By Treasury Secretary Scott Bessent is preparing to roll out a new whistleblower initiative aimed at exposing large-scale fraud targeting federal benefit programs, offering potentially substantial payouts to those who come forward with actionable information, according to sources familiar with the plan.
The program will award tipsters between 10 and 30 percent of fines collected in successful enforcement actions, particularly in cases involving Medicare and Medicaid fraud. With annual losses in those programs estimated at more than $70 billion, the potential rewards could reach into the millions. Payments would be drawn directly from penalties imposed on offenders, rather than taxpayer funds.
“Individuals located in the United States or abroad who provide information may be eligible for awards if the information they provide leads to a successful enforcement action that results in monetary penalties exceeding $1,000,000,” one Treasury document states.
The structure mirrors an existing whistleblower program run by the Internal Revenue Service, also housed within the Treasury Department, which has long offered a share of recovered funds to informants in tax enforcement cases.
The initiative follows heightened scrutiny of fraud in federal assistance programs, including a January visit by Bessent to Minnesota, where authorities have identified widespread welfare fraud schemes. Federal investigations have linked those operations to an estimated $9 billion in improper payments since 2018.
The effort aligns with a broader crackdown by the Trump administration. In March 2025, President Donald Trump signed an executive order establishing a zero-tolerance policy for health care fraud, and Vice President JD Vance chaired the first meeting of a newly formed anti-fraud task force last week.
A Treasury official briefed on the plan underscored the scale of the problem. “Our citizens have a right to know that their tax dollars are not being diverted to fund acts of global terror or to fund luxury cars for fraudsters.”
Investigators have identified a range of schemes, including fake autism clinics, fraudulent food distribution operations, and nonexistent housing services. In many cases, perpetrators allegedly relied on “straw owners” to funnel funds into overseas real estate or, in some instances, to groups such as Al-Shabaab.
One of the largest cases to date involved the nonprofit Feeding Our Future, where prosecutors say $250 million was siphoned from child nutrition programs and spent on luxury goods, vehicles, and foreign property holdings.
As part of the new initiative, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is expected to issue updated guidance to banks, urging increased vigilance for transactions tied to health care fraud. Financial institutions are already required under the Bank Secrecy Act to file Suspicious Activity Reports when they detect signs of money laundering or fraud.
The advisory warns that fraudsters often obtain patient information through bribery or identity theft, then submit claims for services never rendered while laundering proceeds through wire transfers, cryptocurrency, or high-end purchases. It notes that “fraud, including health care fraud and government benefits fraud, also continues to be one of the largest sources of illicit proceeds in the United States,” with activity increasing since the COVID-19 pandemic.
“These schemes threaten the integrity of both the US health care and financial systems, impose enormous costs on taxpayers, waste critical resources for beneficiaries of these programs, and increase the cost of health care in the United States,” the advisory stated.
Common tactics include the use of shell companies posing as legitimate providers of medical equipment, home health care, or laboratory services, often registered under stolen identities or front operators. Fraudulent billing may involve services never delivered, unnecessary procedures, or inflated charges through “upcoding,” with kickbacks paid to medical professionals to facilitate the schemes.
Once funds are disbursed, they are frequently moved quickly through international transfers, complicating recovery efforts.
The FinCEN guidance outlines as many as 24 warning signs for banks, including sudden spikes in billing from newly established entities, companies with no physical presence in the United States, and large outbound transfers immediately following government reimbursements.
Federal enforcement efforts have already expanded in recent years. In 2025, the Justice Department charged 324 individuals in connection with approximately $10 billion in alleged fraud as part of “Operation Gold Rush,” described as the largest health care fraud takedown on record. The operation targeted a transnational network that included Russian-linked actors accused of acquiring medical supply companies to submit false claims and exploit stolen patient data.
Independent estimates underscore the scale of the issue. A 2022 study by the Colorado State University Global White Collar Crime Task Force put annual Medicare and Medicaid fraud losses at $68.7 billion.
The Treasury’s latest move comes amid broader enforcement actions across the financial system. Earlier this month, the department imposed an $80 million fine on investment bank Canaccord Genuity for failing to properly monitor suspicious transactions tied to Russian oligarchs in a separate case.
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