U.S. Treasury Secretary Scott Bessent imposed new reporting requirements this week on all banks in Hennepin and Ramsey counties as part of an unprecedented probe into alleged fraud in the state.
The Treasury Department’s financial crimes unit issued a “Geographic Targeting Order” (GTO) on Tuesday that requires all banks in Hennepin and Ramsey counties to report all transactions of $3,000 or more, focusing on those that involve sending funds to recipients overseas.
Teri Hodgett, chief risk officer at Sunrise Bank, which has two branches in St. Paul and another two in Minneapolis, said the financial institution “complies with all federal requirements and regulations” but that the new requirements pose a challenge.
“This will require a lot of collaboration between our teams, especially those associated with risk, retail banking, wire transfers, and IT,” Hodgett said. “We are operating on a very short timeline – less than one month – to create, review and put these new processes into practice”
Nevertheless, Hodgett said Sunrise is “confident we will be able to meet that deadline and the requirements of this new order.”
U.S. Bancorp and other regional banks that have branches in Hennepin and Ramsey counties did not immediately respond to requests for comment.
Foreign Bank Account Reports are now required for any transaction of $10,000 or more. That reporting requirement was established mainly to combat money laundering, especially among drug traffickers.
By lowering the reporting threshold and requiring additional information about certain financial transactions, the new GTO aims to unearth instances of money transfers, especially by members of the state’s Somali community, to terrorist groups and others outside the United States.
The new, rarely used, reporting requirement will go into effect Feb. 12 and last 180 days, though it is likely to be extended.
The new banking order is part of a broader investigation that was launched by Bessent on Dec. 1 into allegations that Somalis involved in defrauding the state’s social service programs had sent money to terrorists overseas, including al-Shabaab, an insurgent group that controls southern Somalia.
As part of that investigation, the Treasury Department has requested a number of records from Minnesota-based money services businesses, which can move funds overseas faster than banks. IRS auditors are also scrutinizing financial institutions that may have helped move or hide illicit funds and non-profits that may have been involved in social service fraud.
President Donald Trump alluded to the Treasury Department’s crackdown in Minnesota in a post on Truth Social on Tuesday.
“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 said.
The Treasury Department said that at least $300 million in federal funds intended to feed children during the pandemic in Minnesota was diverted by criminal non-profits in the Feeding Our Future scandal. Much of this money was used to purchase luxury vehicles, real estate in Kenya and Turkey, and to fund international travel. There was no evidence, however, that any of the money was sent directly to terrorist groups.
Nonetheless, Bessent said at a press briefing in Shakopee last week that “our citizens have a right to know that their tax dollars are not being diverted to fund acts of global terror or fund luxury cars for fraudsters.”
Bessent also took a swipe at Gov. Tim Walz, a favorite target of the Trump administration, saying without evidence that the governor may have been complicit in fraud.
“It is clear that Governor Walz has been negligent in his fiduciary duties as the chief executive of the state of Minnesota, that this would happen on his watch, and we are actively pursuing all leads to see the level of involvement, whether it’s limited to just negligence and incompetence or is something more than that,” Bessent said.
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