Judge Blocks Treasury’s Anti-Cartel Rule Targeting $200 Cash Transactions Along Border

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

A federal judge in Texas has temporarily blocked a new Trump administration policy targeting small-dollar cross-border transactions aimed at curbing cartel money laundering, siding with two businesses who argued it was crippling their operations and scaring off customers.

In a June 24 ruling, U.S. District Judge Leon Schydlower granted a temporary restraining order to Valuta Corporation and Payan’s Fuel Center, two El Paso-based money services businesses, finding they were likely to succeed on their claim that the policy—requiring reports of cash transactions as low as $200—was arbitrary and capricious.

The policy, imposed by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) through a Geographic Targeting Order (GTO) issued March 11, mandates that money service businesses in 30 ZIP codes across California and Texas file currency transaction reports on all cash transactions between $200 and $10,000. The reporting threshold was previously set at $10,000 under longstanding Bank Secrecy Act rules.

The new mandate, part of a broader Trump administration initiative to designate Mexican drug cartels as terrorist organizations and choke off their U.S. financing, was justified by officials as necessary to stop traffickers from breaking up large sums into smaller cash transactions to avoid detection.

But the plaintiffs—who testified earlier this year in a related case—said the policy instead ensnared law-abiding businesses in high-risk neighborhoods, driving away customers, and overwhelming staff with red tape. In court filings, both described staying up late into the night to complete paperwork and turning away regular customers unwilling to provide personal details such as Social Security numbers to convert or transmit modest sums.

Ashley Light, co-owner of Valuta, said her family’s business had operated since the early 1980s and had only ever filed 123 currency transaction reports (CTR) in all of 2024. Under the new rule, she was forced to submit approximately 1,600 reports in a single month—an explosion in paperwork she said threatened the business’s viability.

“One salaried employee and I have both increased our hours by about 50 [percent]. I am working until about 1:00 in the morning, just doing CTRs,” Light wrote in a declaration. “The failure to file on time is an offense. Each late CTR could mean a fine of over $1,400 or over $70,000 if the government decides the violation is willful. If Valuta slips up at all, we now face potentially ruinous fines.”

Andres Payan Jr., who runs a gas station that also provides check-cashing services, said in filings that many of his customers felt uncomfortable by the new identification demands. Since the GTO went into effect, Payan said he’s lost about 35 percent of his check-cashing business, along with secondary revenue, such as for goods that cash-checking customers might buy.

In response, Trump administration attorneys argued that the GTO is justified because money service businesses along the southwest border are “particularly vulnerable” to money-laundering abuses by cartels, who launder illicit proceeds through the U.S. financial system. They also disputed the claimed burden of compliance with the new rule, calling it “exaggerated.” But even if the court were to grant relief sought by the plaintiffs, it should do so narrowly, tailoring the ruling so that it only applies to the businesses involved in the lawsuit, rather than vacating the GTO with respect to all businesses within covered areas in Texas or elsewhere.

The judge sided with the plaintiffs, but tailored the ruling so it only shields Valuta and Payan’s Fuel Center from further enforcement, meaning other businesses that have not joined the lawsuit are not covered.

In his ruling, Schydlower noted that the government had failed to grapple with the real-world consequences of the rule’s geographic design, which penalizes businesses based solely on ZIP code boundaries. He pointed to Yarbrough Drive, an El Paso street that separates two adjacent ZIP codes—one covered by the order and one not—and said a cartel member “could simply cross” the street to avoid the requirements.

“Innocent businesses can be profoundly disadvantaged if they are located on the ‘wrong’ side of an El Paso street,” he wrote, calling the GTO “completely toothless” from an enforcement perspective.

The case is one of several legal challenges to the GTO. Federal judges in California and Texas previously granted preliminary injunctions, but those orders only applied to a limited number of plaintiffs. Because Valuta and Payan’s Fuel Center were not covered by earlier rulings—despite having provided testimony in those lawsuits—they filed a new suit in June seeking protection.

The GTO targets ZIP codes in six counties along the U.S.–Mexico border: Imperial and San Diego in California, and Cameron, El Paso, Hidalgo, Maverick, and Webb in Texas. Officials argue these areas pose heightened risks for illicit financial activity linked to cross-border narcotics trade.

The Epoch Times has reached out to the Treasury Department with a request for comment on Schydlower’s June 24 ruling and whether the administration plans to appeal or modify the GTO in light of the court’s findings.