New regulation on money transfers will likely impact San Diego border region

The Trump administration will soon track the names, addresses, and Social Security numbers of many people who live along the southern border and wire money to other countries, according to an announcement from the U.S. Department of the Treasury.

The regulation, which the administration says is needed to combat money laundering by Mexican drug cartels, lowers the threshold required to report cash transfers from $10,000 to just $200 in 30 ZIP codes spanning Texas and California.

The area covered is home to nearly 1 million people. In San Diego County, the impacted neighborhoods include San Ysidro, south Chula Vista, downtown San Diego, Clairmont and Mira Mesa.

Critics of the regulation, which is set to begin in April and be in effect for at least six months, come from across the political spectrum. They say it raises concerns over the expansion of “financial surveillance” and goes against President Donald Trump’s campaign promise to cut back on regulations.

“It is deeply hypocritical for the Trump administration to talk about getting rid of costly regulation and then put this huge costly regulation in place without notice or public comment,” said Aaron Klein, senior fellow at the center-left Brookings Institution.

Officials with the U.S. Department of the Treasury did not respond to a KPBS request for comment.

However, in its announcement of the regulation the department said: “Combatting drug cartels and stopping the flow of deadly drugs into the U.S. is one of the Administrations’ highest priorities.

The new regulation applies to “money service businesses” like Western Union or MoneyGram, but not banks, according to the announcement.

It will almost certainly impact U.S. citizens and residents who regularly send money, known as remittances, to family and friends in Mexico. In 2023, Mexico received $63 billion in remittances — which accounted for 4.5% of its GDP.

The average remittance to Mexico was less than $400 in recent years, according to a report from the Center for Strategic & International Studies.

“This is going to pick up anybody who send their mom money for Mother’s Day,” Klein said. “It’s going to pick up a lot of new immigrants who send small dollar amounts more frequently, but also a lot of established immigrants who send money back home.”

Nicholas Anthony, a policy analyst at the Libertarian CATO Institute, called the new regulation an example of “financial surveillance.”

Compared to social media, where people have control over what they reveal or hide from the world, financial data is far more transparent, he said.

“You can get on social media and lie about that vacation or music festival to score some clout, but your financial statements reveal what you truly did,” he said. “They show where you travel, what you are eating, where you work, who you associate with.”

Anthony noted that most of the impacted zip codes are home to working-class immigrant families.

“The people who are going to bear the biggest cost of this are probably people who are on the lower end of the economic spectrum,” he said. “They don’t have access to traditional routes to get money across the border to family or friends.”

Klein has long been a critic of the overall $10,000 threshold for reporting transactions, arguing that it was established in the 1970s and has never been adjusted for inflation.

“When the law was set you could buy a brand new, fully loaded Cadillac in cash and not trigger a report,” he said. “The idea was these were for really large purchases.”

Adjusted for inflation, the $10,000 threshold should be closer to $75,000 today, he added.

With that context in mind, Klein called Trump’s decision to lower the threshold to $200 for any population “a shocking and mistaken move by this administration.”