Judge Halts Federal Scrutiny of $200 Transactions
"Today, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) issued a Geographic Targeting Order (GTO) to further combat the illicit activities and money laundering of Mexico-based cartels and other criminal actors along the southwest border of the United States," the U.S. government's Financial Crimes Enforcement Network announced March 11. "The GTO requires all money services businesses (MSBs) located in 30 ZIP codes across California and Texas near the southwest border to file Currency Transaction Reports (CTRs) with FinCEN at a $200 threshold, in connection with cash transactions."
A decade ago, the policy change might have been justified in the name of fighting terrorists; these days, the feds fret over criminal cartels (although, as Reason's Joe Lancaster reported, President Donald Trump split the difference by designating cartels as terrorists). But no matter who government officials claim to be targeting, the burden of compliance always falls on individuals and small businesses.
The change is a big one. Prior to the March 11 announcement, the threshold had been set at $10,000 since 1972. The dollar has lost much of its purchasing power since then, meaning that more and more transactions are subject to the reporting requirement, increasing the burden of compliance.
"The inflation-adjusted threshold in 2023 would have been about $72,880," a December 2024 Government Accountability Office (GAO) report observed. "Using an inflation-adjusted threshold would have reduced the number of CTRs filed by at least 90 percent annually since 2014."
Not only are Americans suffering under intrusive paperwork, but law enforcement is trying to drink from a firehose of reports. "Law enforcement agencies accessed less than 3 percent of CTRs filed from 2014 through 2023," the GAO added.
But instead of eliminating or streamlining the reporting requirement, the feds lowered the threshold. That means much more paperwork for everybody in the affected ZIP codes.
"Esperanza Gomez and Arnoldo Gonzalez, Jr. run small businesses near the U.S.-Mexico border that provide everyday, small-dollar financial services—often for customers without bank accounts," the Institute for Justice noted in an April 15 press release about a lawsuit challenging the lowered reporting threshold. "While $10,000 is a large amount to Esperanza and Arnoldo's customers—Esperanza's business, for instance, has never had a transaction that large—lowering the threshold to $200 will mean that almost every transaction triggers a report. The reports require detailed information including birthdates, Social Security numbers, and home addresses."
Each report takes Gomez and Gonzalez 20 minutes to file, which means hours of extra work every day. Meanwhile, any actual criminals interested in evading the reporting requirement can take their business to a ZIP code outside the affected area. The excessiveness of the policy change proved persuasive to U.S. District Judge Janis Sammartino of the Southern District of California. On Tuesday, she issued a temporary restraining order that applies to enforcement of the reporting threshold change in the California ZIP codes.
"Sammartino ruled that the San Diego plaintiffs, Gomez and her business, Novedades y Servicios Plus, 'have demonstrated a substantial likelihood of success on the merits of their claims,'" reports Alex Riggins of The San Diego Union-Tribune. "The plaintiffs had argued that the geographic targeting order was unlawfully issued without undergoing the notice-and-comment procedures prescribed by federal law and that the rule is arbitrary and capricious under federal law."
"The government's order enlists these businesses to carry out an unprecedented and sweeping government surveillance system, and buried them in paperwork in the process," commented Institute for Justice Senior Attorney Rob Johnson. "We are grateful for this temporary relief and will continue to fight to make it permanent."
The plaintiffs plan to request an extended restraining order that will remain in place for the duration of litigation. Ultimately, they hope to entirely overturn the lowered reporting requirement.
Earlier this month, financial services businesses along the Texas border won a more-targeted restraining order against the government that temporarily relieves them of the burden of compliance while their lawsuit proceeds. One of the plaintiffs in that case pointed out that many of his competitors are located on the Mexican side of the border, beyond the reach of U.S. government reporting requirements.
In a May 2024 piece for Reason, Nicholas Anthony and Naomi Brockwell pointed out that financial surveillance has become increasingly intrusive in recent decades with relatively little pushback relative to other forms of government snoopiness.
"Compared to today, customers in the 1970s had far more freedom in opening accounts and interacting with their own money. Back then, the decision to transact with a bank could be based on the cash in one's pocket," they wrote. "Transactions were not scrutinized for threats of terrorism or drug trafficking. Customers were not legally required to supply a photo ID to set up an account."
Change, and the erosion of financial privacy, came with the passage of the Bank Secrecy Act, they added. Inflation has further extended the government's reach by applying what were once high-dollar thresholds for scrutiny to relatively common transactions. Along with the Biden administration's aborted attempt to monitor cash flows of as little as $600, the recent FinCen reduction of the reporting threshold to $200 makes it clear that government officials want to know where our money is at all times.
Hopefully, more forceful pushback against financial surveillance will begin with the temporary restraining order in California and its companion in Texas.
The post Judge Halts Federal Scrutiny of $200 Transactions appeared first on Reason.com.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New York Post
25 minutes ago
- New York Post
Gowanus is getting a $25K/month rental
The low-slung industrial buildings that once defined Brooklyn's Gowanus are disappearing. In their place: $25,000-a-month rentals. The rezoned neighborhood's newest luxury condominium is coming on the market this month. 544 Carroll, developed by the real estate investment firm Avery Hall, is meeting what it says is growing demand for spacious, luxury condos among the brownstones of Brooklyn. The 17-story development, located at the border of Gowanus and Park Slope, is made up of 133 units, including two floors of penthouses and one extra-pricey duplex. 7 A rendering of the soon-to-be launched 544 Carroll. Courtesy of Avery Hall 7 The 175-foot-tall development enjoys far-reaching views across the otherwise low-lying Gowanus. Courtesy of Avery Hall The 2,500-square-foot duplex at 544 Carroll will be the largest advertised rental on the Gowanus market, according to StreetEasy — and the most expensive. The $25,000-a-month unit beats out the neighborhood's current highest rental price by an excess of $13,500. Located across the sixth and seventh floors, the residence includes four bedrooms and 1,082 square feet of outdoor space. The rest of the one-, two- and three-bedroom units in the building range in price from $4,700 for the smallest one-bedroom to $15,000 for a premium three-bed penthouse. A quarter of the apartments are designated as permanently affordable. In addition to luxurious touches throughout the units, like marble countertops and walk-in closets, the 175-foot-tall building prioritizes spaciousness. Its smallest units are a sizable 630 square feet, and every two-bedroom comes with two bathrooms to match. 7 A rendering of a unit at 544 Carroll, featuring large windows and a sleek kitchen. Courtesy of Avery Hall 7 Some units in the building enjoy free-standing tubs and double vanities. Courtesy of Avery Hall Jesse Wark and Brian Ezra, founding partners of the Gowanus-based Avery Hall, told The Post that despite rapid housing growth in the area, current layouts neglect those looking for extra elbow room. 'I think most people would not recognize these as New York rentals,' Wark said. 'Given the space, you can fit a dining table in your one-bedroom along with your living room. These things are not standard in the market.' Gowanus has room to grow, and renters want to enjoy it. The firm cited a growing renter-by-choice demographic made up of high-earning New Yorkers who prefer the flexibility of renting to home ownership, whether due to the transient nature of their jobs, languishing high mortgage rates or ongoing economic uncertainty. In addition to large two-bedrooms and lofty duplexes, the building offers the gamut of luxe condo amenities, including a dedicated pilates studio, a cave-centric children's play area, a pet spa and a private dining room. 7 A rendering of the children's playroom. Courtesy of Avery Hall 7 The sun-drenched lobby at 544 Carroll. Courtesy of Avery Hall 7 A pilates room is located inside the building's fitness studio. Courtesy of Avery Hall 544 Carroll represents another step in the Gowanus's snappy transformation. Where gritty warehouses and an odorous canal once defined the neighborhood, kitschy axe throwing bars, art studios and a Whole Foods now dot its landscape. In May, the real estate analytics company Marketproof tracked 141 residential projects with roughly 6,700 new units currently under development in Gowanus, Brick Underground reported. But the Manhattan-like rents at 544 Carroll are tied to the building's dual identity — situated on Carroll Street and Fourth Avenue, it's just a crosswalk away from pricey Park Slope. While Gowanus has undergone massive changes, Ezra told The Post that the firm would not have built a project like 544 Carroll anywhere else in the neighborhood. Gowanus' rebirth and Park Slope's established amenities made it possible. 'It's the combination of tapping into that new energy and also harnessing this existing, beautiful, super strong neighborhood in Park Slope that created this unique opportunity,' Ezra said. 'It will be a part of both communities,' Wark added.
Chicago Tribune
25 minutes ago
- Chicago Tribune
Gary Teachers Union opposes online teacher hiring: move replaces 'soul of education'
As a nationwide teacher shortage left Gary schools turning to online licensed teachers to fill the void, the move has drawn criticism from the leader of the Gary Teachers Union. The Gary School Board voted July 9 to retain Proximity, an Austin, Texas-based company to provide up to 41 online licensed teachers for middle and high school classrooms. 'We remain focused on providing the best for our scholars, which includes instruction delivered by highly qualified, licensed teachers,' said Gary Community School Corp. Superintendent Yvonne Stokes. 'We value our teachers and will continue to work to find a path forward to secure in-person, licensed instructors. We are still hiring and remain in contact with those teachers who are demonstrating efforts to meet the guidelines set forth by the law to obtain their certification,' Stokes said in a statement. District officials said about one-third of its teacher roster of about 245 teachers worked under an emergency permit last year, meaning they didn't hold the state-required teachers' license. The district just emerged from seven years of state control last year because of its perilous financial situation. Stokes joined the district last year as the first hire of the new state and local appointed school board. However, years of uncertainty may have soured local educators from applying for jobs, officials said. School board president Michael Suggs cited the urgency to have licensed teachers on a recent radio appearance with Stokes. 'We've been a failing school district for 10 years… 10 years of failing is broken. We have to rise to a new level, and reset the bar,' he said. Gary's students have performed poorly on state and national standardized tests for more than a decade. 'The state of Indiana says you can't have emergency permits more than three years in a row,' Suggs said. Chief human resources officer Jovanka Cvitkovich said one teacher worked on an emergency permit for seven years. Teachers union president GlenEva Dunham urged the district to reconsider its decision on using Proximity teachers. 'This is not just about saving money or adopting the latest technological trend,' Dunham said in a statement. 'This is about the future of our children, the integrity of our schools, and the livelihoods of the teachers who are committed to making Gary a better city for everyone. We deserve more than virtual replacements.' Dunham, who said the union wasn't consulted about hiring Proximity, said the online teaching platform will leave students more isolated. She said the emergency permit teachers are union members and covered under the contract's recognition clause. 'This partnership with Proximity is not just a decision to 'go digital' — it is a decision to replace the soul of education with something far more distant,' Dunham said. However, both sides agree on the importance of an in-person teacher in front of the classroom. Along with the online instructor, Gary officials said a facilitator will be in each online classroom to back up instruction and keep students on task. 'We cannot continue to place students in classrooms year after year with individuals who have not advanced toward professional credentials, especially when their instructional impact does not meet state expectations for student growth,' said Cvitkovich, who herself began her education career on an emergency permit. 'While well-intentioned, this practice places our students at a significant disadvantage and places the district at risk for continued academic underperformance,' she said in a statement. Last year, there were more than 1,300 teaching vacancies in Indiana, according to the state Department of Education. Low pay and increased responsibilities were among the reasons for the shortage. The General Assembly passed legislation this year boosting a starting teacher's salary from $40,000 to $45,000. Gary's starting salary is $50,883. The Gary Teachers Union is hosting a community forum on the issue from 6 to 7:30 p.m. July 31 at the teachers union, 1401 Virginia St.
USA Today
25 minutes ago
- USA Today
'Hands are tied': Trump DOJ loses bid to unseal Epstein grand jury testimony
A federal judge rejected the Justice Department's bid to unseal grand jury testimony tied to Florida-based investigations of sex offender Jeffrey Epstein. A federal judge in Florida rejected a bid from President Donald Trump's Justice Department on July 23 to unseal grand jury testimony tied to a two-decades-old investigation into convicted sex offender Jeffrey Epstein. The Justice Department asked the federal court in the Southern District of Florida to release transcripts from grand jury investigations that took place in West Palm Beach, Florida, in 2005 and 2007. However, Judge Robin L. Rosenberg ruled that she doesn't have the power to order the records' release. She said she is bound by a past ruling of the U.S. Court of Appeals for the 11th Circuit, which governs Florida federal courts and only allows for releasing grand jury records in narrow circumstances. "(T)he Court's hands are tied," Rosenberg wrote in the order. The ruling does not apply to separate requests from the Justice Department for the Manhattan federal court to unseal grand jury testimony for federal criminal cases filed in that court against Epstein and his associate, convicted sex trafficker Ghislaine Maxwell. This is a developing story that will be updated.
