Scrolling through Instagram one day in March, Ashley Light froze on a post showing a map of Texas with her ZIP code highlighted.
Then a local reporter showed up. A few days later her bank called and a letter from the state arrived, all confirming what she had seen on social media. Her borderland neighborhood in El Paso was being targeted by the Trump administration.
Just a few months earlier, after her father died, Ms. Light had taken over her family’s small money services business, the Valuta Corporation, which offers check cashing and currency exchange. Now her company — and all others like it in 30 ZIP codes scattered across Texas and California — was suddenly required to report any transaction of $200 or more, along with personal identifying information about the customer, to the government. For decades, the reporting threshold had been set at $10,000.
The Treasury Department billed the enhanced scrutiny of already highly regulated businesses as a crucial element of President Trump’s strategy to kneecap Mexican cartels and stem the flow of illicit drugs and money across the southern border.
But owners caught in the crackdown said they found the new regulations crushing. And the theory that they may be blind participants in violent criminals’ schemes to conceal dirty money bore little resemblance to the border communities and working-class customers they knew.
A number of businesses sued, and judges in both states have found that the policy is most likely unlawful. In both cases, judges expressed skepticism that the extra regulations would be effective in turning up the kind of sophisticated transnational operators the administration is hunting.
“While the government’s goal of ferreting out illegal drug money laundering is laudable, the tactic employed here is akin to using a blunderbuss to target a fly,” wrote Judge Fred Biery of the U.S. District Court for the Western District of Texas. The government’s methods, he continued, would most likely wreak “economic destruction on surrounding law-abiding citizens.”
On May 30, Valuta filed a new, separate legal challenge, saying the “ruinous burdens” imposed by the Trump administration had stretched it to the brink of collapse.
Trump’s Policy Shift
Scott Bessent, the Treasury secretary, said in March that the new policy was devised to pick up any signal that cartels were taking advantage of the U.S. financial system.
The effort, led by the department’s Financial Crimes Enforcement Network, or FinCEN, focused on 30 ZIP codes in California and Texas because of their proximity to a major border crossing, according to an undated internal memo the government filed in court.
The memo said the network had decided not to include border counties in Arizona or New Mexico, but “may consider expanding” the scope later on. In its current form, the order is set to expire in mid-September and may be extended.
In response, money services businesses in Texas and California filed two lawsuits that accused the government of a misguided dragnet campaign with the potential to destroy their livelihoods — all without making a dent in cartel operations. A libertarian public interest law firm, the Institute for Justice, has helped represent a small coalition of companies in each state.
“The notion that these border ZIP codes are a wild west where everybody is operating with a wink and a nod and letting cartel thugs with duffel bags full of money launder their cash is false, like ridiculous,” Jeff Rowes, a senior attorney with the institute involved in the challenges, said in an interview.
Indeed, Judge Biery said that a man accused of dealing drugs and laundering money — who appeared before him in a separate case — chuckled and smiled when asked whether he would ever use a “casa de cambio,” or money services business, to “convert dollars to pesos in $200 to $1,000 denominations to launder the drug money.”
“No,” the man said. His method was straw real estate purchases.
“Had the colloquy occurred in text messages,” Judge Biery wrote in a recent filing, “he might have used ‘LOL.’”
The government’s focus on money services businesses is just one piece of Mr. Trump’s domestic agenda related to the southern border. He has mused about unleashing the U.S. military on Mexican drug cartels, and has cited fentanyl trafficking as justification for tariffs on both Canada and Mexico as well as dramatic immigration restrictions.
House Republicans last month passed his signature policy bill, which proposes a new tax on remittances, the money sent back home by immigrants. If the bill becomes law, or if the Trump administration expands the order from the Financial Crimes Enforcement Network, as it has suggested it might, the stress to the larger financial system that allows cash to flow back and forth could be considerable.
Much of the business Valuta does is intensely local, converting dollars and pesos for tourists, people seeking affordable medical care in Mexico, and workers and relatives visiting family.
“Construction worker, waitress, teacher, retiree; it’s Amazon employee, photographer,” Ms. Light said of her clientele. “It’s just kind of a cross section — nurse, baker — they’re just normal people.”
The original lawsuits, filed in April, contend that nearly every transaction these money services businesses handle is typically at least $200, and that merely being located near the southern border had made them pawns in a sprawling data-harvesting operation.
They argue that drug cartels are more likely to use China-based money launderers and cryptocurrency to move cash in bulk. Anyone inclined to send funds in small batches could simply move to a nearby ZIP code to avoid scrutiny, the filings noted.
“To find more needles, FinCEN is exponentially increasing the size of the haystack,” Mr. Rowes and his colleagues wrote.
A spokesman for the Financial Crimes Enforcement Network declined to comment on the lawsuits, but said that drug traffickers and money launderers often “introduce smuggled and illicitly generated cash into the legitimate financial system.” They pointed to findings in a report the office published in April, which found that 32 percent of transactions tied to the fentanyl supply chain were made through money services businesses.
The network has issued similar geographic targeting orders in the past, including in major operations during the Obama administration.
In 2014, it targeted more than 2,000 businesses in Los Angeles’s fashion district during an operation focused on clothing wholesalers and other businesses cartels were using to purchase products in bulk that could be resold in Mexico. It used the same tactic in Miami in 2015, that time focusing on around 700 companies to disrupt a scheme that involved electronics exporters.
In both those cases, the cutoff was any cash transaction of at least $3,000.
A ‘Blanket of Suspicion’
Ms. Light inherited Valuta from her parents, who started the business in 1981. When Texas began regulating the industry years later, Valuta received the state’s first operating permit — license no. 1. For decades, state officials relied on her parents’ expertise when it came time to update the rules, she said. Auditors who were first starting out would come in to train.
In 2024, under the previous $10,000 threshold, the company submitted just over 120 reports to the federal government. Between April 14 and May 14 of this year, Ms. Light said she processed almost 1,500.
Ms. Light said longtime customers were uneasy about handing over their identification, their Social Security numbers and other personal details for everyday transactions, knowing that their information was headed into a federal database.
“It kind of throws this blanket of suspicion over the customers, over the businesses,” she said.
In a sworn statement filed as part of her lawsuit, Ms. Light said she saw at least 10 potential customers a day leave once they learned of the requirements. Once, she said, she lost 10 customers in an hour.
In the statement, Ms. Light said that she and her general manager — Valuta’s only other employee able to fill out the reports — had increased their working hours by 50 percent. Overtime pay is not an option. And then there is the threat of financial penalties for mistakes or late filings. Reports are due within 15 days of each transaction, and even accidental errors carry a potential $1,400 fine per flawed report.
“We have to make sure everything is correct before we file. We cannot risk mistakes, or file too late,” she wrote, because a pileup of fines could bankrupt her.
Other owners along the border recounted similar burdens.
One business involved in the Texas lawsuit that used to file five reports per month now anticipates needing to submit around 6,000, according to a court filing. Another projected an increase to 7,276 reports per month from 31. Even by the more bullish estimate of around 20 minutes per form that the government has insisted is more realistic, that would require an additional workload of more than 2,400 hours per month, or around 300 additional eight-hour shifts.
Andres Payan Jr., another business owner who testified in the Texas case but is not a plaintiff, said his small gas station convenience store was swept up in the Treasury Department’s policy because of the check cashing service it offers. Since the new policy took effect, he said, customers had dropped by 30 percent.
“I can’t speak directly for them, but I think because some might have an apprehension about giving, you know, a clerk at a gas station their Social Security number,” Mr. Payan said.
Mr. Payan has since joined Ms. Light in the new, separate lawsuit filed in Texas last month.
In the California case, Judge Janis L. Sammartino, an appointee of President George W. Bush, barred the government from enforcing the new policy throughout the state’s southern district, exempting all the affected businesses in San Diego and Imperial County.
But Judge Biery, a Clinton appointee, limited the scope of his relief to just the plaintiffs in the original case before him, meaning a majority of companies in the Texas ZIP codes are still subject to the Financial Crimes Enforcement Network’s new rules. Ms. Light’s lawsuit seeks to change that, asking another federal judge to expand the injunction to all of Texas.
“I don’t know if we’re just the guinea pigs and this is going to be what they roll out for everyone, or if it really is just a temporary thing — which I am just praying it is — because I cannot see how this is sustainable,” she said.
Zach Montague is a Times reporter covering the U.S. Department of Education, the White House and federal courts.
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