While the Treasury compels money transfer offices to report suspected immigrants, Homeland Security is directing local police to stop people based on what it deems suspicious financial activity.
President Donald Trump has attacked the Internal Revenue Service for allegedly persecuting Americans. Yet his administration is quietly expanding a far more invasive level of financial surveillance over the public. The Department of Homeland Security has established a covert unit that directs Americans to local law enforcement based on “suspicious” financial transactions, according to recent court filings. At the same time, the Treasury Department is fighting to preserve a program that would require money-transfer offices to report suspected illegal immigration.
Kyle William Olson, a California-licensed marijuana grower, was pulled over and searched by the Montana Highway Patrol, who later charged him with a DUI and possession with intent to distribute. Although the troopers claimed the traffic stop was for an obstructed license plate, Olson’s defense team obtained documents showing that the DHS had flagged him to local police for “financial activity patterns commonly associated with illicit narcotics activity,” which he later disclosed to 404 Media.
Specifically, the document is a report from the Predictive Intelligence Targeting Team in the U.S. Border Patrol’s Spokane, Washington sector, which cross-referenced Olson’s banking data with arrest records and with “additional law-enforcement sensitive records” from an unspecified source. “Based on this analysis, I relayed the information to [Montana Highway Patrol] Sergeant James Beck as law-enforcement-sensitive situational awareness to support general interdiction efforts and officer safety considerations,” Border Patrol Agent Matthew Frank Phelps wrote in the report.
It wasn’t the first time DHS has sent local police to pull over drivers. Border Patrol and Immigration and Customs Enforcement (ICE) operate a nationwide network of license-plate cameras and flag drivers with suspicious “patterns of life” to local officers, who then stop the drivers under another pretext. “The beautiful thing about the Texas Traffic Code is there are thousands of reasons you can stop a vehicle for,” said Bexar County Sheriff’s Deputy Joel Babb in a deposition for a lawsuit brought by the libertarian Institute for Justice against these searches.
But Olson’s case reveals that banking records are also being folded into this surveillance—alongside the existence of ominous-sounding “predictive intelligence targeting teams.” The DHS would not explain to 404 Media how it obtained private citizens’ bank records. Agencies within the department have been quietly amassing vast quantities of data on the American public. For instance, ICE has gained access to an industry database containing 1.8 billion insurance claims and 58 million medical bills, according to an investigation by 404 Media last year.
The Treasury’s Financial Crimes Enforcement Network (FinCEN) requires banks to report customers suspected of money laundering under the PATRIOT Act of 2001. And the Trump administration has attempted to wield this authority against immigrants. Last year, FinCEN ordered money services businesses such as Western Union and MoneyGram to report all large transactions in certain border counties, and to be vigilant for “cross-border funds transfers involving illegal aliens.”
In response to lawsuits brought by small-business owners and the Institute for Justice, the U.S. Court of Appeals for the 9th Circuit ruled in July 2026 that the FinCEN order was “likely arbitrary and capricious” and “failed to consider the cost of compliance” for businesses facing the threat of extinction. Esperanza Gomes Escobar, a shop owner in San Diego, told the court that it was physically impossible for her to complete all the required FinCEN paperwork each day. Last week, FinCEN renewed its reporting order for border counties in New Mexico and Texas, outside the jurisdiction of the 9th Circuit.
The Institute for Justice is currently suing to stop the reporting in Texas as well; two district courts have ruled against it, and the Court of Appeals for the 5th Circuit is weighing whether to uphold the orders. With the new directive, the Treasury remains committed to broad mass financial surveillance in states where appellate courts have not yet ruled, said Institute for Justice Senior Attorney Andrew Ward in a statement.
Escobar, the shop owner, also told the court that she had lost customers who feared being “put on a list with the names of criminals” if they used her store’s money transfer service. As Olson’s case demonstrates, that fear is not unfounded. The federal government is building databases of Americans’ finances, using them to police daily life, and keeping the paper trail from public view.
