Minnesota investigation: The shadowy money system Somalis rely on — and terrorists can exploit

By Fox News · Fox News

The massive and sprawling $1 billion welfare-fraud schemes engulfing Minnesota are now casting fresh scrutiny on an old, opaque money-transfer network used by Somali Americans to send remittances back to their loved ones and friends — a system U.S. officials have warned can be siphoned or taxed by the terrorist group al-Shabaab. Known as hawala, the centuries-old system moves money without banks, wiring infrastructure or standard documentation, yet it remains a lifeline for families in Somalia, where a national banking system barely exists. The system works by having a sender give money to an agent in the United States, who then instructs a partner in Somalia to pay the recipient directly, with no money ever physically crossing borders. Hawala functions as an alternative remittance system, relying on trusted agents rather than banks. It is fast, inexpensive and reaches remote regions of Somalia where no formal banking system exists. For many Somali Minnesotans, hawala-linked payouts are the only practical way to support relatives overseas. MINNESOTA LAWMAKERS VOW NEW CRACKDOWN AFTER $1B FRAUD MELTDOWN THEY SAY WALZ LET SPIRAL But U.S. officials are sounding the alarm on the system, with Treasury Secretary Scott Bessent announcing last month that the Treasury Department has opened a formal investigation into whether Minnesota taxpayer dollars doled out in the various schemes were diverted into financial channels that may benefit al-Shabaab which imposes taxes, extorts businesses or controls trade routes. The House Oversight Committee has also launched its own inquiry into the fraud and the potential terror-finance risks, while Minnesota State Sen. Jordan Rasmusson said the concern is serious. "Because there’s more than a billion dollars that’s been stolen and a significant portion of those dollars have been directed overseas, there are concerns this money could be either directly or indirectly funding terrorist organizations like al-Shabaab," Rasmusson told Fox News…