A geographic targeting order (GTO) issued by the Treasury’s Financial Crimes Enforcement Network (FinCEN) in March is the subject of a lawsuit by the Texas Association for Money Service Businesses (TAMSB), which alleged the order was applied unlawfully and presents a harmful regulatory burden.
The FinCEN GTO, which was intended to combat money laundering along the Southwestern border of the U.S. from April 14 to Sept. 9, required 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.
Under GTOs, title companies are required to file a report with FinCEN regarding covered purchases of residential real property made without a bank loan and that are paid at least in part by currency, check, money order or virtual currency. GTOs also include wire funds transfers.
In its lawsuit Texas Association of Money Services Businesses v. Bondi et al., which was filed on April 1 with the U.S. District Court of the Western District of Texas, the TAMSB alleged that compliance with the GTO will likely place a significant burden on covered businesses in multiple ways.
Firstly, the association expects the order will substantially increase the volume of CTRs that MSBs are required to file in the impacted jurisdictions. Secondly, the association points to the GTO’s geographic specificity as a possible source of logistical hurdles for how MSBs monitor for covered transactions.
“MSBs play a critical role in the American economy. For millions of Americans and visitors to our country, these businesses exchange currency, make money orders, wire transfer money, and provide other services for the unbanked,” the lawsuit reads in part. “Most MSBs in Texas along the border are small, privately-held, family businesses that offer currency exchange at competitive prices where it is needed.
“The administrative burden on the typical MSB will be financially ruinous for these businesses. Most customers of money services businesses in the targeted ZIP codes will take their business elsewhere, largely to similar stores in Mexico where many are unregulated,” the lawsuit continued. “Most members of TAMSB will simply cease to exist if this GTO becomes effective. The blast radius of the effect of this order will not just affect MSBs, but rather a whole microcosm of commerce in these ZIP codes. Many American border communities are heavily reliant on transnational commerce. The end of MSBs in these ZIP codes will destroy these economies, as well.”
TAMSB said it recognizes the Bank Secrecy Act (BSA) allows the Secretary of the Treasury to issue GTOs for specific financial transactions suspected of violating federal law. These orders help law enforcement detect money laundering in high-risk areas.
However, the TAMSB argued the March 11 GTO overstepped the treasury’s legal authority, imposing broad obligations on many institutions without evidence of crime. The plaintiff also alleged that the GTO lowered the reporting threshold from $10,000 to $200, which is unauthorized. The GTO lacks necessary safeguards and turns a temporary tool into a permanent rule and therefore, it should be classified as unlawful, TAMSB argued.
The TAMSB further alleged the GTO changes legal duties for certain MSBs by not only reducing the reporting threshold and requiring the tracking of more cash transactions, but also establishing new compliance rules that go beyond existing laws. MSBs must adjust their operations, submit more reports, collect customer data, and may face penalties without any chance to comment before it starts, the lawsuit alleged.
The TAMSB argued that FinCEN failed to conduct proper notice-and-comment rulemaking, violating the Administrative Procedure Act and denying rights to affected parties. Consequently, the suit claims, the GTO should be deemed unlawful and must be invalidated as it was issued without adhering to necessary procedures.
Additionally, the TAMSB’s suit claimed that geographic coverage of the GTO was influenced by political factors, unfairly targeting Democratic areas with more federal oversight while exempting Republican areas with similar risks. The plaintiff, which operates in these Democratic regions, faces increased data collection and enforcement threats without the option to challenge their inclusion. This selective treatment is seen as viewpoint discrimination against MSBs in Democratic areas, violating the Fifth Amendment's equal protection. Therefore, the March 2025 GTO should be declared unlawful, the TAMSB argued.
As an end goal of its lawsuit, the TAMSB is seeking an injunction to prevent enforcement of the GTO and declaratory judgement invalidating it. The plaintiff is also seeking reimbursement for attorney’s fees, as well as any other costs the court deems appropriate.