The U.S. Department of the Treasury announced a series of targeted actions to combat widespread government benefits fraud in Minnesota, which federal officials say has resulted in the loss of billions in taxpayer funds.
Treasury Secretary Scott Bessent outlined the initiatives while in Minnesota, where he met with financial institutions, state leaders, law enforcement, and community members to discuss fraud prevention and investigative cooperation. The department said the efforts are intended to protect the integrity of public programs and safeguard federal resources from exploitation.
According to the Treasury, complex fraud schemes have diverted billions of dollars intended for programs supporting children, seniors, and other vulnerable populations. Federal authorities allege that these schemes involved the misuse of social services funds and entailed sophisticated money flows both domestically and internationally.
As part of the response, the Financial Crimes Enforcement Network (FinCEN) has issued multiple notices of investigation to Minnesota-based money services businesses. These firms, which provide financial services outside traditional banking channels, are being asked to provide information under the Bank Secrecy Act to support ongoing examinations and investigations.
The Internal Revenue Service will also establish a dedicated fraud task force to investigate misuse of funding, including pandemic-era tax incentives and alleged abuse of tax-exempt status by certain organizations tied to social services.
To enhance law enforcement’s ability to trace illicit funds, FinCEN has issued a Geographic Targeting Order requiring banks and money transmitters in Hennepin and Ramsey Counties — which include Minneapolis and St. Paul — to report additional data on transactions of $3,000 or more when the recipient is located outside the United States. Federal officials said this expanded reporting will provide greater visibility into cross-border money flows connected to alleged fraud.
In addition, FinCEN issued an alert urging financial institutions to monitor for and report activities associated with fraud schemes targeting federal child nutrition programs. The alert includes specific “red flags” to help banks identify suspicious patterns and support law enforcement referrals.
Treasury characterized the combined efforts as a decisive step toward increasing financial transparency, accelerating prosecutions of fraud actors, and recovering misappropriated funds on behalf of U.S. taxpayers. Secretary Bessent emphasized that strengthening oversight and interagency collaboration is essential to protecting government benefit programs and maintaining public trust as these initiatives move forward.
