US Treasury Probes Money Transfer Firms and Banks in Minnesota Fraud Case

Post by : Saif Nasser

The United States Treasury Department has launched a major investigation into money transfer companies and banks in Minnesota following serious allegations of fraud involving federal social welfare funds. Treasury Secretary Scott Bessent confirmed that the probe is focused on possible misuse of government aid and suspicious money transfers sent outside the country.

According to Bessent, the Treasury’s Financial Crimes Enforcement Network, known as FinCEN, has formally notified four money transfer firms that they are under investigation. At the same time, some banks in Minnesota are being audited by the Internal Revenue Service’s civil enforcement division for possible money laundering activities connected to these transfers.

The investigation is linked to alleged fraud schemes involving federal social benefits programs. Authorities believe billions of dollars meant to support vulnerable people may have been misused. Bessent said there are concerns that some of this money may have been sent overseas and could have reached extremist groups, including the al Shabaab organization in Somalia. However, he did not provide detailed evidence and said the investigation is still ongoing.

To strengthen oversight, FinCEN has issued a special geographic order covering Hennepin and Ramsey counties, which include Minneapolis and St. Paul. Under this order, banks and money transfer firms must report extra details on international transfers, especially those above $3,000. The goal is to closely track where federal aid money is going and prevent further abuse.

Bessent stressed that the investigation is not meant to punish people who send legitimate remittances to family members abroad. He said that anyone who can clearly show their money did not come from social service payments should not be affected. The focus, he explained, is on stopping fraud and tracking down those who are abusing the system.

The Treasury Department also announced that the IRS will form a special task force to review nonprofit organizations that handled pandemic-era aid programs. Some nonprofits in Minnesota have been accused of mismanaging funds provided for childcare and other social services since 2020.

The case has also drawn political attention. The Trump administration has criticized Minnesota Governor Tim Walz, accusing him of failing to properly oversee state programs that used federal money. Bessent said the federal government is examining whether the issue was caused by negligence or something more serious. Governor Walz has called the situation a crisis but rejected claims of wrongdoing, saying attacks against him are unfair.

As investigations continue, federal officials say their priority is to protect public money, ensure transparency, and prevent taxpayer-funded programs from being exploited. The outcome of the probes could lead to legal action, tighter financial controls, and changes in how aid programs are monitored in the future.