Executive Summary

On November 28, 2025, the Financial Crimes Enforcement Network (FinCEN) issued an alert titled “FinCEN Alert on Cross-Border Funds Transfers Involving Illegal Aliens” (FIN 2025-Alert003). The alert urges Money Services Businesses (MSBs) to be “vigilant in detecting, identifying, and reporting suspicious activity connected to cross-border funds transfers involving illegal aliens,” defined as individuals without lawful immigration status in the United States.

While the MSB industry broadly supports FinCEN’s mission to protect the integrity of the U.S. financial system and combat criminal abuse, the alert raises substantial legal and operational concerns. Most notably, it introduces ambiguity regarding SAR reporting expectations, appears to rely on unsupported legal premises, and risks creating de facto regulatory obligations that are neither grounded in statute nor operationally feasible for MSBs to implement.

This paper examines the alert’s stated rationales, evaluates its legal underpinnings, and explains why—absent further clarification—it leaves MSBs uncertain as to what concrete compliance actions, if any, are required.

Overview of the FinCEN Alert

The alert instructs MSBs to reference FIN-2025-Alert003 in Suspicious Activity Reports (SARs) related to cross-border funds transfers involving undocumented individuals. FinCEN identifies three principal rationales for heightened vigilance:

Preventing exploitation of the U.S. financial system by undocumented individuals seeking to move illicitly obtained funds, including across borders;
Advancing the intent of Executive Order 14159, Protecting the American People Against Invasion, which asserts that undocumented individuals pose significant threats to national security and public safety; and
Disrupting cross-border human smuggling and tra/icking networks.

Notably, the alert does not introduce new typologies, articulate specific red flags, or explain how existing Bank Secrecy Act (BSA) obligations should be modified or expanded to address the perceived risks.

Existing MSB Obligations Already Address Human Smuggling Risks

With respect to the third stated objective—combating human smuggling and tra/icking— the alert does not meaningfully expand existing regulatory expectations.

MSBs are already required to identify and report transactions involving known or suspected human smuggling and tra/icking activity, including remittances that appear to constitute payments to smugglers or “coyotes.” Such activity is routinely detected and reported under existing anti-money laundering (AML) programs. In practice, this risk is already addressed within the current BSA framework, rendering this aspect of the alert largely duplicative.

National Security Assertions Provide No Actionable Guidance for MSBs

The alert’s second rationale relies on a generalized assertion that undocumented individuals present heightened national security and public safety risks. However, MSBs are neither positioned nor authorized to validate or operationalize this assertion.

Routine remittance transactions—often conducted for ordinary and lawful purposes such as family support—provide no reliable basis for assessing national security risk. The alert does not identify transaction characteristics, behavioral indicators, or contextual factors that would enable MSBs to translate this policy concern into actionable compliance measures. As a result, this rationale o/ers little practical guidance to regulated entities.

The Central Legal Issue: Earnings by Undocumented Individuals Are Not Per Se Illegal

The most consequential implication of the alert appears to arise from its first stated rationale: the suggestion that funds transferred by undocumented individuals are presumptively illicit and therefore inherently suspicious. This assumption is not supported by existing law.

Under the BSA and federal AML statutes, SAR obligations relating to illegal activity are grounded in the concept of Specified Unlawful Activity (SUA). SUAs are predicate o/enses enumerated in 18 U.S.C. § 1956(c)(7) and 18 U.S.C. § 1961(1). Proceeds derived from these o/enses give rise to money laundering concerns.

Although the U.S. Code identifies more than 200 SUAs, working in the United States without lawful immigration status is not among them. Unlawful presence is generally a civil immigration violation, not a criminal o/ense, and civil violations cannot constitute SUAs.

Certain immigration-related crimes do qualify as SUAs, including:

8 U.S.C. § 1324 – Alien smuggling;
8 U.S.C. § 1325 – Improper entry (a misdemeanor limited to the act of entry, not overstays);
8 U.S.C. § 1324c – Document fraud; and
18 U.S.C. § 1546 – Visa and immigration fraud.

Critically, mere unlawful presence or visa overstay does not implicate any of these statutes.

Taken to its logical conclusion, the premise underlying the alert would imply that any financial transaction conducted by an undocumented individual is inherently suspicious because the funds are presumed illicit. That conclusion finds no support in statute, regulation, or long-standing AML practice.

Financial Institutions Are Neither Required Nor Equipped to Verify Immigration Status

Even apart from the absence of legal support, the alert fails to grapple with a fundamental operational reality: U.S. financial institutions are not required to verify a customer’s immigration status.

MSBs, like banks and other financial institutions, routinely provide services to non-citizens and non-residents, including foreign individuals and entities with no U.S. immigration status at all. The AML framework has never required financial institutions to act as immigration enforcement agents.

Absent a legal mandate—or even a permissible mechanism—to determine lawful presence, MSBs cannot reasonably be expected to identify transactions “involving illegal aliens” as a distinct or reliable reporting category.

SAR Obligations Under Existing Law

Under current regulations, financial institutions must file a SAR when they know, suspect, or have reason to suspect that a transaction or pattern of activity:

Involves funds derived from illegal activity, including SUAs;
Is intended to conceal or disguise such funds (e.g., layering, use of fictitious names); or
Lacks an apparent lawful purpose or is inconsistent with the customer’s known or expected activity.

None of these triggers is satisfied solely by a customer’s immigration status.

Practical Implications for MSBs: An Unresolved Quandary

The alert places U.S. money transmitters in a di/icult position. While it cannot be ignored, it also fails to articulate clear expectations. At a minimum, MSBs must grapple with the following unresolved questions:

What is the practical compliance consequence of the alert beyond existing SAR obligations?
Does the alert require amendments to AML policies and procedures?
How should MSBs—and their agents—respond when they know, suspect, or have reason to suspect that customers, including long-standing customers, lack lawful immigration status?
What external risks should be considered, including potential civil liability or class action exposure if customers are targeted absent a clear regulatory mandate?

These questions are neither theoretical nor remote. The alert purports to have immediate e/ect, yet o/ers no concrete framework for implementation. The answers must be derived now, in the absence of clear guidance.

Conclusion

The FinCEN alert articulates policy objectives that the MSB industry broadly supports: safeguarding the financial system, combating criminal abuse, and disrupting human smuggling networks. However, it does not clearly explain how those objectives translate into new or modified compliance obligations.

In particular, the alert:

Relies on legal assumptions inconsistent with the statutory definition of Specified Unlawful Activity;
Implies SAR expectations that extend beyond existing law;
Fails to acknowledge that unlawful presence is a civil matter, not a criminal predicate o/ense; and
Overlooks the fact that financial institutions are neither required nor able to verify customers’ immigration status.

Absent further clarification, the alert risks fostering uncertainty, inconsistent SAR filings, and regulatory overreach in an industry that is already subject to extensive regulation. Clear, legally grounded guidance from FinCEN is essential if MSBs are to respond in a manner that is both compliant and operationally sound.

Connecting the Dots: FinCEN’s Cross-Border Funds Transfer Alert and Its Implications for Money Services Businesses