Federal financial surveillance begins in 7 San Diego ZIP codes, sparking lawsuit

A new federal order has taken effect in parts of San Diego County, requiring money services businesses to file detailed reports on any transaction over $200, dramatically lowering the threshold to collect sensitive information on customers and prompting a lawsuit.

The order from the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, known as FinCEN, took effect Monday. It’s a geographic targeting order aimed at combatting money laundering and cartel activity along the U.S.-Mexico border.

It applies to 30 ZIP codes across California and Texas, including seven in San Diego County, from the border to downtown San Diego and as far north as Clairemont and Mira Mesa: 91910, 92101, 92113, 92117, 92126, 92154, 92173.

The new rule requires money services businesses that offer check cashing, wire transfers, money orders and more to file Currency Transaction Reports for anything over $200. Prior to the order, that threshold was $10,000.

“It's pretty ridiculous because it's $200,” said Fiona Ortega, who works at her mother Esperanza Gomez Escobar’s business Novedades y Servicios Plus in Southcrest. “It's not going to get any criminals.”

They estimated 98% of their customers complete transactions worth more than $200. Each CTR takes about 15 to 25 minutes to complete and they said many customers don’t want to share the personal data now required, like their Social Security Number.

“It's been slowing us down because people don't want to provide all their information. It's sensitive information,” Ortega said.

Gomez Escobar is now suing to stop the order, arguing the data collection is unconstitutional.

“The problem is that they're not allowed to take vast amounts of information this way without probable cause,” Gomez Escobar’s attorney Katrin Marquez said. “The Fourth Amendment to the Constitution says that the government can't search you unless it has probable cause, unless there’s a reason to suspect that you have committed a crime or it has a warrant from the court. Here FinCEN has neither of those things. FinCEN is essentially just using a dragnet search to see what is going on without any individualized suspicion.”

Marquez said they’re seeking a temporary restraining order to suspend the rule as the lawsuit makes its way through the legal system, then ultimately requesting the court rule the regulation unconstitutional.

A Treasury official said the department can’t comment on the litigation itself but FinCEN is “committed to working with MSBs to make sure they understand their reporting requirements and are able to comply” with the order.

The Treasury official also said the southwest border “in particular is a point of vulnerability” for “drug cartels and the professional money launderers who support fentanyl and other drug trafficking activities.”

The order is temporary, lasting for 180 days. But Marquez said FinCEN could extend it. Ortega said she’s concerned it could expand.

“They're just putting it in at the borders right now. But this could be something that affects everyone someday,” Ortega said. “You know, if we don't put a stop to this, it could be you next.”