EL PASO, Texas—On Friday, two El Paso money services businesses subject to intrusive, illegal, and unconstitutional financial surveillance sued the Financial Crimes Enforcement Network (FinCEN), part of the U.S. Treasury Department. They are represented by the Institute for Justice (IJ). Ashley Light, owner of Valuta Corporation, and Andy Payan, of Payan’s Fuel Center, recently testified at a hearing in San Antonio about how the reporting requirement hurts their businesses and customers.
Federal courts in San Antonio and San Diego have already enjoined the unprecedented requirement as unconstitutional under the Fourth Amendment, which protects against unreasonable searches, and as illegal for failing to comply with laws governing the actions of federal agencies. While the San Antonio court halted the rule with a preliminary injunction for companies named in the lawsuit, the injunction did not apply to Ashley or Andy’s businesses. Ashley and Andy have requested that the court grant them a temporary restraining order that would halt the order as soon as possible.
“Valuta has served our community for over 40 years, and now the government’s additional cash transaction surveillance is squeezing our business out of existence,” said Ashley. “I stay up late into the night to fill out the required paperwork, and we are losing customers. I hope this lawsuit can quickly stop the government from treating so many of our transactions, and honest customers, as suspicious.”
On April 14, FinCEN implemented an order requiring certain businesses in targeted ZIP codes to report all cash transactions above $200. The normal reporting requirement is for cash transactions over $10,000. By dropping that to $200, FinCEN is treating virtually every honest, hardworking person as a potential criminal whose name and financial information will go into a database for criminal investigators to use. The ZIP codes in Texas targeted include areas of El Paso, Laredo, Eagle Pass, and Brownsville.
Valuta is a money services business that helps customers exchange currency, cash checks, wire money worldwide, and get money orders. Payan’s provides check cashing. The reports mandated by the order require customers to provide detailed information including birthdates, Social Security or EIN numbers, and home addresses.
“The whole reason we have a Fourth Amendment is so that the government can’t demand whatever information it wants about people’s lives. It has to get a warrant,” said IJ Senior Attorney Andrew Ward. “And if the government is going to impose crushing paperwork obligations, it needs a good reason. No one thinks the cartels are laundering money in $200 increments.”
The lawsuit asks the El Paso court to follow the decision in San Antonio by ruling that the order violates the Fourth Amendment’s prohibition on unreasonable searches. One of the foundational reasons for the creation of the amendment was to prevent the government from being able to acquire “general warrants”—wide-ranging warrants that failed to provide probable cause that a crime was being committed.
IJ also secured an injunction against the order on behalf of a California money services business. Unlike the ruling in Texas, the decision covered all targeted businesses in California.