Reported by Kelly Phillips Erb

(Summary shared below. To read full report, go to: https://www.forbes.com/sites/kellyphillipserb/2026/01/14/treasury-turns-a-little-known-financial-weapon-on-minnesota-benefits-fraud/)

The U.S. Department of the Treasury has launched an aggressive federal response to alleged government benefits fraud in Minnesota, using a rarely used anti-money-laundering tool to enhance financial transparency and investigations. Treasury Secretary Scott Bessent announced that, beginning February 12 2026, a Geographic Targeting Order (GTO) will require banks and money transmitters in Hennepin and Ramsey Counties (including Minneapolis and St. Paul) to report additional data on outbound international transfers of $3,000 or more—well below normal reporting thresholds. The aim is to “follow the money” and uncover structured attempts to move funds abroad that may be linked to fraud schemes. 

GTOs are temporary directives issued by FinCEN under the Bank Secrecy Act to force extra reporting in specific locations when suspected illicit activity is concentrated. Traditionally used sparingly for real estate or border cash flows, the tool is now being repurposed to address alleged diversion of benefits intended for children, families, and seniors. By aggregating transaction information from financial institutions, Treasury hopes to identify patterns that would otherwise remain invisible under standard reporting rules. 

The GTO is part of a broader enforcement push that includes four FinCEN notices of investigation to Minnesota-based money services businesses, expanded IRS audits of financial institutions, enhanced law enforcement training, and a formal alert about fraud in federal child nutrition programs. Federal authorities allege hundreds of millions of dollars meant for nutrition programs have been diverted through suspicious transfers, prompting warnings for banks to watch for unusual international wiring and nonprofit behavior inconsistent with mission statements. 

Treasury officials emphasize that the effort reflects a willingness to use flexible AML tools beyond their traditional contexts, even as the GTO mechanism imposes additional compliance burdens on local institutions without a formal rule-making process. Supporters argue that such targeted orders give investigators a tactical edge when criminal schemes evolve faster than permanent regulations can be updated; critics warn they expand surveillance with little notice. 

Minnesota has become a high-profile test case for these tools amid allegations that complex fraud rings siphoned billions from state and federal benefit programs, with some funds allegedly laundered through financial institutions and spent on luxury goods and real estate abroad. The outcome of this enhanced reporting and enforcement strategy could influence how similar fraud investigations are pursued nationwide and signal heightened scrutiny for banks, nonprofits, and state agencies involved in benefit disbursement.