Continuing its aggressive use of Geographic Targeting Orders (GTOs) to fight money laundering, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced on July 7 that it was renewing a GTO in Southern California and issuing a new GTO in Texas. The California GTO applies to armored cars and other common carriers of currency at two crossings along the Mexican border in that state. The Texas GTO applies to carriers of currency at eight major ports of entry along the Mexican border in that state. The reporting and recordkeeping requirements imposed by these GTOs are designed to enhance the transparency of cross-border money movements and prevent the attempted exploitation of reporting exemptions by some carriers suspected of moving dirty cash for Mexican drug trafficking organizations.
A GTO is an order issued by the United States Secretary of the Treasury requiring all domestic financial institutions or nonfinancial trades or businesses that exist within a geographic area to report on transactions any greater than a specified value. GTOs are authorized by the Bank Secrecy Act in 31 U.S.C. § 5326(a). Originally, GTOs were only permitted by law to last for 60 days, but that limitation was extended by the USA Patriot Act to 180 days.
As explained in FinCEN’s press release announcing its actions, the GTOs temporarily modify the Report of International Transportation of Currency or Monetary Instruments (CMIR) requirements for common carriers of currency when physically moving more than $10,000 in cash across designated border crossings in California and Texas. The GTOs will require 100 percent CMIR reporting and recordkeeping by common carriers of currency at these border crossings because they eliminate the reporting exemption for these carriers that might otherwise apply to transporting currency from a foreign person to a bank. The enhanced reporting requirements of these GTOs will also require common carriers of currency to note additional information when completing the CMIR. This includes the name and address of the currency originator; the name and address of the currency recipient; and the name and address of all other parties involved in the movement of currency and monetary instruments. This additional information significantly assists law enforcement’s ability to identify and prosecute illegal transportation of currency and disrupt the illicit movement of bulk cash across the southwest border. FinCEN issued the GTOs in close coordination with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and U.S. Customs and Border Protection.
Common carriers of currency subject to the renewed California GTO must continue complying with the enhanced reporting requirements until February 4, 2016. Common carriers of currency subject to the new GTO at ports of entry in Texas must comply with the enhanced reporting requirements beginning on September 17, 2015, and continuing through March 15, 2016.
The Texas border GTO is the fifth such order issued publicly by FinCEN within the past year. Prior GTOs include the California border GTO that was just renewed (prior coverage here); a GTO targeted at businesses located with the Fashion District of Los Angeles (prior coverage here); a GTO focused on exporters of electronics in South Florida (prior coverage here); and a second South Florida GTO aimed at check cashers (prior coverage here).
Businesses that transport currency at border crossing in California or Texas must ensure that they are compliant with the terms of the renewed California border GTO and the newly-issued Texas border GTO. Severe penalties may be imposed for non-compliance with the terms of these GTOs, including the seizure and forfeiture of currency or other monetary instruments pursuant to 31 U.S.C. § 5317. In addition, a partner, director, officer, or employee of any common carrier of currency may be liable, without limitation, for civil sanctions and/or criminal penalties for violation of any of the terms of the GTOs.
Blank Rome’s Anti-Money Laundering & Economic Sanctions practice group can assist companies and individuals in addressing question regarding the scope and requirements of any of the GTOs issued by FinCEN. Please contact Ian M. Comisky or Matthew D. Lee with any questions.