OFAC's Reports on Kingpin Sanctions Spending May Be Inaccurate, GAO Says

The Treasury's Office of Foreign Assets Control does not adequately report on the money it and partner agencies spend related to sanctions against drug traffickers, leading to potentially inaccurate estimates and a lack of transparency when reporting expenditures, the Government Accountability Office said. Although OFAC reports to Congress on the resources and personnel it uses when imposing Foreign Narcotics Kingpin Designation Act sanctions, it provides “limited guidance” to partner agencies on how to fulfill those same reporting requirements, the GAO said. Administration officials also said it is sometimes “impossible” to determine whether the sanctions are working.

The report, released Jan. 15, recommends that OFAC provide partner agencies -- including the State Department -- better guidance on how to report expenditures for sanctions. OFAC has sent other agencies memos with general guidance, including instructions to “estimate” how much time staffers spend on activities related to Kingpin Act sanctions, but the guidance is not specific enough, the GAO said. “As a result, agencies must interpret for themselves what to include in their estimated personnel expenditure submissions to OFAC,” the report said. OFAC officials told the GAO they are not more specific in their guidance because “the Kingpin Act is not specific about which expenses to report.”

OFAC, which is required to submit the expenditure report to Congress each year, also “has not disclosed limitations to the consistency or reliability of the expenditure data in its reports,” the GAO said. The GAO questioned the accuracy of OFAC’s reporting, specifically the data it collects from partner agencies. Officials from other agencies estimate personnel expenditures based on the “paygrades of personnel engaged” in the sanctions, while other agencies don’t report anything “because they determined that their level of engagement was minor and did not warrant reporting,” the report said. Drug Enforcement Agency officials don’t report their expenditures at all, the report said, because those investigations “simultaneously support their own cases against the targets,” and the Department of Homeland Security only submits reports when they are “the lead investigative agency.” In addition, OFAC does not verify the reports it receives from other agencies, the report said.

“As a result, the reported expenditures of agencies may not be consistent and may not represent a reliable total for Kingpin Act activities across the U.S. government,” the GAO said. “OFAC cannot provide assurance that its annual reports to Congress on Kingpin Act interagency expenditures contain quality information that is transparent and consistent across all reporting agencies.” This hampers Congress’ ability to provide “informed oversight” over the use of the Kingpin Act.

OFAC and other agencies also said it is “difficult” or “impossible” to determine whether the Kingpin Act sanctions are successful. Officials are not able to “isolate” the impact of their sanctions from other “efforts and factors,” the GAO said, which is compounded by “frequent shifts in policy goals and objectives, and a lack of reliable data.” In October, the GAO said sanctions officials are unable to judge the effectiveness of their own sanctions regimes (see 1910030046).

The report said Treasury officials and other agencies face particular difficulties in assessing the impacts of Kingpin Act designations. “Partner agency officials said they do not consider the Kingpin Act to be a government program for which effectiveness can be assessed,” the report said. Treasury officials have not “undertaken formal, systematic assessments” of the impact of these sanctions because staffing resources are “primarily assigned to designation investigations and reviewing of petitions for Kingpin Act designation reconsideration,” the GAO said. Despite this, Treasury and other agency officials have reported that the sanctions increase “pressure” on traffickers to stop drug trafficking, and said the regime is a “valuable tool.”