U.S. President Donald Trump has announced that he will implement strict regulations on cash service providers in border areas in order to block the flow of funds from Mexican drug cartels, leading to growing backlash from the industry. Criticism has emerged that this is effectively a 'comprehensive surveillance measure,' and some federal courts have also raised the possibility of unconstitutionality.
According to the New York Times (NYT) on the 9th (local time), the recently established Financial Crimes Enforcement Network (FinCEN) under the U.S. Department of the Treasury has mandated that cash service providers located in 30 ZIP Codes near the U.S.-Mexico border report transactions involving exchanges or remittances exceeding $200 (approximately 272,860 won) including customer identity information. Previously, reporting was only required for transactions over $10,000 (approximately 14,640,000 won); this new regulation significantly tightens the criteria.
Considering that the primary clientele of border remittance companies consists of migrant workers, overseas students, and travelers, their inconvenience is expected to increase significantly. This measure will apply until September of this year and may be extended.
The problem is that the number of reportable transactions has increased exponentially, causing remittance companies to suffer from excessive administrative burdens. A remittance company in Texas projected that the number of reports, which was around 5 per month, would rise to over 6,000, while another nearby company anticipated a surge from 31 to 7,276 reports. Based on the government's estimated reporting time per transaction (20 minutes), about 300 additional dedicated personnel would be needed each month.
The burden at the operational level is already becoming evident. Ashley Wright, who operates a remittance company in Texas, told the NYT in an interview, "Customers are hesitant to provide sensitive personal information such as Social Security numbers, leading to an average daily loss of more than 10 clients," and added, "Nevertheless, there’s no choice but to comply since failure to report can result in fines of up to $1,400 (approximately 1,900,000 won) per incident."
The industry is also seeking to halt the government's actions through administrative lawsuits. A federal court in Southern California recently ruled that companies in San Diego and Imperial County must suspend the implementation of the regulations, while federal judge Fred Biery in Texas noted that, "While the goal of tracking illegal funds is legitimate, the current approach is like using a blunderbuss to catch a fly," referencing concerns about its constitutionality.
However, in Texas, the restrictions apply only to some companies, leaving most remittance companies still bound by reporting obligations.
"The government is painting the entire border area as a hotbed of crime," said the Institute for Justice, a public interest law firm with a liberal inclination, and pointed out that "the actual users of remittance services are ordinary citizens like waiters, teachers, construction workers, and hospital visitors."
The government maintains that this measure is part of President Trump's border security strategy but is not the first of its kind. For instance, during the Obama administration in 2014, Los Angeles' fashion district was required to report cash transactions exceeding $3,000 (approximately 4,090,000 won), and in 2015, similar requirements were placed on electronics exporters in Miami. However, the industry argues that there has been no precedent for criteria being tightened as significantly as this.
Industry representatives are expressing concerns that the regulation may stifle the local economy rather than achieve its primary goal of blocking drug transactions. Andres Payan, who operates a small convenience store and remittance company in Texas, stated, "We are subject to regulation because we provide check-cashing services," and said, "Since the measures were implemented, our customer base has shrunk by nearly 30%."