U.S. Cracks Down on Small Cash Transactions to Combat Cartels Cash Flow
On March 15, 2025, the United States unveiled a bold new strategy in its ongoing war against Mexican drug cartels, zeroing in on small-cash transactions along its southwestern border. The U.S. Treasury Department effectively slashed the reporting threshold for money service businesses operating near Mexico from thousands of dollars to just $200, aiming to disrupt the financial pipelines that sustain cartel operations – particularly those tied to the deadly fentanyl trade. The measure adds further tension to the current political back-and-forth seen between the United States and Mexico, as well as other top trading partners, several of which have been subjected to increasing threats of stringent import tariffs which would stifle their respective economies. However, with the U.S. government enacting a significant number of additional measures to help stop the flow of illicit drugs being funneled across the border and to assist in hindering the migration of undocumented aliens into America that have particularly targeted its neighbor to the south, previous pledges of cooperation by the Mexican government to this point could go by the wayside.
The Treasury’s latest order targets a critical vulnerability in U.S. anti-money laundering defenses: frequent, low-value cash transfers that cartels use to collectively launder billions in drug profits. The Wall Street Journal, citing a January report released by the Center for Strategic & International Studies, writes that in 2023 alone, Mexico received “$63.3 billion in remittances from abroad, which amounts to about 4.5% of its gross domestic product”, with remittances being the single largest source of foreign income for the country as a whole – even topping the funds brought in directly from foreign investment.2 Additionally, the average remittance transaction fell well below that of the previous reporting threshold of $10,000, amounting to approximately $390.2 These findings lend to why this area has become a prime target for U.S. intervention.
The Treasury’s new Geographical Targeting Order (GTO) will cover a total of 30 zip codes in both California and Texas, forcing businesses like check-cashing outlets, currency transmitters and wire service firms to now flag any cash transaction over $200, a threshold so low that it captures routine exchanges that were previously ignored. U.S. officials argue information collection in this regard will help expose the intricate web of money laundering that fuels violence and further feeds the opioid crisis that kills tens of thousands of Americans on an annual basis. Government officials believe that the data collected from these new transaction reports could be the key to dismantling networks that thrive on anonymity. All told, the policy builds on recent moves under the Trump administration, reflecting a hardline stance that seeks to choke cartel finances at their source.
The Trump Administration has stayed on the offensive against Mexican cartels as the respective wars on drugs and illicit finance rages on. The newest announcement comes just a few short weeks after the President signed a groundbreaking executive order which designated a total of eight Mexican drug cartels and Latin-American crime organizations as foreign terrorist organizations (FTOs) and Specially Designated Global Terrorists (SDGTs). At the time, these measures better equipped U.S. law enforcement with tools to target any cartel affiliates, from money launderers to gun suppliers, providing material support or resources to these organizations, while also marking representatives of these FTOs as inadmissible and/or removable from the United States by law. Further, any U.S. financial institution that becomes aware that it has possession of or control over funds in which a designated FTO or any of its agent has an interest must retain possession of/control over the funds and report these funds to the Office of Foreign Assets Control (OFAC).
As a result of these measures, Mexico now finds itself in a bind. While its government and financial institutions have voiced support for tackling cartel money, the practical fallout is daunting. Bloomberg notes that Mexican banks and regulators are grappling with a flood of new reporting requirements, straining systems already plagued by corruption and underfunding.1 Compliance could overwhelm smaller operators, potentially shuttering legitimate businesses or driving cash flows into less traceable channels like cryptocurrency, which would be a win for the cartels. Mexican officials, led by President Claudia Sheinbaum, have also hinted at their unease with the U.S. unilateral tactics to date, especially after the terrorist designation – vehemently opposed by the Sheinbaum cabinet – initially stoked tensions. Sheinbaum’s administration insists on sovereignty and remains wary of foreign overreach.
Further compounding the issues at hand is the fact that, much like American businesses conducting transactions on behalf of Mexican persons of interest, Mexico’s financial sector risks U.S. sanctions for non-compliance, yet faces domestic criticism for giving in to American pressure. The opposition of U.S. intervention believes that the new focus on following the cartel money flows sidesteps heavier issues like U.S. drug demand and the southward flow of American guns, which Mexico blames for arming the cartels. Meanwhile, the U.S. presses forward, betting that tighter financial controls will yield results where investigative and law enforcement efforts have faltered to date. Many believe however that this move will just force cartels to adapt on the fly, shifting focus from these small-value transactions to bulk cash smuggling and digital currencies that could easily bypass this net. As this policy rolls out, much of its potential success rests on an uneasy partnership. The U.S. wants actionable intelligence; Mexico wants respect for its autonomy. For now, the $200 threshold is a litmus test – both of the cartels’ resilience and of how well these two nations can align against a shared enemy or risk unraveling in front of an international audience.
Citations
1. O’Boyle, Michael. “Mexico’s Assurances to Us on Drug Cartels Collide with Compliance Onslaught – Bloomberg.” Bloomberg, 14 Mar. 2025.
2. Vanderford, Richard. “U.S. Targets Small Currency Transactions to Fight Cartels.” The Wall Street Journal, 11 Mar. 2025.