SAN ANTONIO—This afternoon, a San Antonio federal court ordered the Financial Crimes Enforcement Network (FinCEN) to stop enforcing a financial surveillance rule that threatened ten small money services businesses (MSBs) and intruded on the financial privacy of their customers. Judge Fred Biery granted a preliminary injunction protecting the Texas businesses after first granting a temporary restraining order on behalf of members of the Texas Money Services Business Association in April.
The MSBs are represented by the nonprofit Institute for Justice (IJ), which protects property rights and economic liberty nationwide. IJ is also representing a California MSB in a similar lawsuit. A judge in San Diego recently ordered a temporary halt to the rule for all California businesses.
“This is a tremendous relief since the rule threatened to make my business simply unprofitable,” said Arnoldo Gonzalez, Jr. “My customers are honest, hardworking people who exchange modest amounts of cash. This requirement intruded on their privacy with no apparent benefit to law enforcement.”
Arnoldo has operated High Value in Laredo for 25 years. Operating from a convenience store, High Value helps customers exchange cash whether they are crossing into Mexico or shopping in the U.S. His location is conveniently located near where the interstate meets the border checkpoint. The only service High Value provides is currency exchange.
“The court ruled that ordering the plaintiff small businesses to report their customers to federal criminal investigators just for changing over $200 in pesos was illegal and unconstitutional,” said IJ Senior Attorney Jeff Rowes. “It invaded the privacy of the customers and the businesses and caused a pointless explosion of paperwork.”
On March 14, FinCEN implemented an order requiring certain businesses in targeted ZIP codes to report all cash transactions above $200. The normal reporting requirement is for cash transactions over $10,000. By dropping that to $200, FinCEN is treating virtually every honest, hardworking person as a potential criminal whose name and financial information will go into a database for criminal investigators to use.
The ZIP codes in Texas targeted include areas of El Paso, Laredo, Eagle Pass, and Brownsville.
The Court agreed that the government order likely violates the Fourth Amendment’s prohibition of unreasonable searches. One of the foundational reasons for the creation of the amendment was to prevent the government from being able to acquire “general warrants”—wide-ranging warrants that fail to provide probable cause that a crime was being committed.