Treasury Department Increases Surveillance of Financial Transactions

The Treasury Department has issued an order to increase surveillance of financial transactions worth as little as $200 across businesses along the U.S. southwest border. This move has raised concerns among privacy advocates, including those within the cryptocurrency industry.

Questions have emerged regarding whether the directive applies to crypto transactions as well. However, experts told Decrypt that digital asset owners shouldn’t be overly concerned. Despite raising issues about Americans’ financial privacy rights, the order primarily targets cash transactions and does not affect individuals sending or receiving digital assets via platforms like Coinbase.

Neeraj Agrawal, Communications Director at Coin Center, stressed that although the order focuses on cash, it primarily targets businesses akin to Western Union.

The temporary order issued by FinCEN mandates money services businesses in 30 zip codes across California and Texas to report cash transactions over $200, significantly reducing the standard reporting threshold of $10,000. This includes reporting the name, address, and social security number of the individual initiating the transaction, alongside the transaction details.

According to Secretary of the Treasury Scott Bessent, the directive aims to address the “significant risk to the U.S. financial system” posed by cartels, drug traffickers, and other criminal activities in the region.

Money laundering through money orders and wire transfers serves as a financial support for these criminal organizations, allowing them to continue their illegal operations, which often lead to violence and corruption. Nevertheless, immigrants and unbanked individuals also depend on these services for remittances and bills.

While monitoring transactions in border towns could help diminish drug cartel activities, the implications of the order could impose severe invasions into ordinary people’s lives. Nick Anthony from the Cato Institute highlighted that this could significantly affect lower-income individuals who frequently use alternative financial services, stripping away their sense of financial privacy.

Though crypto firms are exempt from this order, the new regulations could raise concerns for digital asset holders. Anthony remarked that this serves as an eye-opener regarding the limitations of the Fourth Amendment concerning financial privacy.

The Treasury’s order may push businesses to report transactions below the new $200 threshold as well. Money services businesses are legally required to flag transactions that seem to be structured to evade reporting requirements.

Consequently, a transaction of $185 could prompt reports to the U.S. Treasury, essentially transforming the $200 threshold into a $0 threshold.

These stringent surveillance measures might compel clients of Western Union and MoneyGram to seek crypto as an alternative. Anthony noted that this shift should be a personal choice based on individual needs rather than a forced reaction to constrained options.