Following the September 10, 2014 historic seizure of $100 million in cash from the execution of approximately 70 business search warrants in the Los Angeles Fashion District, the Financial Crimes Enforcement Network (FinCEN) issued a Geographic Targeting Order (GTO) on October 2, 2014 that will affect more than 2,000 businesses in Los Angeles.
FinCEN, a bureau of the U.S. Department of Treasury, exercised its authority to issue a GTO, which is a rarely invoked tool, aimed at deterring money laundering and identifying potential illegal sources of currency being accepted by small business owners. The GTO imposes strict reporting and recordkeeping requirements on businesses that are covered under the GTO, including, but not limited to, garment and textile stores, transportation companies, travel agencies, electronic stores, and beauty supply stores.
The GTO was issued at the request of the U.S. Attorney's Office in the Central District of California, whose investigations have revealed that businesses in the Los Angeles Fashion District routinely accept over $10,000 in cash from unknown individuals who were making payments on behalf of customers in Mexico and Colombia.
Therefore, for a period of 180 days, starting on October 9, 2014, a covered business is required to file a Form 8300 when it receives in excess of $3,000 in currency in one transaction (or two or more related transactions within a 24-hour period). A covered business must also ask for and report information about the person delivering cash. In fact, the GTO makes it unlawful for a business to accept cash from an individual who does not provide an acceptable form of identification and who refuses to provide a telephone number, among other requirements. Each covered business is also responsible for monitoring compliance of the GTO for its officers, directors, employees, or agents.
This GTO is the kind of regulatory action one would expect to see following the massive federal raid on September 10, 2014. We can also expect to see increased scrutiny by FinCEN and other federal law enforcement agencies on the lookout for businesses and other "gatekeepers" who evade federal currency reporting requirements.