WASHINGTON, Dec 12 (Reuters) – The U.S. Treasury is boosting financial reporting requirements for money services businesses that will help track where cash goes, Treasury Secretary Scott Bessent said on Friday after a fraud scandal involving Minnesota’s social services system.
Treasury will issue a so-called geographic targeting order to make sure any illegal activity is reported to its Financial Crimes Enforcement Network.
“This will empower investigators to develop additional leads through increased scrutiny on funds going to areas of concern, such as Somalia,” Bessent said in an X post.
At least 77 people have been charged, many from the Somali community, with siphoning COVID relief funds that were intended to provide meals to schoolchildren.
The fraud has cost taxpayers hundreds of millions of dollars, Bessent said, including money sent to Somalia through money services businesses rather than formal banks.
Treasury had personnel on the ground investigating such businesses and that FinCEN will soon issue notices of investigation, he added in a post on X.
Treasury is also investigating allegations that tax dollars from Minnesota may have been diverted to the Al-Shabaab militant group in Somalia.
Bessent announced that probe on Dec. 1 after U.S. President Donald Trump called Minnesota a “hub of fraudulent money laundering activity” under Democratic Governor Tim Walz.
(Reporting by Katharine Jackson and Doina Chiacu; Editing by Caitlin Webber and David Ljunggren)
