One of the key theses forming the heart of economist and historian Robert Higgs’ monumental 1987 book, “Crisis and Leviathan” is that politicians tend to create or promote tales of “crises” that “only the government” can solve. Each purported “crisis” sees them push for bigger government control over civilians, and each new claim of power is never relinquished, leading to the term Higgs coined, “the ratcheting effect,” as every new government usurpation and assault on rights piles atop the last.
Thanks to the reporting of a handful of Americans, we have information on an alarming effect caused by an Executive Order targeting foreign drug cartels.
Reason’s Joe Lancaster explains:
“One of President Donald Trump's Day 1 executive orders designated ‘certain international cartels’ as ‘foreign terrorist organizations,’ a classification that according to the State Department ‘play[s] a critical role in our fight against terrorism and [is] an effective means of curtailing support for terrorist activities and pressuring groups to get out of the terrorism business.’"
The claim leverages contemporary American frustration over foreign migrant gangs coming into the US and applies muscle to that leverage with the ever-present American frustration concerning the use of dangerous drugs.
As a result, the move has not received a lot of scrutiny over its scope, and few US presidents who have preceded Mr. Trump on this path have received proper questioning over their acts, either.
Writes Lancaster:
“…(T)he U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) announced a new rule cracking down on cash transactions this week, but only in certain geographical regions. No matter the administration's intent to target cartels, the rule will expand government surveillance of its citizens.
FinCEN ‘issued a Geographic Targeting Order (GTO) to further combat the illicit activities and money laundering of Mexico-based cartels and other criminal actors along the southwest border of the United States,’ according to the announcement. ‘The GTO requires all money services businesses (MSBs) located in 30 ZIP codes across California and Texas near the southwest border to file Currency Transaction Reports (CTRs) with FinCEN at a $200 threshold, in connection with cash transactions.’"
That’s right. 200 Dollars.
Which makes much more visible the previously lesser-noticed FinCEN invasion of privacy, but leaves unscrutinized the linguistic legerdemain driving such virtually unlimited snooping power.
This move substancially grows the police state. In any of these 30 “ZIP” codes, one’s measly withdrawal for a weekend BBQ now could land his name and bank account on Uncle Sam’s naughty list.
And, regardless of the purported goal, it engages in the same kind of warrantless snooping that last year saw author James Bovard sound the alarm about the “Know Your Customer” dragnet being thrown around conservatives.
In a July, 2024 article for the Future of Freedom Foundation entitled “Buy a Bible, Become a Terror Suspect,” Bovard warned of this ever-changing, politically expedient federal snooping/reporting weapon.
“After the January 6 Capitol clash in 2021, the Biden administration targeted average Americans as if they were would-be terrorists. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) bloated its definitions of ‘suspicious behavior,’ warning banks to track “‘extremism’ indicators that include ‘transportation charges, such as bus tickets, rental cars, or plane tickets, for travel to areas with no apparent purpose,’ or ‘the purchase of books (including religious texts),’” the House Judiciary Committee announced in a January report. As Fox News reported, FinCEN “distributed materials to financial institutions that outlined ‘typologies’ of ‘various persons of interest’ and provided the banks with ‘suggested search terms and Merchant Category Codes for identifying transactions on behalf of federal law enforcement.’”
“But,” some supporters of this new mandate might say, “this is different. These are drug lords in a foreign nation or illegal immigrants, and they might be laundering money.”
Constitutionally, none of that matters. When it comes to the powers clearly defined by the US Constitution, the purported wickedness of the target of such unconstitutional activity does not justify the activity.
Bovard went on to outline how the Bidenistas – who feared (and still fear) gun owners and would like to see a “war on gun violence” -- leveraged FinCEN for their purposes:
“If you bought a gun or ammo since 2021, Team Biden bureaucrats may have automatically classified you as a ‘potential active shooter.’ Or maybe your purchases triggered ‘Lone Actor/Homegrown Violent Extremism Indicators.’”
And he added:
“FinCEN encouraged banks to use terms such as ‘TRUMP’ and ‘MAGA’ for ‘identifying transactions on behalf of federal law enforcement,’ according to the House Judiciary Committee. Committee chairman Rep. Jim Jordan (R-OH) complained: ‘This kind of pervasive financial surveillance … raises serious doubts about FinCEN’s respect for fundamental civil liberties.’ The House Committee is therefore demanding information on “federal law enforcement’s mass accumulation and use of Americans’ private information without legal process; FinCEN’s protocols, if any, to safeguard Americans’ privacy and constitutional rights in the receipt and use of such information.’”
The same scrutiny should apply now, and support for, or personal admiration of, the person in an office should not prevent Americans from calling the current administration to task.
Oblivious to the constitutional problems, many Americans might have supported the 1952, Cold-War Era, establishment of a federal mandate that, as Reason’s Lancaster notes, “… first began requiring banks to log and report all cash transactions of $10,000 or more…”
And many Americans might have supported Richard Nixon in 1970 when he and Congress established the “Drug War supporting” Bank Secrecy Act (BSA), also known as the Currency and Foreign Transactions Reporting Act, requiring US-based financial institutions to “assist” the federal government in “detecting” and “preventing” “money laundering.” Specifically, the act required – and still requires -- financial institutions to keep records of cash purchases of negotiable instruments (certificates of deposit, promissory notes, and travelers checks are some examples), to file reports if the daily aggregate per customer exceeds $10,000, and report suspicious activity that may signify money laundering, tax evasion, or other activities the feds deem “criminal.”
Shortly after passage, several groups brought suit for the clear violation of the First Amendment (mandating that the banks keep records), the Fourth Amendment (handing over of records), and Fifth Amendment (protection against self-incrimination) it represented. But the Supreme Court of the United Stated (SCOTUS) in the disastrous 1974 case of “California Bankers Association v. Shultz” ruled otherwise, on every valid claim.
Since then, Congress has expanded the KYC edict several times, including provisions in TITLE III of the USA PATRIOT Act of 2001 which amended the BSA to require financial institutions to establish anti-money-laundering programs that would include new internal policies, procedures, and controls, the hiring of “compliance officers,” ongoing employee training, and testing of their programs through expensive independent audits.
As Bovard and other journalists have noted, regardless of the intent or the laudability of their government goal, the feds’ push for financial institutions to report “suspicious” transactions creates a dragnet that assumes guilt without evidence and exposes private information to the government without any judge issuing a public warrant.
And this new $200 threshold is that KYC imposition on immigration-war/drug-war steroids: every small cash move gets flagged, no probable cause required.
When your local ATM becomes a federal informant, that’s not freedom—it’s a nightmare.