WASHINGTON D.C. – In a significant escalation of federal oversight, Treasury Secretary Scott Bessent has unleashed a powerful new financial weapon against Minnesota, imposing stringent new reporting requirements on banks operating within Hennepin and Ramsey counties. This move, framed by the administration as an unprecedented probe into alleged state fraud, immediately places a spotlight on the flow of funds leaving the region, particularly to overseas recipients.
Bessent Imposes Strict Geographic Targeting Order
On Tuesday, the Treasury Department’s financial crimes unit issued a sweeping “Geographic Targeting Order” (GTO). This directive mandates that all financial institutions within the two major Minnesota counties must report every transaction equaling or exceeding $3,000 that involves sending funds to recipients outside the United States. This threshold is drastically lower than the standard $10,000 requirement typically used for Foreign Bank Account Reports (FBARs), which are generally aimed at combating large-scale money laundering.
The GTO, set to take effect on February 12 and initially slated to last 180 days, signals a focused effort to trace illicit funds. Secretary Bessent, watching closely as President Donald Trump directed his attention toward this issue, officially launched the broader investigation on December 1. The core allegation fueling this intense scrutiny involves claims that individuals within Minnesota’s Somali community, allegedly involved in defrauding state social service programs, have been transferring money overseas to terrorist organizations, including the insurgent group al-Shabaab operating in southern Somalia.
Immediate Impact on Local Banking Operations
The sudden regulatory shift has sent ripples through Minnesota’s financial sector. Institutions are now grappling with tight deadlines to overhaul compliance protocols. Teri Hodgett, Chief Risk Officer at Sunrise Bank, which maintains several branches across Minneapolis and St. Paul, acknowledged the logistical hurdles.
“This will require a lot of collaboration between our teams, especially those associated with risk, retail banking, wire transfers, and IT,” Hodgett stated. “We are operating on a very short timeline – less than one month – to create, review and put these new processes into practice.” Despite the pressure, Hodgett expressed confidence that Sunrise would meet the compliance deadline.
Major players like U.S. Bancorp and other regional banks operating in the targeted counties have yet to issue public comments regarding the extensive operational changes required by the GTO.
Broader Investigation Unfolds
The GTO is just one component of a multi-pronged federal investigation led by Secretary Bessent. The Treasury Department is also actively seeking records from Minnesota-based money services businesses (MSBs). These MSBs are often utilized for faster, less regulated international transfers compared to traditional banks, making them prime targets in investigations seeking to uncover the movement of illicit funds.
Furthermore, IRS auditors are reportedly scrutinizing financial institutions suspected of facilitating the movement or concealment of illicit funds. Non-profits potentially implicated in the underlying social service fraud schemes are also under the microscope.
The scale of the alleged misuse of federal funds is substantial. Preliminary estimates cited by the Treasury Department suggest that at least $300 million in federal funds may be involved in the fraudulent activities being investigated.
Presidential Endorsement and Focus
The administration has made it clear that this crackdown is a top priority. President Donald Trump publicly backed his Treasury Secretary’s efforts via a post on Truth Social, emphasizing the need for accountability.
“I have instructed Secretary of the Treasury Scott Bessent to FOLLOW THE MONEY and put an END to this abuse once and for all, first in Minnesota and then all around the country,” Trump wrote, signaling an intent to potentially replicate this aggressive financial monitoring in other jurisdictions facing similar allegations.
The implementation of the GTO, a tool rarely employed outside of major international money laundering or sanctions evasion cases, underscores the administration’s commitment to disrupting the alleged pipeline connecting domestic fraud to international financing of extremist groups. For Minnesota banks, the next 180 days will involve intense regulatory compliance under the watchful eye of Secretary Bessent’s Treasury Department.
