Ninth Circuit Blocks FinCEN’s Border Geographic Targeting Order

On July 13, a divided Ninth Circuit panel upheld a lower court order that barred enforcement of FinCEN’s border Geographic Targeting Order (“GTO”). The GTO would have forced money services businesses (“MSBs”) in 30 ZIP codes along the U.S.-Mexico border to report cash transactions of just over $200, a dramatic reduction from the longstanding $10,000 reporting threshold. The decision in Novedades Y Servicios, Inc. v. FinCEN, 181 F.4th 961, 967 (9th Cir. 2026) is a significant procedural check on the administration’s anti-cartel enforcement agenda.

Cartels as a National Security Priority

The Trump administration has repeatedly framed cartel-linked money laundering as a national security threat. On January 20, 2025 – the first day of his second term – President Trump issued an executive order designating certain international cartels as Foreign Terrorist Organizations and Specially Designated Global Terrorists. The order declared that cartels “present an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States,” and set its goal as “the total elimination of these organizations’ presence in the United States.”

The border GTO flowed directly from that priority. Issued by FinCEN in March 2025, the GTO targeted MSBs in 30 ZIP codes along the U.S.-Mexico border, requiring a Currency Transaction Report (“CTR”) filing for any cash transaction between $200 and $10,000. Treasury Secretary Scott Bessent made the administration’s priorities clear: “[f]or too long, cartels have abused the U.S. financial system to profit from poisoning Americans with deadly fentanyl. At Treasury, we are expanding our efforts to keep drug money out of the United States and to provide law enforcement with additional information to put these traffickers behind bars.”

The Ninth Circuit Holding

The panel’s decision turned on administrative procedure rather than the merits of AML enforcement.

The majority concluded that the border GTO was likely a rule – rather than an order – under the Administrative Procedure Act (APA), because it applied to all unnamed and unspecified MSBs across a geographic area home to over one million people, rather than targeting specific identified businesses based on particularized findings. Because 31 U.S.C. § 5326 authorizes FinCEN to act only by “order,” the GTO likely exceeded the agency’s statutory authority.

The panel also found that FinCEN was required to conduct notice-and-comment rulemaking which it skipped entirely, and that the GTO was likely arbitrary and capricious because FinCEN “entirely failed to consider the cost of compliance to regulated parties.” On that point, the court noted that the only evidence the government offered on cost consideration was an internal FinCEN memorandum dated “March XX” that was undated, in draft form, and heavily redacted.

Who Challenged It

The case was brought by the Institute for Justice on behalf of Esperanza Gomez Escobar, who owns and runs Novedades y Servicios, a family-run MSB in San Diego. Escobar’s customers are largely people without bank accounts who come in to cash paychecks and wire money to family.

The compliance burden was, by Escobar’s account, impossible for her MSB to absorb. The $200 threshold swept in roughly 99% of Novedades’s monthly transactions, and the complaint alleged that filing the resulting CTRs would require an additional 14 to 17 hours per day. During the single week the order was in effect, Escobar alleges she lost between 50 and 60 percent of her customers after explaining the new reporting requirements. The Institute for Justice argued the lowered threshold amounted to “enlisting [small business owners] as surveillance agents of the government.”

The dynamic is not new. As the President of the National Small Business Association told the Wall Street Journal in 2024 when discussing a separate FinCEN rule, “FinCEN has never dealt with small businesses, and small businesses don’t know who FinCEN is and FinCEN doesn’t know how to regulate small businesses.”

Implications

The Ninth Circuit’s decision is a procedural check rather than a policy reversal. Nothing in the Ninth Circuit’s ruling calls into question the policy objective of targeting cartel finances. The panel’s concerns were exclusively procedural: FinCEN bypassed formal notice-and-comment rulemaking, and the record before the Circuit suggested the agency never accounted for the costs it was imposing on border MSBs.

Financial institutions and their compliance teams should consider the following:

• The injunction does not reduce the underlying compliance imperative. The administration’s commitment to disrupting cartel cash flows has not wavered, and a formally noticed rule is the likely next step.
• For institutions with border exposure, the question is not whether new requirements will come, but when and in what form. FinCEN has every incentive – both political and practical – to return with a formally noticed rule.

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