Washington (Somalia Today) — The US Treasury Department is launching an aggressive crackdown on money transfer firms operating between Minnesota and Somalia, intensifying federal oversight of a financial corridor that sustains millions of families in the Horn of Africa.
Treasury Secretary Scott Bessent announced Friday that the department will issue a “geographic targeting order” (GTO)—a potent regulatory tool—mandating rigorous new verification protocols for Money Services Businesses (MSBs) in Minnesota.
The move expands a federal enforcement campaign triggered by massive pandemic-era fraud schemes and fueled by unproven allegations that stolen taxpayer funds flowed to the Al-Shabaab insurgency.
“The Treasury Department will soon issue an order requiring money wire services that people use to send money to Somalia to submit additional verification to Treasury,” Bessent said.
He confirmed that investigators have already deployed to Minnesota, with the Financial Crimes Enforcement Network (FinCEN) preparing to serve notices of investigation while the Internal Revenue Service (IRS) audits flagged enterprises.
The fraud nexus
The Treasury explicitly anchors this regulatory offensive to the Feeding Our Future scandal, which federal authorities characterize as one of the largest pandemic-aid fraud schemes in US history.
Prosecutors allege that a network of nonprofits siphoned nearly $300 million in funds intended for child meal programs during the COVID-19 crisis.
The legal fallout continues to widen: last month, prosecutors charged a 78th defendant with wire fraud and money laundering, while other key figures have received lengthy prison sentences.
While the Treasury asserts that “millions” of these looted dollars moved through Somali transfer networks, critics and legal experts fiercely contest the link to terrorism.
Bessent cited a recent report by the conservative outlet City Journal claiming that fraud proceeds were diverted to Al-Shabaab, the Al-Qaeda affiliate controlling parts of rural Somalia.
However, the report relies on unnamed sources, and federal prosecutors have not charged a single defendant in the case with terrorism financing.
Former US Attorney Andy Luger, who oversaw the initial indictments, previously emphasized that the defendants “were looking to get rich, not fund overseas terrorism,” noting they used the money to buy luxury cars, gold, and property in Kenya rather than arms.
Escalating rhetoric
The enforcement surge coincides with escalating rhetoric from President Donald Trump, who has increasingly targeted Minnesota’s Somali diaspora.
In recent weeks, Trump has disparaged Somali immigrants as “garbage” and derided their home country as “filthy” and “crime-ridden.”
During a recent rally in Pennsylvania, he singled out Somalia as a “disaster,” suggesting its people are culturally prone to piracy.
The comments drew a sharp rebuke from Somalia’s government. Defence Minister Ahmed Moallim Fiqi acknowledged the United States’ pivotal military role in the fight against Al-Shabaab but warned that such support grants no license to demean the Somali people.
In a statement to Reuters, Fiqi advised Trump to focus on domestic promises rather than “busying himself with Somalia,” asserting that resilience and enterprise define his citizens, not the “filthy” portrait painted by the White House.
He thanked the United States for its pivotal role in the fight against al-Shabaab, but emphasised that support does not give any leader a licence to insult Somalis as a people.
“The Somali people are known around the world for their hard work,” he said.
“They are known for their resilience in the face of adversity. They have faced hardships and many enemies, including those who deny their existence, kill them, humiliate, and insult them. Somalis have overcome all of them and have survived.”
Regulatory tightening
The mechanism for the new crackdown—the Geographic Targeting Order—marks a significant escalation.
Historically, agencies have used GTOs to combat drug cartels and high-level money laundering by imposing stricter reporting standards on specific businesses in a designated zone.
While the Treasury has not yet released the specific monetary limits for the Minnesota order, the implications are clear: MSBs will likely need to collect far more granular customer data.
This raises the specter of “de-risking,” a phenomenon where banks sever ties with money transmitters to avoid regulatory blowback.
A 2018 Government Accountability Office (GAO) report warned that such pressure can strangle financial corridors to fragile states, forcing money into underground channels where tracking becomes harder.
For Somalia, the stakes are existential. The country lacks a robust formal banking system, leaving the diaspora to rely on hawalas—trust-based transfer operators—to send funds home.
The World Bank estimates that personal remittances accounted for 17.5 percent of Somalia’s GDP in 2024. These funds often pay for basic survival needs like food, water, and healthcare rather than investment.
Humanitarian groups fear that new friction in the system could delay or block these transfers, punishing millions of civilians for the alleged crimes of a few fraud syndicates in Minneapolis.
The Treasury expects to publish the full text of the order in the coming days.
