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

Key Concepts:

• Geographic Targeting Order (GTO)
• Financial Crimes Enforcement Network (FinCEN)
• Money Services Business (MSB)
• Currency Transaction Report (CTR)
• Suspicious Activity Report (SAR)
• Structuring
• Cash/Cash Equivalent
• Illicit Finance Activities
• Money Laundering

1. New Trump Financial Reporting Rule: $200 Cash Transaction Reporting

• The Trump Administration, through FinCEN, is implementing a new financial reporting rule targeting cash transactions as low as $200.
• This rule applies specifically to individuals and businesses within 30 zip codes along the Southwest border of the United States.
• Estimated to affect over 1 million Americans.
• The stated purpose of the GTO is to combat illicit activities and money laundering by Mexico-based cartels and other criminal actors.

2. Geographic Targeting Order (GTO) Details

• The GTO requires Money Services Businesses (MSBs) in the designated zip codes to file Currency Transaction Reports (CTRs) with FinCEN for cash transactions exceeding $200.
• The standard CTR reporting threshold for other areas remains at $10,000.
• The GTO was quietly introduced in early March and has an effective date of April 14, 2025.
• The GTO applies to MSBs in zip codes across these seven counties in California and Texas: Imperial County (CA), San Diego County (CA), Cameron County (TX), El Paso County (TX), Hidalgo County (TX), Maverick County (TX), and Webb County (TX).

3. Money Services Businesses (MSBs) Definition

• A Money Services Business (MSB) includes businesses such as:
  • Check cashing services
  • Sellers of traveler's checks
  • Money order issuers
  • Money transmitters

4. Currency Transaction Reports (CTRs)

• Under current rules, financial institutions, including banks, must file CTRs when they accept $10,000 or more in cash in a single day.
• "Cash" includes:
  • Currency and coins of the United States and any other country.
  • Certain monetary instruments like cashier's checks, bank drafts, traveler's checks, or money orders.
• A CTR includes:
  • Details about the person involved in the transaction (name, address, taxpayer identification number).
  • Information about the date, amount, and kind of the transaction.
• FinCEN collects and maintains CTR information, which is accessible to authorized law enforcement and other agencies for investigating and prosecuting illicit finance activities.

5. Legality of Cash Transactions and Reporting Purpose

• It is not illegal to deal in cash, even in significant amounts.
• The purpose of reporting large transactions (via FinCEN 104, 105, or Form 8300) is to ensure proper reporting and taxation of funds.
• Reporting makes it more difficult to circulate and exchange "dirty" money (funds from illegal sources) for "clean" money.
• Reporting ensures funds are reported to taxation authorities, especially when taxpayers are aware that the government knows about the funds.

6. $10,000 Threshold and Inflation

• The $10,000 CTR threshold was established in 1972 and has never been adjusted for inflation.
• If adjusted for inflation, the threshold would be nearly $80,000, according to the Government Accountability Office.
• Financial institutions filed approximately 167 million CTRs from fiscal years 2014 to 2023.
• Adjusting for inflation would have reduced the number of CTRs filed by at least 90% annually since 2014.

7. Suspicious Activity Reports (SARs) and Structuring

• Even if a transaction is below the $10,000 threshold (or the $200 threshold in the targeted zip codes), a financial institution or MSB must file a Suspicious Activity Report (SAR) if they have reason to believe the transaction is out of the ordinary.
• Structuring: Breaking down large transactions into smaller ones to avoid reporting requirements.
  • Example: Depositing $9,991 eleven times instead of depositing $100,000 at once.
• Structuring with the intent to evade reporting is illegal.

8. Conclusion

• The new GTO represents a significant expansion of financial reporting requirements, particularly for individuals and businesses in the targeted zip codes.
• The rule aims to combat illicit finance activities and money laundering by lowering the cash transaction reporting threshold to $200 for MSBs in specific areas.
• While dealing in cash is not illegal, the reporting requirements are designed to ensure transparency and proper taxation of funds.