FinCEN Southwest border GTO challenged by Texas trade group

On April 1, 2025, the Texas Association for Money Service Businesses filed a lawsuit in San Antonio federal court challenging the recent Geographic Targeting Order (GTO) applicable to money services businesses (MSBs) located in certain areas along the southwest border.¹ The complaint alleges that the GTO has an unlawful and unconstitutional application, places discriminatory obligations on these businesses, and imposes a financially ruinous burden. The complaint seeks to block the GTO from being enforced.

The GTO that is the subject of the lawsuit was issued on March 11, 2025, by the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).² It is aimed at MSBs operating in 30 ZIP codes along the southwest border of the United States (the Covered Geographic Area).³ The GTO requires MSBs in the impacted ZIP codes to file currency transaction reports (CTRs) in connection with cash transactions at a $200 threshold – in contrast to the usual, much higher CTR filing threshold of $10,000. The GTO is set to be in effect from April 14, 2025, to September 9, 2025, and can be renewed. FinCEN has explained that it issued the GTO in furtherance of the Treasury Department’s efforts to combat the illicit activities and money laundering of Mexico-based cartels and other criminal actors along the southwest border of the United States.

A “Covered Business” for purposes of the GTO is any MSB, as defined in 31 CFR § 1010.100(ff), located in the Covered Geographic Area. Per the FAQs published by FinCEN, if an MSB does not meet the definition of a Covered Business, it does not need to comply with the GTO but may be asked to provide information to FinCEN to verify that it does not meet the criteria of a Covered Business. The GTO defines a “Covered Transaction” broadly as “each deposit, withdrawal, exchange of currency or other payment or transfer, by, through, or to the Covered Business which involves a transaction in currency, of more than $200 but not more than $10,000.”

Under the GTO, if a Covered Business is “involved in a Covered Transaction,” it must file a CTR with FinCEN within 15 days of the Covered Transaction unless the Covered Transaction is between the Covered Business and a commercial bank. Before concluding a Covered Transaction, the Covered Business must comply with the identification requirements set forth at 31 CFR § 1010.312, including the requirement that the specific identifying information used in verifying the identity of the customer (for example, the account number of the credit card, the driver’s license number) shall be recorded on the CTR, and the mere notation of “known customer” or “bank signature card on file” on the report is prohibited. Covered Businesses are required to retain all records relating to compliance with the GTO, including all CTRs filed, for at least five years from the last day that the GTO is effective, including any renewals thereof. 

The GTO does not alter any existing Bank Secrecy Act (BSA) obligation of a Covered Business, except as otherwise noted in the GTO itself. Therefore, Covered Businesses should continue to comply with other BSA obligations such as filing CTRs for transactions of more than $10,000 and Suspicious Activity Reports for transactions that involve or aggregate to at least $2,000. The GTO does not amend the aggregation requirement of 31 CFR § 1010.313 and does not require Covered Businesses to alter their policies and procedures relating to currency aggregation. 

As the lawsuit alleges, compliance with the GTO will likely place a significant burden on Covered Businesses. First, it is expected to substantially increase the volume of CTRs that MSBs are required to file in the impacted jurisdictions. Second, the GTO’s geographic specificity may create logistical hurdles for how MSBs monitor for Covered Transactions. Covered Businesses should act quickly to update and train staff on this new development and ensure they have adequate resources in place. Failure to comply with the GTO, which is scheduled to go into effect soon – on April 14, 2025 – can result in significant civil or criminal penalties.
__________

If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

_{1 Texas Association of Money Services Businesses v. Bondi et al., 5:25-cv-00344 (W.D. Tex.).
2 Financial Crimes Enforcement Network, Southwest Border Geographic Targeting Order (Mar. 11, 2025); see also Financial Crimes Enforcement Network, Frequently Asked Questions: Southwest Border Geographic Targeting Order (Mar. 24, 2025).
3 The Covered Geographic Area includes the following ZIP codes: 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); and Webb County, Texas (78040, 78041, 78043, 78045, 78046).}