U.S. leverages AML crackdown to combat cartels
The U.S. government is intensifying its battle against money laundering and drug cartels along the Mexican border. In a decisive move, money transmitters and check cashing companies in 30 targeted ZIP Codes across California and Texas must now report all cash transactions exceeding $200. This geographical targeting order, unveiled by the Treasury Department’s Financial Crimes Enforcement Network, aims to intercept small-dollar transactions that criminal organizations exploit to launder money from drug trafficking and other illicit activities.
Tightening financial oversight
Traditionally, banks and financial institutions report cash transactions only when they surpass the $10,000 mark. The new geographic targeting order shifts the focus toward smaller, seemingly routine remittance operations that may hide illicit activity. Money services businesses located in critical border regions such as El Paso, Brownsville, and select areas of the San Diego metropolitan region will need to comply with stringent customer identification requirements and monitor transactions rigorously. FinCEN mandates flagging any suspicious behavior—even those transactions deliberately kept below the $200 threshold—to prevent evasion of the new rules.
Impact on cross-border remittances
In 2023, Mexico received remittances totaling $63.3 billion, accounting for approximately 4.5 percent of its gross domestic product. With the average remittance hovering around $390 in 2022, experts acknowledge that this regulatory change may introduce additional paperwork for routine financial transfers between the U.S. and Mexico. However, financial crime specialists argue that lowering the reporting threshold, combined with sophisticated pattern recognition techniques, will significantly fortify the remittance system against misuse.
A broader strategy against drug cartels
Treasury Secretary Scott Bessent underscored the government’s commitment to protecting the U.S. financial system from the influence of drug cartels and transnational criminals. The administration, led by President Trump, has consistently prioritized dismantling the financial infrastructure of these criminal organizations. The order supporting this AML crackdown not only marks an operational shift in the enforcement of financial regulations but also aligns with broader policies that designate certain cartels as terrorist organizations. This classification streamlines the pursuit of cartel financiers and even opens the door to potential military measures.
This strategic AML crackdown on lower-level cash transactions represents a critical development in U.S. efforts to disrupt the financial networks underpinning drug trafficking and organized crime. As the order takes effect for an initial six-month period—subject to renewal—money services businesses and law enforcement agencies brace for a new era of financial oversight at the U.S.-Mexico border.
AML Compliance order affects 30 ZIP codes
The terms of the GTO are effective beginning 30 days after the date on which the order is published in the Federal Register. The terms are effective for 179 days thereafter.
The order covers the following ZIP codes across seven counties in California and Texas:
- Imperial County, California: 92231, 92249, 92281, 92283
- San Diego County, California: 91910, 92101, 92113, 92117, 92126, 92154, 92173
- Cameron County, Texas: 78520, 78521
- El Paso County, Texas: 79901, 79902, 79903, 79905, 79907, 79935
- Hidalgo County, Texas: 78503, 78557, 78572, 78577, 78596
- Maverick County, Texas: 78852
- Webb County, Texas: 78040, 78041, 78043, 78045, 78046
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