Victory for Small San Diego Business! Federal Appeals Court Rules Against Ruinous Financial Surveillance of California Money Services Businesses
SAN DIEGO—San Diego small business owner Esperanza Gomez can continue to operate her money services business free of ruinous financial surveillance after a federal appeals court ruled today in her favor. The U.S. 9th Circuit Court of Appeals upheld a lower court order directing the federal government to halt a targeted financial surveillance rule aimed at California money services businesses (MSBs). Esperanza sued with the Institute for Justice (IJ), a national nonprofit law firm that also sued to protect Texas businesses from the same surveillance.
“I am very relieved to have my victory confirmed by the court,” said Esperanza. “If the rule had gone into effect, I don’t think I could have kept my business. I’m also proud that my win has saved many similar businesses.”
The panel’s 2-1 decision determined that FinCEN’s order violated the Administrative Procedure Act, which sets limits on government regulators, and another federal law. The majority found that the government lacked the authority to impose the regime and that it was required to provide a comment period ahead of time.
“We’re thrilled,” said IJ Senior Attorney Andrew Ward. “FinCEN doesn’t have the power to snap its fingers and impose massive new compliance burdens any time it wants.”
Esperanza’s business provides check cashing, money transfers, and money orders—services that are vital to working class customers, many of whom do not have bank accounts. Customers cash paychecks, send money to family, and take out money orders for things like paying the rent.
In March 2025, the Financial Crimes Enforcement Network (FinCEN) issued 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. The 30 targeted ZIP codes were located in Texas and California—with many near El Paso and San Diego—and cover an area with a population of over a million people.
For Esperanza, there were literally not enough hours in the day to complete the required paperwork, since it would take her 30 hours to file reports for the number of transactions she used to process daily. While the rule was in effect, she was also losing customers who were understandably reluctant to hand over personal information.
After the time for the original order ended, FinCEN has issued a second and then third order which expanded reporting to parts of Arizona and New Mexico but raised the transaction limit to $1,000.
In Texas, two federal courts have issued preliminary injunctions against the rule. The U.S. 5th Circuit Court of Appeals is currently considering the government’s appeal in one of those cases and may issue a decision at any time. A fourth case, pending in Arizona, will be governed by the new decision.
