Highlights of the Article:
- Order of Geographic Targeting
- Affected ZIP Codes and Areas:
- Business of Financial Services
- Effect on the Need for Reports
- Transactions Covered
- Procedure for Reporting
- MSBs as Tax Preparers
- Sanctions for Non-Compliance
- Steps to Take
Under the Bank Secrecy Act (BSA), the Financial Crimes Enforcement Network (FinCEN) may issue a Geographic Targeting Order (GTO), which places additional reporting or recordkeeping obligations on domestic financial institutions or other companies operating in a particular geographic area for a maximum of 180 days. The GTO might, however, be extended if needed.In certain ZIP Codes in California and Texas close to the southwest border, FinCEN has released a new GTO that affects companies, including tax preparers, who are categorized as money services businesses (MSBs). For transactions involving currency above $200 but under $10,000, this order imposes new Currency Transaction Report (CTR) reporting requirements, which will take effect from April 14, 2025, to September 9, 2025.
Affected ZIP Codes and Areas:
- Imperial County, California: 92231, 92249, 92281, 92283
- San Diego County, California: 91910, 92101, 92113, 92117, 92126, 92154, 92173
- Cameron County, Texas: 78520, 78521
- El Paso County, Texas: 79901, 79902, 79903, 79905, 79907, 79935
- Hidalgo County, Texas: 78503, 78557, 78572, 78577, 78596
- Maverick County, Texas: 78852
- Webb County, Texas: 78040, 78041, 78043, 78045, 78046.
Business of Financial Services
A Money Services Business (MSB) is defined under the rules as any company that fits into any of the following categories:
- Currency Dealer or Exchanger: Companies that deal in currency exchange.
- Check Cashers: Companies that cash checks for people or companies.
- Issuer of Money Orders or Traveler's Checks: Companies that issue money orders, traveler's checks, or other such documents.
- Seller or Redeemer: Organizations that deal in the sale or redemption of stored value, money orders, or traveler's checks.
- Money Transmitter: Companies that specialize in sending money.
- U.S. Postal Service: In particular positions associated with these operations.
Effect on the Need for Reports
- Threshold Reduction: Transactions involving currency of more than $200 but not more than $10,000 now qualify for CTR reporting, when before it was over $10,000.
- Payment Methods: Only currency transactions—that is, the actual exchange of cash—are subject to reporting. Checks, credit cards, and other non-cash payment methods are not always covered by this.
- No Change for Typical CTRs and SARs: In compliance with the BSA and relevant rules, covered firms are still required to submit Suspicious Activity Reports (SARs) when necessary and CTRs for transactions involving more than $10,000 in cash.
Transactions Covered
- Transaction Types: All deposits, withdrawals, currency exchanges, and other payments or transfers made by, through, or to the Covered Business that include currency transactions are covered by the GTO. Transactions involving actual cash, whether it be U.S. money or foreign currency that has been approved as legal tender, are the focus of this.
- Dollar barrier: The lower reporting barrier in this GTO is the main distinction. Transactions above $10,000 are subject to the normal Currency Transaction Reports (CTR) reporting requirement. Transactions above $200 but under $10,000 are required to be recorded under the GTO. This makes smaller cash trades reportable by drastically lowering the barrier.
- Aggregating Rules: Although the GTO mandates that transactions between $200 and $10,000 be reported, companies are exempt from changing their current aggregating procedures unless otherwise required by other laws, such as 31 CFR 1010.313 for transactions above $10,000.
- Forms of Payment Not Included: In particular, the GTO applies to cash transactions. It excludes credit cards, cheques, and other non-cash payment methods. The emphasis is on transactions involving actual cash exchanges, withdrawals, or deposits.
Procedure for Reporting
- CTR Filing: For each transaction above the $200 GTO level, tax preparers designated as MSBs are required to electronically submit a CTR using the BSA E-Filing System. Field 45 of Part IV of the report must have the term "MSB0325GTO" when submission.
- Reporting Deadline: Within 15 days of the covered transaction, reports must be submitted. This timeline guarantees that the government gets timely information on currency trades that could be relevant because of questionable activity.
- Record Retention: For a minimum of five years after the final day the order goes into effect, Covered Businesses are required to keep all documentation of their compliance with the GTO, including submitted reports.
MSBs as Tax Preparers
Tax preparers in certain areas who provide services that make them eligible to be MSBs under the GTO must comply with these stricter reporting requirements. It is vital to remember that a tax preparer is not automatically considered an MSB just because they receive cash fees for tax preparation. Incorporating any of the aforementioned activities into their company operations qualifies them as MSBs.
Sanctions for Non-Compliance
Non-compliance may result in serious consequences, such as potential criminal penalties and civil fines of up to $286,184 per infraction.
Steps to Take
In the impacted locations, MSBs need to:
- To find out which of their transactions are subject to the GTO requirements, review them.
- Within the allotted 15 days for reporting, make sure that the systems and procedures are in place to record and report the relevant information about these transactions.
- If you are unclear about how to interpret the GTO requirements, get advice from legal or compliance professionals.
Please get in touch with FinCEN or consult official paperwork for further details.
Take the initiative. Continue to comply.
