the southwest border of the United States. The purpose of this order is to require these businesses to report and retain records of specific currency transactions ranging from $200 to $10,000. Additionally, businesses must verify the identity of individuals involved in these transactions. This measure is set to take effect from April 14, 2025, through September 9, 2025, covering designated areas within California and Texas. The main goal is to combat illicit financial activities, particularly those associated with drug cartels.

General Summary

The order mandates tighter control and tracking of cash transactions handled by money services businesses in certain border regions. By focusing on transactions over $200, FinCEN aims to gather detailed financial information to help curb illegal activities. Such measures are intended to enhance the enforcement of the Bank Secrecy Act, aiming to deter financial crimes linked to organized illegal syndicates.

Significant Issues and Concerns

There are several potential issues and concerns raised by this order:

• Impact on Small Businesses: The increased reporting and recordkeeping requirements may place a significant burden on small money services businesses. Managing additional compliance tasks could be challenging, especially for operations with limited resources.

• Privacy Concerns: The requirement for identifying customers for relatively small transactions might be seen as invasive. Individuals making everyday transactions slightly above the $200 threshold might feel their privacy is unnecessarily compromised.

• Effectiveness of the Measures: While aimed at deterring illicit financial activity, the actual impact of these measures on reducing crime is uncertain. There is a risk that it might shift criminal activities rather than eliminate them.

• Complexity and Clarity: The defined Geographic Covered Area is based on ZIP codes, which may require additional explanation to ensure comprehensive understanding by affected businesses. Furthermore, the encouraged voluntary filing of Suspicious Activity Reports for transactions evading the $200 threshold could lead to confusion or over-reporting.

Broad Public Impact

The introduction of stringent reporting rules may have broader implications for individuals and businesses operating in the specified regions. Regular transactions may face additional scrutiny, affecting everyday commerce and potentially leading to slower service due to the verification processes.

Impact on Specific Stakeholders

• Money Services Businesses: These entities will experience an increased administrative burden. They will need to invest time and resources in compliance training to ensure their staff can manage and process the required documentation effectively. There could be financial implications, especially if penalties for non-compliance are enforced.

• Customers: Individuals using money services businesses, often those without traditional banking access, might find the process more cumbersome. This could lead to frustration or deter use, impacting these businesses' revenue streams.

• Law Enforcement and Regulatory Agencies: Agencies may benefit from increased data, aiding in tracking and dismantling illegal networks. However, they also face the challenge of handling large volumes of reports and determining the best use of this data to maximize the impact of the regulations.

Overall, while the GTO intends to disrupt illicit financial flows and enhance security, it introduces concerns about feasibility, privacy, and fairness that merit attention. Addressing these concerns could help balance effective crime prevention with the needs and rights of law-abiding citizens and businesses.

The document from FinCEN (Financial Crimes Enforcement Network) details a Geographic Targeting Order (GTO) impacting money services businesses along the southwest border of the United States. A central component of this order is the requirement for these businesses to report and retain records of currency transactions more than $200 but not more than $10,000. This reporting requirement aims to combat illicit financial activities often associated with drug cartels and other illegal actors in the region.

Transaction Thresholds and Reporting

The order mandates that money services businesses file Currency Transaction Reports (CTRs) for transactions within the specified range. This is significant because traditionally, CTRs are required only for transactions exceeding $10,000. By lowering this threshold to $200, the order imposes a more comprehensive obligation to track and report smaller transactions, which might be used to circumvent existing financial monitoring systems.

Additionally, the dollar thresholds for filing Suspicious Activity Reports (SARs) - typically required for transactions as low as $2,000 - remain unchanged under the current regulations. However, FinCEN encourages additional SAR filings for transactions designed to evade the newly imposed $200 reporting requirement. This suggests an increased vigilance that may lead to more extensive financial documentation for smaller transactions, raising concerns of privacy and administrative burdens on businesses.

Potential Impact on Small Businesses

The focus on transactions over $200 and under $10,000 could disproportionately affect smaller money services businesses, which might lack the resources to implement sophisticated reporting systems. Compliance could become particularly burdensome, requiring investment in staff training and systems upgrades. This might lead to financial strain for businesses operating on slim margins, necessitating a careful evaluation of implementation support provided by regulatory bodies.

Voluntary Filings and Compliance Concerns

Encouraging voluntary SAR filings for activities designed to evade the reporting threshold could lead to over-reporting. This situation may cause confusion among businesses about what constitutes a reportable event. Without clear guidelines, businesses might err on the side of caution and increase filings, which could diminish the effectiveness of SARs as a tool for identifying suspicious activities. Clearer guidance on this front could mitigate unnecessary compliance costs and maintain focus on truly suspicious transactions.

Administrative and Compliance Requirements

Electronic filing of the reports through the BSA E-Filing System is mandatory, requiring covered businesses to obtain a BSA E-Filing User account. The document assumes a level of familiarity with digital filing systems which smaller, less tech-savvy businesses might lack. Detailed guidance and support for navigating these requirements are crucial to avoid unintentional noncompliance, which could result in financial penalties or legal challenges.

In summary, while the intent behind lowering the reporting threshold is to curb illicit financial activities, it is vital to consider the accompanying burdens on smaller businesses and ensure that the overall compliance ecosystem is balanced and fair. Clear communication and support from FinCEN are imperative to ensure the successful implementation of this order without overburdening affected entities or compromising individual privacy.