Lack of Coordination Between FAA, OFAC Leading to Sanctions Issues, GAO Says
The Federal Aviation Administration does not independently vet civil aircraft registrations, which could lead to a host of sanctions related risks, according to a March report from the Government Accountability Office. In at least one case, the FAA allowed a sanctioned Venezuelan drug trafficker to obtain a dealer certificate, which gave his front company access to blocked planes for more than a year, the GAO said. FAA officials said they do not have the required authorities to address sanctions issues, but the GAO pointed to a lack of coordination between FAA and the Treasury's Office of Foreign Assets Control and a flawed FAA registration system.
The FAA’s registry “generally accepts self-certification of eligibility and aircraft ownership and does not verify the information it receives,” the GAO report said. “Such an approach may be appropriate for the majority of law-abiding registrants, but it leaves the registry vulnerable to exploitation by those who wish to circumvent eligibility requirements, disregard safety standards, or pursue criminal activities.”
The FAA “does not check” whether applicants and aircraft are subject to sanctions “at registration, at renewal, or on a periodic basis,” the GAO said, adding that the agency relies on OFAC to share sanctions information. The FAA “flags” a registrant and will withhold registration actions when it finds out about a sanction from OFAC, but FAA officials told the GAO they cannot deny or revoke a registration because the party is sanctioned. In those cases, the “aircraft’s registration would remain valid,” the GAO said, as would its dealer certificate records. “Sanctioned individuals or entities flagged in aircraft registration records are not flagged by FAA for OFAC coordination before receiving a dealer certificate, which could allow operation of blocked aircraft under that certificate,” the GAO said.
In one case, a “high-ranking” Venezuelan government official designated by OFAC as a Specially Designated Narcotics Trafficker was able to use a U.S. company owned by a front man to register with the FAA. Although the FAA flagged the registration, the agency issued a dealer certificate to the company “without coordination with OFAC,” the report said. The sanctioned company held the certificate for a year until it expired, the GAO said.
Because the FAA and OFAC do not coordinate on flagged registrations and because the FAA does not “proactively” check OFAC sanctions data, the two agencies may be unable to manage sanctions risks, the GAO said. “In addition, FAA misses opportunities to address abuse of the registry for illicit purposes, as well as to provide information to OFAC in support of U.S. efforts to curb drug trafficking, corruption, and other illicit activity.”
FAA’s registration process does not have “strong controls to prevent ineligible registrants and potential fraud and abuse,” the report added. “The absence of more and electronically analyzable information has substantially hindered FAA’s ability to use the registry as a tool to detect potential fraud and abuse and to oversee registered aircraft.”
Among several recommendations, the GAO said the FAA needs a “comprehensive registry risk assessment,” which could help “manage risks of fraud.” The FAA should also develop an approach to routinely check OFAC sanctions data and flag sanctioned people and entities across its aircraft registration and dealer systems.