The U.S. Department of the Treasury announced a series of actions aimed at combating widespread government benefits fraud in Minnesota, citing billions of dollars in taxpayer losses tied to complex fraud rings exploiting public assistance programs.
While visiting the Twin Cities on January 9, Treasury Secretary Scott Bessent said the initiatives are intended to increase transparency, strengthen enforcement, and recover funds misused through fraud schemes that targeted vulnerable populations, including children and seniors.
According to Treasury, fraud rings operating in Minnesota have stolen billions of dollars from state and federal programs, including child nutrition and Medicaid programs, using the proceeds for personal enrichment in the United States and abroad. Treasury officials said the schemes diverted money intended to feed children, house disabled seniors, and provide services for families in need.
FinCEN Expands Investigations and Reporting Requirements
As part of the initiative, the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued multiple notices of investigation to money services businesses operating in Minnesota. These notices seek records and information under the Bank Secrecy Act to support ongoing examinations and investigations.
FinCEN also issued a Geographic Targeting Order (GTO) requiring banks and money transmitters located in Hennepin and Ramsey counties, which include Minneapolis and St. Paul, to retain and report additional information on certain transactions of $3,000 or more where funds are transferred outside the United States.
The GTO is designed to address what FinCEN described as limited visibility into individuals and entities located abroad who receive proceeds from government benefits fraud. Treasury said the additional reporting is expected to accelerate prosecutions and assist in recovering funds laundered internationally.
IRS Launching Task Force on Fraud and Nonprofit Abuse
Treasury also announced that the Internal Revenue Service will launch a task force to investigate fraud involving pandemic-era tax incentives and the misuse of 501(c)(3) tax-exempt status by entities linked to Minnesota-based social services fraud schemes.
In addition, IRS civil enforcement is auditing financial institutions alleged to have facilitated the laundering of fraud proceeds and is supporting related criminal and civil investigations, Treasury said.
Alert Issued on Child Nutrition Program Fraud
FinCEN issued a formal Alert urging financial institutions nationwide to identify and report suspicious activity connected to fraud involving federal child nutrition programs in Minnesota. According to FinCEN, these schemes have defrauded the U.S. government of at least $300 million intended to feed children in need, with proceeds used to purchase real estate, vehicles, luxury goods, and international travel.
The alert provides detailed “red flags” to help banks and money transmitters identify fraudulent behavior and report it through Suspicious Activity Reports, referencing a designated FinCEN alert code.
Training and Coordination with Law Enforcement
FinCEN also conducted on-the-ground training for Minnesota-based federal, state, and local law enforcement on using financial intelligence, including Suspicious Activity Reports, to better detect and dismantle fraud schemes tied to government benefits programs.
Treasury officials said the combined actions reflect a coordinated effort across federal agencies to hold perpetrators accountable and safeguard taxpayer dollars.
