GAO: Treasury’s Limited Guidance to Agencies on Kingpin Act Results in Inconsistent Data

Drug deaths in the United States have been rising for years and is a national emergency that results in part from the activities of international narcotics traffickers and their organizations.

The Foreign Narcotics Kingpin Designation Act (Kingpin Act), enacted in 1999, allows the Department of the Treasury to designate and sanction individuals and entities that contribute to illicit narcotics trafficking. Sanctions and other consequences include blocking a designee’s property and assets, denying U.S. travel visas to designees, and penalizing U.S. persons who violate the prohibitions in the Kingpin Act.

Treasury is required to submit an annual report to Congress on agencies’ Kingpin Act–related personnel and resource expenditures and sanctions activities. The Government Accountability Office (GAO) found that the quality of information in this report could be improved. For example, Treasury provides limited guidance to partner agencies on what to report, and GAO says this results in inconsistent data across agencies.

Under the Kingpin Act, the Treasury’s Office of Foreign Assets Control (OFAC) leads a flexible interagency process to designate and sanction foreign individuals and entities that contribute to illicit narcotics trafficking. OFAC identifies potential Kingpin Act designees, compiles evidence, submits it for legal review, and seeks concurrence from partner agencies on designation decisions.

GAO’s January 15 report said OFAC and U.S. partner agencies monitor and enforce Kingpin Act sanctions, but OFAC has not ensured consistency and transparency of the expenditure data it has reported to Congress.

Federal Banking Agencies monitor the OFAC compliance programs of U.S. banks through regular bank examinations. Additionally, OFAC handles enforcement through warnings, monetary penalties, and other methods. As required, OFAC reports annually to Congress on Kingpin Act designations and corresponding agency expenditures, but GAO found it has provided limited guidance to partner agencies on expenditure data they report. As a result, agencies use different methods to calculate the personnel and resource costs associated with their Kingpin activities.

For example, the Department of Homeland Security said it only reports personnel expenditures when it is the lead investigative agency, but the Department of Defense reports personnel expenditures when it is not the lead. Furthermore, OFAC has not reported the limitations in agency data in its congressional reports.

OFAC officials told GAO that they face challenges to assessing the overall effectiveness of the Kingpin Act, but they and their U.S. and international partners track and report a range of results. The primary challenge cited is the difficulty of isolating the effect of the Kingpin Act from multiple other programs combating drug trafficking organizations.

From 2000-2019, OFAC reported that it had designated more than 2,000 Kingpins and their supporters, and frozen more than half a billion dollars in assets under the act. In addition, host government officials reported that Kingpin Act sanctions assist them in imposing penalties on drug traffickers.

GAO is recommending that Treasury ensure that OFAC improves guidance to partner agencies on their Kingpin Act–related expenditures and discloses expenditure data limitations in its annual Kingpin Act reports to Congress.

Read the full report at GAO

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