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Treasury Intensifies Scrutiny of Border Money-Service Businesses to Thwart Cartel Money Laundering

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  Published in Business and Finance on Wednesday, December 24th 2025 at 9:17 GMT by breitbart.com

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U.S. Treasury Cracks Down on Border Money‑Service Businesses to Stop Cartel Money Laundering

In a sweeping new enforcement effort, the U.S. Department of the Treasury announced on December 24, 2025 that it will intensify scrutiny of money‑service businesses (MSBs) located along the U.S.–Mexico border. The initiative, described in a Treasury press release and a set of newly‑issued guidance documents, is aimed at disrupting the flow of illicit funds that finance drug‑trafficking cartels and related violent criminal activity. The move follows a series of investigations that identified a growing network of small‑scale financial intermediaries—often referred to as “hawala” or “falcón” operations—used by drug traffickers to launder money across the border.

The Problem: Cartels Using the “Money‑Transfer” Dark‑Matter

Cartels have long exploited the U.S. banking system’s loopholes to move money quickly and covertly. While large, regulated banks are required to file suspicious‑activity reports (SARs) under the Bank Secrecy Act, many border‑area MSBs operate under the radar. They typically process cash‑to‑cash transfers, send money orders, issue traveler's checks, and sometimes run informal courier services. Because many of these businesses are family‑owned or operate under the “small‑business” classification, they were historically exempt from the more stringent AML reporting requirements that larger institutions must follow.

Recent intelligence, however, indicates that the cartels have increasingly turned to these MSBs as a low‑profile means of moving money from drug‑producing areas in Mexico into U.S. financial institutions and then onward to overseas accounts. In several cases, the Treasury’s Office of Terrorism and Financial Intelligence (TFI) identified MSBs that had processed millions of dollars in suspicious transactions with minimal oversight. The Treasury’s enforcement data, drawn from a combination of SARs, criminal indictments, and internal audits, revealed a pattern of “structuring” and “layering” typical of money‑laundering schemes.

New Regulatory Measures

The Treasury’s strategy is multi‑layered:

1. Expanded AML Reporting Requirements
   Under the new guidance—published in the Federal Register on December 22—the Treasury now requires all MSBs with annual transaction volumes exceeding $10 million, as well as those that process cash deposits over $10 ,000 in a single day, to submit SARs for any suspicious activity. The guidance clarifies that “suspicious” includes, but is not limited to, transactions that lack an apparent legitimate purpose, repeat structuring to avoid the $10 000 reporting threshold, or a sudden increase in transaction volume relative to historical patterns.

2. Mandatory AML Compliance Programs
   The Treasury’s TFI has issued a “Compliance and Monitoring Memorandum” that requires all border‑area MSBs to adopt robust AML programs, including customer due‑diligence, transaction monitoring, and regular internal audits. The memorandum cites the “Office of the Inspector General” findings that many MSBs lacked even basic record‑keeping practices.

3. Increased Enforcement Actions
   The Treasury has pledged to pursue civil penalties and criminal charges against non‑compliant businesses. In its press release, the Treasury cited the first case in the crackdown: a family‑owned MSB in San Luis Potosí, Mexico, that facilitated the transfer of $2.3 million in cash to an U.S. correspondent bank. The business was fined $750,000 and had its banking relationship severed. The Treasury also announced that it will collaborate closely with the U.S. Treasury’s Office of Foreign Assets Control (OFAC) to flag any MSBs that facilitate transfers to sanctioned entities.

4. Cross‑Agency Coordination
   The Treasury has formalized partnerships with the Department of Homeland Security’s Customs and Border Protection (CBP), the Drug Enforcement Administration (DEA), and the Federal Bureau of Investigation (FBI). The agencies will share data in real time through a dedicated “Border Financial Operations Hub,” allowing law enforcement to spot anomalous patterns across the entire supply chain—from drug production to money laundering to money movement.

Case Studies and Impact

The Treasury’s enforcement documents include a number of illustrative cases. In one, a “falcón” operation in El Paso, Texas, was found to have served as a front for a cartel’s money‑laundering ring. The business had been processing cash‑to‑cash transfers on behalf of an anonymous client network for over five years, with no apparent legitimate commercial activity. Upon investigation, the DEA uncovered that the money was ultimately funneled into a network of shell corporations that owned real estate in the U.S. and Europe.

In another case, a small MSB in the Rio Grande Valley was caught on camera moving cash through a series of front‑companies, each claiming to be a legitimate payroll‑processing firm. The Treasury’s TFI identified a pattern of “structuring”—transactions purposely kept below the $10 000 threshold—designed to evade reporting requirements. The business was shut down and its owners faced criminal charges under the Money Laundering Control Act.

Community Response

While the Treasury’s action has been praised by anti‑corruption advocates, some border‑area business owners expressed concern that the crackdown could disproportionately affect legitimate small businesses. One local shop owner in Nogales, Arizona, said, “We’re just trying to help people send money to family. I don’t want to be hauled in because of a cartel that’s just using us.” The Treasury has emphasized that the new rules are intended to target only those businesses that knowingly facilitate illicit transactions, and it has set up a “Self‑Report” portal for businesses that want to disclose past violations before facing penalties.

Looking Ahead

The Treasury’s crackdown is the latest chapter in a broader push to disrupt drug‑trafficking financing. In the accompanying Treasury statement, the Secretary of the Treasury noted that the agency would continue to refine its approach, focusing on high‑risk corridors identified by the Department of Justice’s “Drug Corridor Program.” Future steps are expected to include the introduction of a “Border MSB Registration” program, where businesses must register annually and submit detailed transaction logs.

For border communities, the policy signals a double‑edged sword: on the one hand, it promises greater security and a reduction in cartel influence; on the other, it risks squeezing out small businesses that have long relied on informal money‑transfer services. As the Treasury rolls out its new regulations, all stakeholders will be watching closely to see whether the crackdown strikes the right balance between financial integrity and economic vitality.