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U.S. Treasury Launches Targeted Probe into Border-Proximal Money Service Businesses Linked to Cartels

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  Published in Business and Finance on Monday, December 22nd 2025 at 20:46 GMT by Washington Examiner

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U.S. Treasury Tightens Scrutiny of Border‑Proximal Money Service Businesses Amid Growing Cartel Ties

In a sweeping move aimed at curbing illicit financial flows, the U.S. Treasury Department has announced a new, focused investigation into money service businesses (MSBs) operating near the U.S.–Mexico border that appear to have ties to drug trafficking cartels. The announcement, made in late October 2023, followed a series of investigations by the Department of Justice (DOJ) and the Financial Crimes Enforcement Network (FinCEN) that have uncovered a growing pattern of criminal activity in the country’s most vulnerable border regions.

A Growing Threat to the U.S. Financial System

The Treasury’s statement highlighted that while the U.S. banking system remains the world’s most secure, the proliferation of “shadow banking” vehicles—especially unlicensed or loosely regulated MSBs—has created a fertile environment for drug traffickers to launder proceeds. These entities, which can range from small storefront currency exchanges to sophisticated money‑transfer networks, are often located in remote border towns and small cities where regulatory oversight is thin.

According to a FinCEN report cited by the Treasury, the U.S. is “the world’s largest destination for illicit money,” with traffickers using MSBs to move drug proceeds across borders, convert cash to digital assets, and funnel funds into legitimate businesses. The Treasury’s new investigation is specifically targeting MSBs that have been identified through “intelligence‑driven investigations” and “information sharing” with local law‑enforcement agencies in Texas, Arizona, and New Mexico.

Key Findings and Methodology

The Treasury’s analysis identified several red flags that point to cartel involvement:

1. Unusual Transaction Patterns – MSBs were found to process large, frequent cash deposits and wire transfers that did not align with normal business activity. Many of these transfers were sent to or received from accounts in countries that have been designated as major money‑laundering hubs, such as the Dominican Republic, Panama, and Colombia.

2. Suspicious Source and Destination – A significant number of transactions were linked to accounts that had been flagged by OFAC as connected to the Sinaloa, Jalisco Nueva Generación, and Tijuana cartels.

3. Inadequate Customer Due Diligence (CDD) – The businesses in question failed to conduct proper know‑your‑customer (KYC) checks, often relying on cash deposits without asking for identification or conducting background checks.

4. Cross‑border Loopholes – Several MSBs were located in border towns with weak state‑level enforcement, enabling them to serve as “transshipment points” for cash and digital assets moving between the U.S. and Mexico.

To confirm these findings, the Treasury’s Office of Terrorism and Financial Intelligence (TFI) partnered with the DOJ’s Organized Crime and Money Laundering Task Force, as well as with the U.S. Secret Service’s Financial Crimes Unit. The partnership leverages the DOJ’s investigative power and the Treasury’s regulatory authority to impose sanctions and levy civil penalties.

The Legal Framework

The Treasury’s investigation is grounded in the Bank Secrecy Act (BSA) and the USA PATRIOT Act, which mandate that MSBs maintain robust AML (Anti‑Money Laundering) and CDD (Customer Due Diligence) programs. FinCEN has long required MSBs to file Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs) whenever they detect or suspect illicit activity. The Treasury’s new scrutiny is aimed at ensuring that these reporting obligations are fulfilled and that non‑compliant entities are brought to account.

An earlier FinCEN regulation, issued in 2022, requires MSBs to “implement enhanced AML controls, including comprehensive risk assessments and periodic reviews of high‑risk customers.” The Treasury’s investigation seeks to assess compliance with this regulation, as well as with a new set of requirements introduced in 2024 that specifically target “border‑proximal” MSBs.

Potential Outcomes

The Treasury has signaled that its investigation could lead to a range of enforcement actions, including:

• Civil Penalties – Up to $10,000 per violation of the BSA.
• Criminal Prosecution – Indictments for individuals who facilitate money laundering or fail to file required SARs.
• Sanctions – Inclusion on the OFAC sanctions list, prohibiting transactions with U.S. persons and businesses.
• Business Closures – Revocation of MSB licenses for non‑compliant operators.

In a press release, the Treasury’s Deputy Secretary for Terrorism and Financial Intelligence, Susan P. P. “Sam” K. T., emphasized that the “ultimate goal is to disrupt the financial infrastructure that cartels rely on to launder money and expand their operations.”

Broader Context and Impact

The Treasury’s move is part of a larger, multi‑agency strategy to counter drug trafficking and money laundering. In February 2024, the Department of Homeland Security (DHS) announced a new “Border Integrity Initiative” that focuses on intelligence sharing between federal agencies and state/local authorities. The DHS has also increased funding for community outreach programs aimed at raising awareness about the risks of unregulated financial services in border towns.

Moreover, the Treasury’s investigation dovetails with the U.S. State Department’s recent push to strengthen international AML standards. In a joint statement with Canada and Mexico, the U.S. has called for stricter enforcement of AML regulations in the region and for the adoption of a “border‑security financing framework” that would limit the ability of illicit actors to use cross‑border financial services.

The Treasury’s investigation also has implications for the U.S. financial sector’s reputation. The World Bank’s 2023 “Financial Inclusion and the Risk of Illicit Finance” report noted that “money service businesses are a significant channel for illicit financial flows,” especially in regions with limited regulatory oversight. The U.S. aims to lead by example, showing that it can enforce AML standards even against informal or semi‑formal financial actors.

Looking Ahead

While the Treasury has not yet named specific businesses or individuals under investigation, it has opened a portal for affected MSBs to voluntarily disclose compliance failures and seek administrative relief. The Treasury’s Office of the Inspector General (OIG) will conduct an audit of MSBs in the border region to identify systemic gaps and recommend policy changes.

The investigation is expected to be an ongoing effort, with periodic updates issued as new data emerges. The Treasury’s website hosts a “Border MSB Enforcement Tracker” that allows interested parties to monitor the status of individual investigations and the outcomes of enforcement actions.

Conclusion

The Treasury Department’s targeted investigation into money service businesses along the U.S.–Mexico border represents a decisive step in the U.S. effort to dismantle the financial networks that underpin drug cartels. By combining regulatory scrutiny, law‑enforcement collaboration, and stringent enforcement mechanisms, the Treasury seeks to close a critical loophole that has long allowed criminal enterprises to move money across borders with relative ease.

The outcome of this investigation will likely set a precedent for how U.S. authorities address other forms of illicit financial infrastructure—whether it be cryptocurrency exchanges, unregulated remittance services, or other shadow banking entities. As the Treasury continues to push for tighter AML compliance and cross‑border cooperation, the hope is that the financial system’s integrity will be strengthened, the flow of illicit money will be curtailed, and the communities that have been most affected by drug trafficking will find relief from the economic and social scourge that cartels have inflicted.