A federal judge in Texas has temporarily blocked a federal rule requiring small-dollar cash transactions to be reported, after two El Paso businesses said it was crushing their operations and scaring off customers.
Key Facts:
- On June 24, U.S. District Judge Leon Schydlower blocked enforcement of a Treasury Department rule against two El Paso money service businesses.
- The rule required reports on cash transactions between $200 and $10,000 in 30 ZIP codes near the U.S.–Mexico border.
- Valuta Corporation and Payan’s Fuel Center argued the rule was crippling, causing them to lose customers and work long hours filing paperwork.
- The judge found the rule’s ZIP-code targeting arbitrary, noting a cartel member could avoid scrutiny by crossing a street.
- The restraining order applies only to the two plaintiffs, not to other businesses affected by the same rule.
The Rest of The Story:
In March 2024, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a Geographic Targeting Order (GTO) affecting money service businesses in select ZIP codes in Texas and California.
The goal: catch Mexican cartels breaking up large cash sums into smaller amounts to avoid federal scrutiny.
Under the rule, transactions as low as $200 required full reporting—far below the usual $10,000 threshold.
Businesses said this turned routine work into a paperwork nightmare, scared off legitimate customers, and put livelihoods at risk.
Ashley Light of Valuta said she now spends late nights completing over 1,600 reports a month—compared to just 123 for all of 2024 before the rule.
“Each late CTR could mean a fine of over $1,400… If Valuta slips up at all, we now face potentially ruinous fines,” she warned.
Andres Payan Jr. reported a 35% drop in check-cashing customers due to new ID requirements.
Judge Schydlower agreed the rule unfairly penalized businesses based solely on location.
He pointed out that someone could simply walk across Yarbrough Drive in El Paso to avoid scrutiny, calling the GTO “completely toothless.”
Commentary:
Efforts to choke off cartel money laundering at the U.S. border are valid and needed.
But when policies are this sweeping, they often end up hurting the wrong people. That’s exactly what happened here.
The Treasury’s $200 transaction reporting rule may have been meant to flush out criminal activity, but it instead buried small business owners in government paperwork.
Businesses like Valuta and Payan’s Fuel Center were forced to choose between survival and compliance.
The strategy also shows the flaws of using ZIP codes to enforce rules with serious consequences.
In El Paso, the dividing line between compliance and freedom from reporting requirements is as thin as a street. How can that be called effective—or fair?
While officials argue these areas are vulnerable to cartel activity, punishing all businesses within arbitrarily drawn borders is lazy policymaking.
A smarter system would target actual suspicious activity, not simply proximity to the border. The burden of compliance was real.
Forcing mom-and-pop operations to file thousands of detailed reports or risk five-figure fines was overkill.
That’s not cracking down on cartels—that’s crushing small business.
What’s worse, the court’s ruling only helps the two businesses that sued.
The rest are still stuck with the same requirements.
And the Treasury Department is likely to appeal, showing no signs of backing down.
Good intentions don’t always lead to good policy.
If the federal government wants to shut off cartel cash, it should start by fixing its own broken system.
Make it precise. Make it fair. And stop turning every neighborhood business into a suspect.
The Bottom Line:
A federal crackdown on small cash transactions meant to catch cartel activity is hurting law-abiding small businesses near the southern border.
One judge called the rule arbitrary and unfair, but only two companies are exempt for now.
The Treasury is likely to appeal, but the real fix may lie in smarter, more targeted enforcement—not blanket ZIP code zones and burdensome red tape.
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