BREAKING: US Treasury launches Minnesota fraud crackdown – audits, $3,000 GTO and FinCEN alert

By PAUL O’DONOGHUE, Senior Correspondent

U.S. Treasury Secretary Scott Bessent has announced a major crackdown on fraud in Minnesota, calling the move the “genesis for a national rollout”.

Officials have charged almost 100 people, many from the Somali community, with siphoning COVID relief funds that were intended to provide meals to schoolchildren.

The new measures announced include:

• FinCEN, the Treasury’s AML unit, has published a GTO (Geographic Targeting Order) applying to financial instiutions in Hennepin and Ramsey Counties. They must now report certain transactions of $3,000 or more to FinCEN where the beneficiary is located outside of the United States.  
• FinCEN has also issued four notices of investigation to money services businesses located in Minnesota.
• Mr Bessent said the department is specifically investigating money sent to Somalia. He raised the possibility the funds “could have potentially been diverted to the terrorist organization Al-Shabab.”
• FinCEN has issued an Alert with ‘red flag’s to help financial institutions identify and report fraud associated with Federal child nutrition programs.
• IRS civil enforcement will form a task force to investigate any fraud involving pandemic-era tax incentives.

Mr Bessent said: “Treasury will deploy all tools, all tools, to bring an end to this egregious, unchecked fraud and hold perpetrators to account.

Minnesota fraud crackdown

The Justice Department has charged 98 defendants in Minnesota-related fraud cases. Sixty-four have been convicted so far. Eighty-five of those charged are of Somali descent.

In December, Assistant U.S. Attorney Joe Thompson said more than $9 billion in federal funds may have been stolen. The money supported 14 Minnesota-run programmes since 2018. Thompson did not explain how authorities reached the estimate. Governor Tim Walz has said fraud losses could exceed $1 billion, while disputing Thompson’s figure.

In one case, prosecutors allege scammers stole more than $250 million from a federal programme designed to feed hungry children. Authorities have described it as the largest pandemic-era fraud scheme in the country.

Bessent said the Minnesota probe would serve as a “launching pad for investigations into other states”. He did not name any jurisdictions. The comments came a day after Vice President JD Vance said the administration would create a new assistant attorney general role to prosecute fraud nationwide.

The administration has also blocked nearly 7,000 small business loans in Minnesota. It has frozen federal childcare payments over fraud concerns.