The ongoing battle against money laundering and illicit financial activities remains a critical priority for the U.S. government, with the Financial Crimes Enforcement Network (FINCEN) taking a major step forward in the fight. Recently, FINCEN issued a Geographic Targeting Order (GTO) designed to address the specific financial risks posed by Mexico-based drug cartels and other criminal actors operating along the southwest border of the United States. This order aims to leverage financial transaction data to track and disrupt the financial operations that fund these dangerous organizations, ultimately protecting the integrity of the U.S. financial system.

Understanding FINCEN’s Geographic Targeting Order

FINCEN’s Geographic Targeting Order (GTO) is a strategic response to the growing threat posed by criminal organizations, particularly drug cartels, operating across the U.S.-Mexico border. The new order directly affects money services businesses (MSBs) located in 30 specific ZIP codes in California and Texas, regions that are known to be hotspots for illicit financial activities due to their proximity to the border.

Under the terms of the GTO, MSBs in these designated areas are required to file Currency Transaction Reports (CTRs) for cash transactions that exceed $200. This initiative allows the U.S. government to monitor and analyze financial transactions that may be tied to money laundering schemes, which often serve as the financial backbone for drug trafficking and other criminal enterprises.

This action comes as part of a larger, coordinated effort by FINCEN and other government agencies to disrupt the financial operations of criminal organizations. By increasing transparency around these transactions, the GTO aims to close off pathways that allow illicit funds to flow undetected, ultimately cutting off the financial lifelines that sustain these criminal groups.

“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,” said Scott Bessent, Secretary of the Treasury. His statement emphasizes the critical role of financial monitoring in protecting national security and upholding the integrity of the financial system.

Addressing the Threat of Drug Cartels and Illicit Financial Flows

The focus on Mexico-based drug cartels is central to this new FINCEN initiative. Cartels operating along the southwest border are notorious for their role in trafficking illicit drugs, such as fentanyl, into the United States. These drugs, which have contributed to the opioid crisis in the country, pose a significant threat to public health and safety. However, the cartels’ financial activities are just as dangerous, as they rely on money laundering to move illicit proceeds and fund their criminal operations.

The U.S. government has made it clear that combating drug trafficking is a top priority. To that end, President Donald J. Trump signed an Executive Order in January creating a formal process to designate certain cartels and other organizations as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs). This designation allows the U.S. to take additional steps to isolate these groups from the U.S. financial system, making it harder for them to carry out their illicit activities.

In February, the Departments of the Treasury and State took further action by designating eight organizations, including six major Mexico-based drug cartels, as FTOs and SDGTs. These actions allow U.S. authorities to block the financial transactions of individuals and entities associated with these groups, further limiting their ability to operate within the U.S. financial system. The goal is to suffocate the financial infrastructure that supports these criminal operations and deny them the resources they need to continue their destructive activities.

The Role of Currency Transaction Reports (CTRs) in Tracking Illicit Transactions

One of the central elements of the FINCEN Geographic Targeting Order is the requirement for money services businesses (MSBs) to file Currency Transaction Reports (CTRs) for cash transactions over $200. CTRs are a critical tool used by the U.S. government to track large cash transactions that could be indicative of money laundering or other illicit financial activities.

By requiring MSBs to submit these reports in the specified areas along the southwest border, FINCEN aims to create a comprehensive picture of financial activity in regions where cartels and other criminal organizations are most active. The data collected through CTRs will allow regulators to detect suspicious patterns, such as large-scale cash deposits or withdrawals that could be linked to illicit money flows. These reports will be analyzed to identify potential links to criminal organizations, and, if necessary, enforcement actions will be taken to disrupt those activities.

The introduction of this GTO is part of a broader strategy by FINCEN to enhance its oversight of the financial transactions occurring in high-risk areas. With greater visibility into these transactions, law enforcement agencies and financial institutions can work together to identify and stop money laundering schemes before they have a chance to impact the broader financial system.

The Duration and Impact of the Geographic Targeting Order

The terms of the FINCEN Geographic Targeting Order are effective 30 days after its publication in the Federal Register, and the order will remain in effect for 179 days thereafter. This timeframe allows sufficient time for MSBs in the affected ZIP codes to adjust to the new requirements and begin filing the necessary Currency Transaction Reports for qualifying cash transactions.

The GTO’s temporary duration reflects the ongoing nature of the threat posed by criminal organizations along the southwest border. While this order is a targeted measure designed to gather data and disrupt illicit financial flows, it is part of a broader, longer-term strategy to combat drug cartels and money laundering. As such, the U.S. government will likely continue to monitor the effectiveness of this measure and make adjustments as necessary to ensure that it is achieving its intended goals.

The GTO’s success in targeting cartel-linked financial transactions will be closely scrutinized, as it will provide valuable data for future efforts to combat money laundering and criminal financial operations. As the data is collected and analyzed, it is likely that new tactics and tools will be developed to further isolate criminal organizations from the financial system.

Conclusion: A Continued Commitment to Protecting the U.S. Financial System

The issuance of FINCEN’s Geographic Targeting Order represents a significant step forward in the fight against money laundering and illicit financial activities tied to Mexico-based cartels. By requiring money services businesses to file Currency Transaction Reports for qualifying cash transactions, the U.S. government is increasing its ability to detect and disrupt criminal financial activities.

This initiative is just one piece of the larger puzzle in the ongoing battle against drug trafficking, money laundering, and organized crime. The U.S. government has made it clear that it will continue to use all available tools to counter these threats and protect the integrity of the U.S. financial system. With the support of financial institutions, regulatory bodies, and law enforcement agencies, efforts like the GTO play a critical role in safeguarding the nation’s financial security.

Related Links

• FinCEN’s Geographic Targeting Orders
• U.S. Department of the Treasury
• Executive Order on Designating Cartels
• Fentanyl and the U.S. Opioid Crisis
• Foreign Terrorist Organizations Designations

Other FinCrime Central News Reports about FINCEN’s actions Against Cartels and Money Laundering

• The Long-Standing Connection Between Drug Cartels and Terrorist Organizations
• FinCEN’s Bold Action to Combat Fentanyl Trafficking in the U.S.
• FinCEN Renews Real Estate Geographic Targeting Orders

Source: FINCEN