Treasury's Clampdown on Social Benefits Fraud: Balancing Scrutiny and Legitimate Transfers

The U.S. Treasury's initiative to intensify monitoring of overseas money transfers aims to curb social benefits fraud without affecting legitimate remittances. Treasury Secretary Scott Bessent emphasized compliance for those who can prove the money's origin. Investigations target Minnesota, amid allegations against Somali communities and welfare fraud, tying into Minnesota Governor Tim Walz's political focus.

The U.S. Treasury Department is ramping up scrutiny on overseas money transfers as part of an effort to combat social benefits fraud, without hindering legitimate transactions, according to Treasury Secretary Scott Bessent speaking to Reuters.

Bessent announced that the Financial Crimes Enforcement Network (FinCEN) is conducting investigations into some money services businesses, targeting alleged abuses of federal social benefits in Minnesota. Additionally, some banks will undergo audits by the Internal Revenue Service for suspected money laundering. A specific focus has been placed on Hennepin and Ramsey counties in Minnesota, where firms will be required to report more comprehensive information on international transfers, particularly those exceeding $3,000.

Despite concerns about potential impacts on remittances sent by migrants to their families, Bessent assured that those with legitimate sources of money would not be affected. The emphasis is on ensuring funds were not misappropriated from social services. He highlighted the importance of regulated systems for legal residents transferring money, particularly amid ongoing issues of welfare fraud linked to Governor Tim Walz's political agenda and past allegations involving Somali American communities.

(With inputs from agencies.)