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Yahoo
25-04-2025
- Business
- Yahoo
Judge Halts Federal Scrutiny of $200 Transactions
Among the many intrusions of the federal government into our lives is the requirement that cash transactions of $10,000 or more be reported to the authorities. It's just one exercise in surveillance of our lives that should be done away with. But instead of abolishing currency transaction reports, the federal government recently lowered the reporting threshold to $200 in some border areas. Fortunately, a federal judge blocked enforcement of the order in California while legal challenges move forward. "Today, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) issued a Geographic Targeting Order (GTO) to further combat the illicit activities and money laundering of Mexico-based cartels and other criminal actors along the southwest border of the United States," the U.S. government's Financial Crimes Enforcement Network announced March 11. "The GTO requires all money services businesses (MSBs) located in 30 ZIP codes across California and Texas near the southwest border to file Currency Transaction Reports (CTRs) with FinCEN at a $200 threshold, in connection with cash transactions." A decade ago, the policy change might have been justified in the name of fighting terrorists; these days, the feds fret over criminal cartels (although, as Reason's Joe Lancaster reported, President Donald Trump split the difference by designating cartels as terrorists). But no matter who government officials claim to be targeting, the burden of compliance always falls on individuals and small businesses. The change is a big one. Prior to the March 11 announcement, the threshold had been set at $10,000 since 1972. The dollar has lost much of its purchasing power since then, meaning that more and more transactions are subject to the reporting requirement, increasing the burden of compliance. "The inflation-adjusted threshold in 2023 would have been about $72,880," a December 2024 Government Accountability Office (GAO) report observed. "Using an inflation-adjusted threshold would have reduced the number of CTRs filed by at least 90 percent annually since 2014." Not only are Americans suffering under intrusive paperwork, but law enforcement is trying to drink from a firehose of reports. "Law enforcement agencies accessed less than 3 percent of CTRs filed from 2014 through 2023," the GAO added. But instead of eliminating or streamlining the reporting requirement, the feds lowered the threshold. That means much more paperwork for everybody in the affected ZIP codes. "Esperanza Gomez and Arnoldo Gonzalez, Jr. run small businesses near the U.S.-Mexico border that provide everyday, small-dollar financial services—often for customers without bank accounts," the Institute for Justice noted in an April 15 press release about a lawsuit challenging the lowered reporting threshold. "While $10,000 is a large amount to Esperanza and Arnoldo's customers—Esperanza's business, for instance, has never had a transaction that large—lowering the threshold to $200 will mean that almost every transaction triggers a report. The reports require detailed information including birthdates, Social Security numbers, and home addresses." Each report takes Gomez and Gonzalez 20 minutes to file, which means hours of extra work every day. Meanwhile, any actual criminals interested in evading the reporting requirement can take their business to a ZIP code outside the affected area. The excessiveness of the policy change proved persuasive to U.S. District Judge Janis Sammartino of the Southern District of California. On Tuesday, she issued a temporary restraining order that applies to enforcement of the reporting threshold change in the California ZIP codes. "Sammartino ruled that the San Diego plaintiffs, Gomez and her business, Novedades y Servicios Plus, 'have demonstrated a substantial likelihood of success on the merits of their claims,'" reports Alex Riggins of The San Diego Union-Tribune. "The plaintiffs had argued that the geographic targeting order was unlawfully issued without undergoing the notice-and-comment procedures prescribed by federal law and that the rule is arbitrary and capricious under federal law." "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," commented Institute for Justice Senior Attorney Rob Johnson. "We are grateful for this temporary relief and will continue to fight to make it permanent." The plaintiffs plan to request an extended restraining order that will remain in place for the duration of litigation. Ultimately, they hope to entirely overturn the lowered reporting requirement. Earlier this month, financial services businesses along the Texas border won a more-targeted restraining order against the government that temporarily relieves them of the burden of compliance while their lawsuit proceeds. One of the plaintiffs in that case pointed out that many of his competitors are located on the Mexican side of the border, beyond the reach of U.S. government reporting requirements. In a May 2024 piece for Reason, Nicholas Anthony and Naomi Brockwell pointed out that financial surveillance has become increasingly intrusive in recent decades with relatively little pushback relative to other forms of government snoopiness. "Compared to today, customers in the 1970s had far more freedom in opening accounts and interacting with their own money. Back then, the decision to transact with a bank could be based on the cash in one's pocket," they wrote. "Transactions were not scrutinized for threats of terrorism or drug trafficking. Customers were not legally required to supply a photo ID to set up an account." Change, and the erosion of financial privacy, came with the passage of the Bank Secrecy Act, they added. Inflation has further extended the government's reach by applying what were once high-dollar thresholds for scrutiny to relatively common transactions. Along with the Biden administration's aborted attempt to monitor cash flows of as little as $600, the recent FinCen reduction of the reporting threshold to $200 makes it clear that government officials want to know where our money is at all times. Hopefully, more forceful pushback against financial surveillance will begin with the temporary restraining order in California and its companion in Texas. The post Judge Halts Federal Scrutiny of $200 Transactions appeared first on
Yahoo
14-03-2025
- Business
- Yahoo
Taking $200 Out of an ATM Should Not Trigger Federal Financial Surveillance
One of President Donald Trump's Day 1 executive orders designated "certain international cartels" as "foreign terrorist organizations," a classification that according to the State Department "play[s] a critical role in our fight against terrorism and [is] an effective means of curtailing support for terrorist activities and pressuring groups to get out of the terrorism business." To that end, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) announced a new rule cracking down on cash transactions this week, but only in certain geographical regions. No matter the administration's intent to target cartels, the rule will expand government surveillance of its citizens. FinCEN "issued a Geographic Targeting Order (GTO) to further combat the illicit activities and money laundering of Mexico-based cartels and other criminal actors along the southwest border of the United States," according to the announcement. "The GTO requires all money services businesses (MSBs) located in 30 ZIP codes across California and Texas near the southwest border to file Currency Transaction Reports (CTRs) with FinCEN at a $200 threshold, in connection with cash transactions." Treasury Secretary Scott Bessent said the change "underscores our deep concern with the significant risk to the U.S. financial system of the cartels, drug traffickers, and other criminal actors along the Southwest border." The order lists 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 small portion of the state's total southern border. It's not clear why these seven counties were chosen out of the 44 total border counties, including any in Arizona or New Mexico. Federal law requires banks, as well as businesses that provide services like check cashing or currency exchange, to fill out CTRs as a means of protecting against illegal activity like money laundering. Financial transactions totaling at least $10,000 in cash per day—including deposits, withdrawals, or a combination—require a CTR, where the institution must collect and record personal identifying information from the client, like a Social Security or tax ID number. The reports are then sent to FinCEN. (CTRs are different from suspicious activity reports, which are only triggered when a financial institution actively suspects the customer might be doing something illegal.) The rule remains in effect in the rest of the country, but in those seven border counties, FinCEN has dropped the reporting threshold from $10,000 to $200. While ATM transactions don't often qualify since they typically have a much lower withdrawal limit, they are technically also subject to the CTR threshold—meaning a $200 cash withdrawal in one of seven counties could soon make one subject to a federal financial report. "More than one million Americans are about to face a new level of financial surveillance," writes Nicholas Anthony, a policy analyst at the Cato Institute. "Financial surveillance in the United States has long needed reform, but this move is in the wrong direction." Anthony says rather than lowering the threshold, the $10,000 baseline is overdue to be raised. The federal government first began requiring banks to log and report all cash transactions of $10,000 or more in 1952. The Bank Secrecy Act of 1970 established CTRs as we know them today, and Treasury regulations enacted in 1972 set the threshold at $10,000. As Anthony points out, the $10,000 threshold has remained since that time. If it had been raised even just to keep up with inflation, the current minimum for filing a CTR would be anywhere between $80,000 and $180,000, depending on whether you start from the pre-CTR rules in 1952 or the adoption of the current rules two decades later. Instead, the CTR minimum has remained the same since it was first enacted, even as the power of the dollar has declined: $10,000 today is equivalent to $1,372 in 1972—a fraction of what the regulation required. For this reason, the number of CTRs has ballooned far past the point that any bureaucracy could feasibly find it useful. Last year, FinCEN reported that for FY 2023, businesses and financial institutions filed around 20.8 million CTRs—an average of 57,000 per day. "Inflation may have contributed to the increase in volume of CTRs filed, which has increased by about 62 percent since fiscal year 2002," according to a December 2024 report from the Government Accountability Office. "The inflation-adjusted threshold in 2023 would have been about $72,880. Using an inflation-adjusted threshold would have reduced the number of CTRs filed by at least 90 percent annually since 2014." The Trump administration's push to crack down on penny-ante cash transactions is reminiscent of actions the Biden administration attempted. In a 2021 bill ostensibly passed to provide relief from the COVID-19 pandemic, the Biden administration included a provision that would require gig economy companies like Uber, eBay, and Etsy to report anyone to the IRS who earned at least $600 per year on their platform—a dramatic cut from the previous minimum of $20,000 per year or 200 transactions. The Biden administration also proposed a rule requiring banks to report to the IRS any customers with at least $600 in annual deposits and withdrawals—in other words, nearly everybody. (The IRS has since delayed the gig worker rule, and the Biden administration raised the reporting requirement on the latter from $600 to $10,000 annually.) Clearly, the Trump administration is adamant that drug cartels south of the border should be brought to heel—hence the repeated calls by Republicans over the past few years for the U.S. to invade or bomb Mexico. But just as those methods would be an aggressive overreach of U.S. foreign policy, subjecting innumerable law-abiding citizens to additional financial surveillance is an aggressive overreach of fiscal policy. The post Taking $200 Out of an ATM Should Not Trigger Federal Financial Surveillance appeared first on
