The Ninth Circuit Court of Appeals has upheld a preliminary injunction that blocks the Financial Crimes Enforcement Network (FinCEN) from enforcing its border cash reporting rule, determining the agency likely violated the Administrative Procedure Act during the rulemaking process.
FinCEN, a bureau of the Treasury Department, issued an order lowering the cash reporting threshold for cross-border transactions to combat money laundering by Mexican cartels. The rule requires banks and financial institutions to file Currency Transaction Reports (CTRs) for larger volumes of cash moving across the US-Mexico border. The threshold reduction was intended to detect and disrupt illicit financial flows tied to drug trafficking organizations.
Plaintiffs challenged the rule, arguing FinCEN failed to follow proper notice-and-comment procedures required by the APA. The APA mandates that federal agencies provide the public with advance notice of proposed rules and a meaningful opportunity to comment before finalizing regulations. The Ninth Circuit agreed, finding FinCEN likely bypassed these procedural safeguards. The court determined plaintiffs demonstrated a reasonable likelihood of success on their claim that the agency violated the law.
The injunction remains in effect, preventing FinCEN from implementing the lowered reporting threshold pending resolution of the underlying lawsuit. This decision hampers federal efforts to track cross-border cash movements tied to cartel activity, which represents a significant enforcement setback.
The ruling reflects broader litigation trends challenging agency action without strict APA compliance. Courts increasingly scrutinize whether agencies follow proper procedural steps, even when their substantive goals are legitimate. Financial institutions operating along the border now need not comply with FinCEN's new reporting requirements under the injunction. The ruling may require FinCEN to restart the rulemaking process and conduct formal notice-and-comment procedures before enforcing any revised border cash reporting rules. The agency faces pressure to address cartel money