Novedades Y Servicios, Inc. v. Financial Crimes Enforcement Network
Case Overview
A corporation operating in Southern California as a Money Services Business sued the Department of Treasury over the new Geographic Targeting Order from the Financial Crimes Enforcement Network which requires businesses along the southern border to file Currency Transaction Reports with FinCEN at a $200 threshold.
The Application
Novedades Y Servicios challenges the GTO as either: (1) a substantive rule requiring notice-and-comment rulemaking rather than an enforcement action, given the dramatic $9,800 threshold reduction; or (2) an arbitrary and capricious exercise of discretion lacking reasoned explanation under Motor Vehicle Mfrs. Ass'n v. State Farm.
The Conclusion
The case remains active; the court will determine whether the GTO falls within FinCEN's delegated authority, whether its dramatic threshold reduction constitutes a substantive rule requiring formal procedures, and whether the agency provided adequate reasoned justification for the order.
Case Analysis
Overview
A corporation operating in Southern California as a Money Services Business sued the Department of Treasury over the new Geographic Targeting Order from the Financial Crimes Enforcement Network which requires businesses along the southern border to file Currency Transaction Reports with FinCEN at a $200 threshold.
Issue
Whether FinCEN's Geographic Targeting Order requiring Money Services Businesses in southern border regions to file Currency Transaction Reports at a $200 threshold (rather than the standard $10,000) is authorized by the Bank Secrecy Act and complies with the Administrative Procedure Act's procedural requirements.
Rule
Under 31 U.S.C. § 5318, FinCEN may issue Geographic Targeting Orders requiring financial institutions in specified regions to file reports; however, such orders must remain within statutory authority and comply with APA notice-and-comment procedures unless properly characterized as an enforcement action.
Analysis
Novedades Y Servicios challenges the GTO as either: (1) a substantive rule requiring notice-and-comment rulemaking rather than an enforcement action, given the dramatic $9,800 threshold reduction; or (2) an arbitrary and capricious exercise of discretion lacking reasoned explanation under Motor Vehicle Mfrs. Ass'n v. State Farm.
Conclusion
The case remains active; the court will determine whether the GTO falls within FinCEN's delegated authority, whether its dramatic threshold reduction constitutes a substantive rule requiring formal procedures, and whether the agency provided adequate reasoned justification for the order.
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