Treasury Secretary Scott Bessent announced Friday that an international money laundering scheme allegedly diverted taxpayer funds to foreign businesses and potentially global terrorists based in Somalia.
Bessent also announced the formation of a task force to investigate government fraud in Minnesota. He said that the task force will "serve as a genesis and a launching pad for investigations into other states."
"Democratic Gov. Tim Walz has allowed welfare programs and fraud to spiral out of control, out of control," Bessent said while speaking from Minneapolis.
"Billions of dollars intended for hungry children, housing for disabled seniors, and services for children with special needs were diverted to people who cheated the system, some of whom are not even American citizens."
Bessent said Treasury investigators have "followed the money" and identified money service businesses that "may have transferred taxpayer funds overseas."
He said some of that money — at least $300 million — could have been diverted to Al-Shabaab, an al-Qaida-linked insurgent organization.
Pressed by reporters about Walz's role, Bessent said he could not discuss ongoing investigations but relayed that the governor has been "negligent in his fiduciary duties" and that investigators are pursuing whether the issue is limited to "negligence and incompetence or is something more than that."
Bessent said Treasury's Financial Crimes Enforcement Network (FinCEN) has formally notified those businesses that they are now under investigation and warned that firms that failed to follow money laundering prevention laws "will be held responsible for any crimes they committed."
Bessent's announcement is the latest escalation in the Trump administration's push to crack down on fraud, waste, and abuse. It comes as Minnesota remains mired in controversy over massive misuse of government funds that were supposed to serve vulnerable families.
"President [Donald] Trump wants accountability. I want accountability," Bessent said.
"The American people want accountability, and they will get accountability."
In a major enforcement step, FinCEN issued a geographic targeting order for Hennepin and Ramsey counties requiring banks and money transmitters to report additional details on funds transferred outside the United States.
Bessent said the goal is to put "a microscope" on suspicious transfers, advance prosecutions, and help recover funds "laundered internationally."
The Treasury chief said fraudsters in Minnesota stole "at least $300 million meant for children in need," adding that the department must prevent fraud "of this scale" from happening again.
He announced that FinCEN also issued an alert to financial institutions laying out warning signs tied to fraud in federal child nutrition programs — guidance he said will help law enforcement identify criminal schemes earlier.
The IRS is also being deployed in an aggressive new posture.
Bessent said IRS Criminal Investigation has played a "critical role" and will continue assisting criminal and civil enforcement efforts.
He added that IRS civil enforcement is auditing financial institutions accused of facilitating the laundering of Minnesota funds.
Beyond immediate investigations, Bessent said the Treasury will soon announce a new task force to probe fraud and abuse involving pandemic-era tax incentives, as well as the misuse of 501(c)(3) nonprofit status by entities implicated in Minnesota-based social services fraud schemes.
"We are committed to preventing fraud and fraudulent nonprofits from taking advantage of the American taxpayer," he said.
Charlie McCarthy ✉
Charlie McCarthy, a writer/editor at Newsmax, has nearly 40 years of experience covering news, sports, and politics.
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