By David Lawder
SAVAGE, Minnesota, Jan 9 (Reuters) – The U.S. Treasury Department’s plan to increase scrutiny of overseas transfers of money should not harm people who can prove the funds did not come from social service payments, U.S. Treasury Secretary Scott Bessent told Reuters on Friday.
Bessent on Friday announced the Treasury’s Financial Crimes Enforcement Network (FinCEN) is investigating some money services businesses as part of a crackdown on federal social benefits abuses in Minnesota, while some banks will be audited by the Internal Revenue Service for alleged money laundering.
FinCEN also issued a geographic order increasing scrutiny on banks and money transmitters in Minnesota’s Hennepin and Ramsey counties, which will require firms to report additional information on funds transferred outside of the U.S., including FinCEN reports on transactions above $3,000.
Asked if this would have a chilling effect on legitimate remittances made by migrants to families overseas, Bessent said, “No, it shouldn’t. Anyone who can prove where the money has come from … is fine,” in an interview after touring the Minneapolis-area engineering lab of RV and boat maker Winnebago Industries.
Bessent said payments from people who are in the United States legally were usually transferred through the regulated banking system. “You cannot send welfare money from the people of Minnesota to Somalia, right? Like, that just means you’re getting too much, or you can’t send stolen money.”
Remittances account for large percentages of the gross domestic product of many poorer countries, including El Salvador and Somalia.Minnesota Governor Tim Walz, a Democrat and a vice presidential candidate in the 2024 election, this week announced he will not seek a third term and instead focus on allegations of state welfare fraud that have become a crisis after mounting attacks from Republican U.S. President Donald Trump’s administration.
The Trump administration has singled out Walz and Minnesota, including its large population of Somali Americans and Somali immigrants, over allegations of fraud dating to 2020 by some nonprofit groups that administer the state’s childcare and other social services programs, backed by federal funding.
At least 56 people have pleaded guilty since federal prosecutors started to bring charges in 2022 under Trump’s Democratic predecessor, Joe Biden.
(Reporting by David Lawder, writing by Andrea Shalal, editing by Chris Reese)
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