Treasury Secretary Scott Bessent announced the department’s moves to crack down on government benefit fraud in Minnesota.
“Democratic Governor Tim Walz has allowed welfare programs and fraud to spiral, spiral out of control,” said Bessent. “Billions of dollars intended for hungry children, housing for disabled seniors and services for children with special needs were diverted to people who cheated the system, some of whom are not even American citizens.”
The Treasury’s Financial Crimes Enforcement Network (FinCEN) will investigate at least four money services businesses. Those companies facilitate wire transfers. Bessent elaborated:
At Treasury, we are thoroughly investigating the fraud, including funds sent to Somalia through money service businesses, which provide financial services outside of a formal bank. These funds could have potentially been diverted to the terrorist organization al-Shabaab.We have traced where the money went and are examining it. Treasury’s Financial Crimes Enforcement Network, known as FinCEN, along with the IRS, are leading our investigation to examine whether financial institutions have complied with their legal obligations under the Bank Secrecy Act and Treasury’s regulations. These requirements are designed to detect money laundering and other illicit activity, counter the financing of terrorism and safeguard the United States financial system from abuse.
FinCEN will require those businesses to report transactions over $3,000 if the beneficiary is outside the US.
That seemed high to me. I’m glad a reporter asked Bessent if the Treasury would lower that amount.
“So we have lowered the, it’s called a geographical targeting order the GTOs, we have used lower thresholds to get at the cartels along the US Mexico border, and we view this crime as very similar to the cartels money laundering, many of the same approaches, many of the same shell companies,” explained Bessent. “So we will see where it goes out from here. That will be a starting point.”
The Treasury also issued a GTO for Hennepin and Ramsay Counties, which means banks and money transmitters in those areas must report additional information about funds sent outside of the US.
“This will put a microscope on these businesses, advance prosecutions and assist in the recovery of funds laundered internationally,” stated Bessent.
FinCEN also alerted financial institutions to ways to identify and report potential fraud, especially in federal child nutrition programs.
“Fraudsters in Minnesota stole at least 300 million meant for children in need, and we must prevent fraud of this scale from occurring in the future,” said Bessent.
Remember, one of the fraud accusations centers around “Feeding Our Future,” a program meant to feed poor children.
The IRS has also joined the investigation:
Our investigators at IRS CI have played a critical role in uncovering fraud, and the role the IRS in these investigations will continue. I am pleased to announce that IRS civil enforcement is auditing financial institutions that facilitated the laundering of Minnesota funds. In addition to helping support criminal and civil enforcement efforts, the IRS will also soon announce the formation of a task force to investigate any fraud and abuse involving pandemic era, tax incentives and misuse of 501(c3) tax exempt status by entities implicated in the Minnesota based social services fraud schemes. We are committed to preventing fraud and non fraudulent nonprofits from taking advantage of the American taxpayer.
The Treasury will help train Minnesota law enforcement to interpret financial data and spot suspicious activity.
“We will not let the incompetence and recalcitrance of Governor Walz stop law enforcement from holding these perpetrators accountable,” reassured Bessent. “President Trump is dedicated to ensuring honest Minnesotans are not cheated and their hard earned tax dollars are not being abused.”
Minnesota likely won’t be the Treasury’s only stop.
“And as I said, Minnesota is going to be the protocols, the procedures and the investigative techniques, as well as the collaboration with other agencies,” added Bessent. “Minnesota is going to be the genesis for a national rollout.”
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