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The Financial Crimes Enforcement Network (FinCEN) has issued a broad and stringent Geographic Targeting Order (GTO) that will have significant implications for money services businesses (MSBs) operating in California and Texas. The order applies to MSBs in 30 zip codes across the two states and mandates strict reporting requirements for any cash transaction of $200 or more. Aimed at disrupting cartel activity near the U.S.-Mexico border, this measure introduces several compliance challenges for financial firms in the region.
Under this order, MSBs are defined according to federal law, not the varying state laws in California and Texas. This means that the GTO applies beyond just money remitters—currency exchangers, check cashers, money order sellers, and prepaid access providers are also included. Many businesses that previously assumed they were outside the scope of such federal oversight will now need to reassess their compliance obligations.
Another major change concerns MSBs that facilitate online transactions with a cash component exceeding $200. If a customer logs into an app and sends $250 for pickup in El Paso County or brings $250 in cash to a location in San Diego County for transmission to a recipient in China, a Currency Transaction Report (CTR) must be filed. This represents a significant departure from prior thresholds, which often ranged between $1,000 and $3,000, and will require businesses to adapt quickly.
Customer Identification Program (CIP) requirements are also shifting dramatically. Now, at the $200+ level, MSBs must collect and document detailed customer information, including identification numbers. FinCEN has specifically emphasized, “(e.g., the account number of the credit card, the driver’s license number) used in verifying the identity of the customer shall be recorded on the Currency Transaction Report, and the mere notation of ‘known customer’ or ‘bank signature card on file’ on the report is prohibited.” This means MSBs accustomed to speed and efficiency will need to implement additional verification processes, which may slow down transactions and alter customer experiences.
Additionally, the order mandates that “The covered business must transmit this Order to each of its agents located in the Covered Geographic Area.” This means compliance responsibilities extend beyond corporate offices to individual branches, franchises, or agents operating in affected zip codes.
For MSB auditors and system providers, the GTO presents both logistical and technical challenges. Ideally, larger MSBs have adaptable Anti-Money Laundering (AML) systems in place, but for those without such infrastructure, compliance may become a manual, spreadsheet-driven process—an approach that is not only inefficient but also prone to errors.
This order is part of the federal government’s broader efforts to combat drug trafficking organizations (DTOs), which have been a national priority since 2021. The implications of this GTO extend beyond just MSBs; banks and credit unions servicing these businesses must also reassess their AML programs. While financial institutions are not direct regulators of MSBs, the risks associated with these transactions inevitably flow up to the banks and credit unions clearing payments for them.
Ultimately, this GTO signals the beginning of what is likely to be a series of complex regulatory requirements from the current administration. Institutions that lack the technology to efficiently ingest and adapt to evolving financial crime typologies will face both operational inefficiencies and significant compliance risks. Traditional financial institutions (tradFI) and non-traditional firms alike must now prepare for a regulatory landscape that demands faster, more adaptive responses to emerging threats.
By fLEXI tEAM
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