Treasury Tightens Financial Rules to Disrupt Mexican Cartel Money Laundering

Businesses in border areas in California and Texas must report cash transactions of more than $200.

Human smugglers drive ATVs on the Mexican side of the United States border wall near Jacumba, Calif., on Oct. 31, 2023. John Fredricks/The Epoch Times

The Trump administration is tightening financial rules at the U.S.–Mexico border in a bid to disrupt cartel money laundering, imposing new cash transaction reporting requirements on businesses operating in key border areas.

Under a Geographic Targeting Order (GTO) issued by the Treasury Department on March 11, businesses such as currency exchanges, check-cashing services, and money transfer providers in 30 ZIP codes across California and Texas must report all cash transactions of more than $200 to the Financial Crimes Enforcement Network.

The order, which takes effect 30 days after its publication in the Federal Register and remains in place for 179 days unless renewed, is part of a broader crackdown on cartel finances and drug trafficking networks.

“Today’s issuance of this GTO underscores our deep concern with the significant risk to the U.S. financial system of the cartels, drug traffickers, and other criminal actors along the Southwest border,” Treasury Secretary Scott Bessent said in a statement.

“As part of a whole-of-government approach to combatting the threat, Treasury remains focused on leveraging all our available tools and authorities to better identify and counter these criminal activities.”

The new rule targets low-value cash transactions, which authorities say cartels use to structure and launder drug money by breaking deposits into smaller amounts to avoid detection. Previously, businesses were only required to report cash transactions of more than $10,000.

The order focuses on border counties in California (Imperial and San Diego) and Texas (Cameron, El Paso, Hidalgo, Maverick, and Webb), which the Treasury Department considers high-risk zones for cash smuggling, money laundering, and other cartel-linked financial activity.

Businesses that fail to comply with the reporting requirements could face civil or criminal penalties under the Bank Secrecy Act.

The financial crackdown follows President Donald Trump’s executive order on Jan. 20, his first day back in office, directing officials to assess whether certain cartels and transnational gangs should be designated as terrorist organizations.

That directive led to a February decision to formally classify several major Mexican cartels and criminal groups as terrorist organizations, a move that expands U.S. legal authority to freeze cartel assets, block financial transactions, and impose sanctions on those who support them.

During his first term, Trump considered such designations but ultimately did not act on them. The recent classification is part of a wider effort to dismantle cartel operations through financial, legal, and law enforcement measures.

Defense Secretary Pete Hegseth has said that the Trump administration is not ruling out military action against Mexican cartels after they were declared foreign terrorist organizations.

While the new reporting rule aims to curb cartel money laundering, critics say it may not meaningfully disrupt criminal finances and could burden legal businesses and low-income consumers in border communities.

Julia Yansura, program director for environmental crime and illicit finance at the FACT Coalition, called the new rule “misguided” and said it misses the bigger picture.

“Illegal drug trafficking is a huge problem with heartbreaking human costs. Over 100,000 Americans die each year from drug overdoses, the leading cause of death for Americans ages 18 to 45,” Yansura said in a statement. “But it’s hard to understand how the campaign to combat this $500 billion illicit market would be advanced by focusing on $200 cash transactions.”

Yansura also pointed to a recent Treasury Department decision that scaled back enforcement of corporate transparency laws, which were intended to crack down on anonymous shell companies frequently used for large-scale money laundering.

She said that requiring businesses to report their transactions to the government could scare people away from using legal financial services, pushing them into informal cash networks that are even harder to track.

The Epoch Times has reached out to the Treasury with a request for comment.