News

The U.S. Financial Crimes Enforcement Network’s latest geographic targeting order will push illicit remittances to money services businesses outside of the regions in California and Texas covered by the measure, former officials and other sources told ACAMS moneylaundering.com.

Starting April 14, MSBs in 30 ZIP codes, including in El Paso, Eagle Pass and Laredo, Texas, and San Ysidro, Otay Mesa and Calexico, California, must flag remittances of more than $200 to Mexico pursuant to the GTO, which separately, explicitly advises such businesses to also flag suspected attempts to evade the threshold.

U.S. parties remitted nearly $63 billion to Mexico in 2024, according to Spanish-headquartered lender BBVA, for an average of $393 per remittance. Put another way, MSBs covered by the GTO will soon have to report a dramatically larger share of remittances if those trends continue.

“FinCEN almost certainly considered potential evasion behaviors when determining the size and scope of the GTO,” said Michael Fasanello, a former senior policy adviser at FinCEN who served with the bureau from November 2017 to March 2019. “MSBs operating outside the specified 30 ZIP codes should anticipate potential changes in transactional patterns.”

Money launderers and money mules working for Mexican drug cartels, in other words, will probably employ a range of strategies to avoid detection, such as redirecting their funds through MSBs not covered by the GTO.

MSBs outside the 30 ZIP codes specified by FinCEN should therefore take notice of larger overall volumes while focusing most of their attention on spikes in remittances of $200 or less that occur in rapid succession after the measure takes effect, said Braddock Stevenson, a former senior enforcement official at the bureau.

“I don’t know whether we will see a flood of reports [on remittances] below the threshold as much as we see reports on systemic or egregious attempts to bypass the threshold,” said Stevenson, now of counsel at Paul Hastings in Washington, D.C.

The GTO expires Sept. 9, but FinCEN can extend the measure indefinitely and add new ZIP codes.

“I expect we’ll see an iterative approach to this GTO, with an initial assessment made from the first tranche of reporting, then strategic decisions on adjustments and renewals,” said Fasanello, now a private-sector compliance officer and board member of the ACAMS chapter in Pittsburgh.

Not every ZIP code included in the GTO touches the border. 92126, for example, covers Mira Mesa, a suburb north of San Diego, while 79935 covers an area of El Paso 10 miles from the nearest crossing.

“There’s some reasoning with the areas FinCEN selects, whether it’s SARs [suspicious activity reports], other, prior BSA [Bank Secrecy Act-mandated] filings or ongoing investigations,” said Peter Hardy, a former federal prosecutor in the Eastern District of Pennsylvania, now an attorney with Holland & Knight in Philadelphia.

Prologue

FinCEN placed hundreds of electronics retailers in South Florida under a GTO in 2015, and has regularly renewed, modified and expanded a GTO first imposed in 2016 on title insurance companies involved in all-cash purchases of luxury real estate in Miami and Manhattan.

Twenty-two MSBs and 3,500 agents in and around New York fell under a GTO in 1996 as part of the bureau’s efforts to track remittances to cocaine traffickers in Colombia. U.S. seizures of outbound cash spiked past $50 million in the six months after the GTO entered into force.

“Law enforcement expected that people would try to move funds in other manners during the GTO,” said Stevenson.

The GTOs targeting remittances to Colombia expired in 1997, but not before FinCEN ordered 15 MSBs in and around New York and five others in Puerto Rico to report remittances of more than $750 to the Dominican Republic.

FinCEN’s latest GTO officially targets the financial networks behind the flow of fentanyl and other narcotics into the U.S., though some speculate federal authorities could use the measure for other purposes as well.

“This GTO is going to impact cartel activity, but the way it’s structured, I think there are parts of it that could also impact undocumented workers,” Stevenson said.

Repurposing the GTO in such a manner could complement a reported arrangement between the IRS and Immigration and Customs Enforcement whereby the former will supply the addresses of suspected undocumented migrants to the latter.

News of the arrangement, which the White House has not confirmed, appeared in The Washington Post on March 22.

“The GTO could be paired up with that [IRS] data,” said Stevenson.

Contact Charlie Passut at cpassut@acams.org