By David Lawder
LE SUEUR, Minnesota, Jan 9 () – The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has informed four money transfer companies that they are being probed for suspected fraudulent activities as part of an effort to combat misuse of federal social benefits in Minnesota, said Treasury Secretary Scott Bessent on Friday.
Bessent also mentioned during a virtual press briefing that certain banks within the state, which handle money transfer transactions, are under review by the Internal Revenue Service’s Civil Enforcement Division due to suspected money laundering.
He refused to name the banks and money service companies under investigation, but stated that the U.S. government is committed to uncovering alleged social services fraud schemes in Minnesota that he claimed had redirected billions of dollars meant for social welfare programs. Bessent mentioned that some funds might have “possibly been directed” to the al Shabaab terrorist organization in Somalia, but declined to present specific proof.
If you’re sending money back to Somalia, you’re receiving too much,” Bessent said during an interview on a three-day trip to the Minneapolis-St. Paul region. “Or you’re involved in the scam, and we will find you.
He further stated that the examination of financial transfers should not negatively impact individuals who can demonstrate that the money was not sourced from social service payments.
When asked whether the audits might discourage proper remittances sent by migrants to their families abroad, Bessent responded: “No, that shouldn’t happen. Anyone who can demonstrate the source of the funds… is okay.”
Bessent mentioned that FinCEN has implemented a geographic order, intensifying oversight of banks and money transfer companies in Hennepin and Ramsey counties in Minnesota, which include Minneapolis and St. Paul. This measure will necessitate businesses to provide more detailed information on international fund transfers, including FinCEN filings for transactions exceeding $3,000.
IRS TO CREATE SPECIAL GROUP
The Treasury official stated that the IRS will also establish a task force to examine nonprofit organizations in relation to their management of tax incentive programs during the pandemic.
The administration of Donald Trump has specifically targeted Minnesota Governor Tim Walz and the state, including its significant Somali American and Somali immigrant communities, due to claims of fraud that originated in 2020. These allegations involve certain nonprofit organizations receiving federal support to manage the state’s childcare and other social service programs.
It’s evident that Governor Walz has failed in his fiduciary responsibilities as the state of Minnesota’s top official, and this incident occurred under his leadership,” Bessent stated. “We are thoroughly investigating all possible angles to determine the extent of involvement, whether it’s merely negligence and poor performance, or something more serious.
Walz, who has announced this week that he will not pursue a third term, has described the fraud controversy as a crisis and condemned Trump and other Republicans for what he termed dishonest assaults on him.
(Reported by David Lawder in Le Sueur, Minnesota, Andrea Shalal, and Susan Heavey in Washington; Edited by Rod Nickel and Tom Hogue)