A federal judge in Texas has dealt a blow to the Treasury Department’s efforts to combat cartel money laundering along the border. Judge Leon Schydlower issued a temporary restraining order on June 24th, halting a policy that mandated reporting of cash transactions as low as $200. This ruling sided with Valuta Corporation and Payan’s Fuel Center, two El Paso businesses arguing the regulation was excessively burdensome and detrimental to their operations.

The controversial policy, implemented by the Financial Crimes Enforcement Network (FinCEN) via a Geographic Targeting Order (GTO) on March 11th, targeted money service businesses in 30 California and Texas zip codes. It drastically lowered the reporting threshold for cash transactions from the established $10,000 limit under the Bank Secrecy Act to a mere $200. This significant reduction, according to the judge’s ruling, is likely to be deemed ‘arbitrary and capricious,’ giving the businesses a strong chance of winning their case.

The judge’s decision highlights the significant impact of this policy on small businesses operating near the border. The businesses argued that the new reporting requirements scared away customers and created an untenable operational burden. The temporary restraining order offers a crucial reprieve, allowing these businesses to continue their operations without the immediate threat of these stringent regulations while the legal battle continues.

This development raises questions about the balance between combating illicit financial activity and the potential negative consequences for legitimate businesses. The case’s outcome will have broad implications for similar regulations and the enforcement of anti-money laundering measures across the country.