New Trump Financial Reporting Rule Aims To Capture Cash Transactions As Low As $200

New Financial Reporting Rules Target 30 ZIP Codes

The U.S. government has introduced a new rule aimed at combating financial crimes, particularly targeting 30 specific ZIP codes in California and Texas. This initiative lowers the cash transaction reporting threshold from $10,000 to $200 for these areas, effective April 14, 2025. The goal is to monitor transactions involving money orders and traveler’s checks to curb illegal activities, especially those linked to Mexico-based cartels. This change affects over a million residents and businesses, raising concerns about privacy and the impact on the unbanked population.

Details of the Geographic Targeting Order

The Geographic Targeting Order (GTO) applies to money services businesses (MSBs) in 30 ZIP codes across seven counties. MSBs include check cashing services, sellers of traveler’s checks, and money transmitters. The affected areas are Imperial and San Diego counties in California and Cameron, El Paso, Hidalgo, Maverick, and Webb counties in Texas. This rule requires these businesses to report cash transactions exceeding $200 to FinCEN, which will collect and analyze the data to combat financial crimes.

Understanding the Reporting Rules

FinCEN currently requires financial institutions to report cash transactions over $10,000. This threshold, set in 1972, hasn’t been adjusted for inflation, which would make it around $80,000 today. Financial institutions also file Suspicious Activity Reports (SARs) for smaller, unusual transactions, such as structuring, where large sums are broken into smaller amounts to avoid detection. The new rule lowers this threshold in targeted areas, potentially increasing surveillance but raising privacy concerns.

The Impact on Unbanked Households

The unbanked population, those without bank accounts, relies heavily on MSBs and cash transactions. In 2023, 4.2% of U.S. households, or 5.6 million, were unbanked, often due to low income or distrust of banks. The new rule may disproportionately affect this group, imposing additional reporting burdens and potentially driving financial activities underground. This raises concerns about financial inclusion and the fairness of targeting vulnerable populations.

Controversy Surrounding Financial Surveillance

Critics, including the libertarian Cato Institute, argue that the new rule erodes privacy and expands government surveillance. Similar concerns arose with IRS changes to third-party payment reporting thresholds, which were met with public backlash. The GTO’s focus on specific ZIP codes has sparked debates about geographic targeting and the risk of over-regulation, highlighting the tension between security and individual privacy.

What This Means for the Future

The GTO’s implications extend beyond the targeted ZIP codes, suggesting a potential expansion of financial surveillance. Critics warn this could be the first step toward broader reporting requirements nationwide. While the rule aims to combat crime, it may drive transactions underground, undermining its effectiveness. The debate underscores the need for a balanced approach that protects both security and civil liberties, ensuring that financial regulation does not disproportionately harm vulnerable populations.