9th Circuit Blocks FinCEN’s Border Cash Rule Targeting Cartel Funds
The 9th Circuit upheld an injunction blocking FinCEN's cash reporting rule along the US-Mexico border.
Why it matters: Financial and compliance teams must rethink enforcement risks and operational impacts due to this ruling. The decision signals potential shifts in regulatory approaches targeting money laundering linked to drug cartels.
- The 9th Circuit affirmed a preliminary injunction against FinCEN's Geographic Targeting Order on July 14, 2026.
- The order required money services businesses to report cash transactions between $200 and $10,000 in 30 ZIP codes along the US-Mexico border.
- The rule, effective April 14, 2025, lowered the reporting threshold from $10,000 to $200 to curb cartel money laundering.
- A plaintiff MSB in San Diego reported losing 50–60% of its customers during the order’s first week due to privacy concerns.
On July 14, 2026, the Ninth Circuit Court of Appeals affirmed a preliminary injunction blocking the Financial Crimes Enforcement Network's (FinCEN) Geographic Targeting Order (GTO). This GTO required money services businesses (MSBs) in 30 ZIP codes across seven counties at the U.S.-Mexico border to file currency transaction reports for cash exchanges between $200 and $10,000, far lower than the standard $10,000 threshold.
The GTO aimed to disrupt illicit cash flows tied to Mexico-based drug cartels, as part of a broader anti-cartel initiative directed by the Trump administration. However, the Court found procedural issues with how the rule was implemented. Judge Lucy H. Koh wrote the majority opinion, concluding that the GTO likely violated the Administrative Procedure Act because it functioned as a de facto legislative rule without undergoing required notice-and-comment rulemaking.
The decision highlighted real-world impacts for financial businesses. Plaintiff Novedades y Servicios, Inc., a small MSB in San Diego, reported losing roughly half to over half of its customers during the week the GTO was enforced, as customers were reluctant to provide personal information required by the reporting rule.
While the majority blocked enforcement, dissenting Judge Kenneth K. Lee argued the record did not contain sufficient financial details to justify such a broad injunction.
This ruling is a critical reminder for legal and compliance professionals to closely monitor regulatory rulemaking processes and assess how enforcement actions might be challenged in court.
By the numbers:
- 30 ZIP codes — targeted by the GTO in Texas and California counties
- $200 — new cash transaction reporting threshold under the GTO, down from $10,000
- 50-60% — customer loss reported by a San Diego MSB in GTO's first week
Yes, but: The dissenting opinion argued that the financial evidence was insufficient to support such a broad injunction, indicating the Court was divided on the ruling's scope.
What's next: Financial regulators may need to revisit the GTO with proper notice-and-comment procedures or craft alternative enforcement mechanisms to target cartel cash flows.