Federal judge blocks Treasury Department’s controversial $200 transaction reporting requirement at the border, declaring it ineffective at stopping cartel money laundering while unfairly burdening legitimate small businesses.
Key Takeaways
- A Texas federal judge issued a temporary restraining order against the Treasury Department’s “Geographic Targeting Order” that lowered cash transaction reporting thresholds from $10,000 to $200 in specific border ZIP codes.
- The ruling marks the third federal court rejection of the policy, which was intended to combat cartel money laundering operations.
- Two small businesses successfully argued the policy harmed their operations by deterring customers unwilling to provide extensive personal information for relatively small transactions.
- The judge pointed out that the policy could be easily circumvented by simply conducting transactions in neighboring, uncovered ZIP codes.
- The current restraining order applies only to the two businesses involved in the lawsuit and expires on July 8, though it may be extended.
Small Businesses Challenge Treasury Department’s Border Monitoring
The Treasury Department’s attempt to crack down on cartel money laundering along the southern border has hit another legal roadblock. U.S. District Judge Leon Schydlower granted temporary relief to two small businesses from a controversial policy that required businesses in specific border ZIP codes to report cash transactions exceeding $200, drastically lowered from the standard $10,000 threshold. The ruling represents a significant victory for legitimate business owners caught in the crossfire of federal efforts to combat illegal financial activities along the border region.
Flawed Implementation Undermines Policy Effectiveness
Judge Schydlower’s ruling highlighted fundamental flaws in the Treasury Department’s approach, noting that the policy’s effectiveness was severely compromised by its limited geographic scope. By targeting only specific ZIP codes, the judge observed that illicit financial operations could easily evade detection by simply conducting transactions in adjacent, unmonitored areas. This practical limitation undermined the entire premise of the “Geographic Targeting Order” (GTO) while simultaneously placing an unfair regulatory burden on law-abiding businesses that happened to fall within the designated zones.
Business Owners Cite Operational Harm
The lawsuit was brought by Valuta Corporation, Inc., and Payan’s Fuel Center, Inc., two businesses that experienced direct negative impacts from the reporting requirements. These small business owners argued that the policy’s implementation was excessively burdensome, requiring them to collect extensive personal information from customers making relatively modest transactions. Many customers were unwilling to provide such detailed information for routine purchases, leading to lost business and operational disruptions that threatened their livelihoods.
Pattern of Judicial Rejections
This ruling represents the third time federal courts have rejected the Treasury Department’s border transaction monitoring policy. Previous temporary restraining orders were issued by U.S. Judges Janis Sammartino in California and Fred Biery in Texas, establishing a clear pattern of judicial skepticism toward the implementation and effectiveness of this approach. The consistent legal pushback suggests deeper problems with the policy’s formulation and raises questions about whether alternative approaches to combating cartel financial operations should be considered.
Limited Scope of Current Relief
While the ruling represents a significant victory for the plaintiff businesses, the temporary restraining order’s impact remains narrowly tailored. Judge Schydlower’s order applies exclusively to the two businesses that brought the lawsuit, leaving other businesses in the affected ZIP codes still subject to the reporting requirements. Additionally, the order expires on July 8, though there is a possibility for extension pending further legal proceedings. This limited relief underscores the need for broader reconsideration of the policy’s implementation across border communities.
Balancing Security and Business Interests
The ongoing legal challenges to the Treasury Department’s border transaction reporting requirements highlight the difficult balance between legitimate national security concerns and the operational needs of small businesses. While disrupting cartel money laundering operations remains a critical priority, policies that disproportionately impact law-abiding businesses without demonstrably achieving their security objectives warrant reconsideration. The administration now faces pressure to develop more targeted approaches that effectively address criminal financial activities without undermining the economic vitality of border communities.
