Background The Foreign Narcotics Kingpin Designation Act The Kingpin Act authorizes Treasury to identify and apply sanctions to significant foreign narcotics traffickers and their organizations worldwide to protect the national security and economy of the United States. According to officials from OFAC and other partner agencies, key goals of the Kingpin Act include disrupting and dismantling drug trafficking organizations and blocking designees’ access to the U.S. financial system. Treasury and Other U.S. Partner Agencies The Kingpin Act mandates the participation of certain agencies in the Kingpin designation process. The Secretary of the Treasury, after consulting with partner agencies, is authorized to designate a foreign national or entity as a Specially Designated Narcotics Trafficker. The partner agencies participating in Kingpin Act designations are the Department of Justice (DOJ), State, DHS, DOD, CIA, FBI, and DEA. For Treasury to designate a foreign individual or entity under the Kingpin Act, it must identify that individual or entity as either a significant foreign narcotics trafficker or part of a designee’s network. The following offices in Treasury are involved in identifying designation targets, and managing and assessing the impact of sanctions: The Office of Terrorism and Financial Intelligence (TFI) has the twin aims of safeguarding the U.S. financial system against illicit use and combatting national security threats, including drug kingpins. TFI includes OFAC, the Office of Intelligence and Analysis (OIA) and the Office of Terrorist Financing and Financial Crimes (TFFC). OFAC is Treasury’s primary office for sanctions implementation and enforcement. OIA is responsible for TFI’s intelligence functions and performs some assessment of the impact of Treasury’s sanctions programs. TFFC works across the national security community and with the private sector and foreign governments to identify and address the threats presented by illicit finance to the international financial system. Kingpin Act Identification and Designation Treasury can designate a foreign individual or entity under the Kingpin Act if it identifies an individual or entity as either a significant foreign narcotics trafficker or part of a designee’s network. OFAC and its partner agencies have grouped these Kingpin Act designation categories into two tiers, Tier 1 and Tier 2, based on the procedures required for identification and designation under the act. (See tab. 1.) All identifications and designations under the Kingpin Act are subject to the same asset blockings and penalties. The names of persons and entities designated are published in the Federal Register and incorporated into Treasury’s Specially Designated Nationals and Blocked Persons List (SDN List). The majority of Tier 1 Kingpin Act designations are individuals and entities from countries in the Western Hemisphere, as shown in figure 1. Kingpin Act Sanctions and Other Consequences Treasury is authorized to block assets of and prohibit transactions with designated individuals and entities and to impose penalties on individuals and entities that engage with designees. Blocking assets. Treasury blocks (i.e., denies access to) a designated individual or entity’s property and interests in property within the United States, or within the possession or control of any United States individuals or entities that are owned or controlled by the blocked individual or entity. Prohibiting transactions. Treasury generally prohibits United States individuals and entities from engaging in transactions in property or interests in property of designees. Denying visas. Treasury provides information to State so it can decide whether to cancel existing visas and deny visa applications of Kingpin Act designees. Penalties for nondesignees. Treasury may enforce criminal and civil penalties for any U.S. person who willfully violates the prohibitions in the Kingpin Act, associated regulations, or license rules. Penalties for violations of the Kingpin Act range from civil penalties of up to $1.5 million per violation to more severe criminal penalties. Criminal penalties for corporate officers in violation may include up to 30 years in prison and fines up to $5 million for individuals and $10 million for corporations. Annual Kingpin Act Reporting Requirements Treasury is required to report to Congress on the status of sanctions imposed under the Kingpin Act, including the personnel and resources directed toward imposing such sanctions during the preceding fiscal year. On July 1st of each year, the OFAC Director, as delegated by the Secretary of the Treasury, is required to submit a report to the Permanent Select Committee on Intelligence of the House of Representatives and the Select Committee on Intelligence of the Senate on the status of sanctions imposed under the Kingpin Act, the personnel and resources directed toward imposing sanctions under the Kingpin Act during the preceding fiscal year, and background information with respect to the newly identified significant foreign narcotics traffickers and their activities. Treasury is also required to report on foreign persons who are sanctioned under the Kingpin Act to the Director of the Office of National Drug Control Policy (ONDCP); ONDCP is the Executive Branch office responsible for issuing an annual National Drug Control Strategy and coordinating the efforts of the National Drug Control Program agencies implementing any aspects of the strategy. OFAC Leads a Flexible Interagency Process to Designate Narcotics Kingpins and Their Networks, and Partner Agencies Generally Find OFAC Guidance Sufficient to Understand Their Roles OFAC Leads a Six Step Kingpin Act Designation Process Treasury’s OFAC leads a process generally involving six steps to designate Kingpin Act targets. This process allows OFAC to coordinate its investigations and designations with U.S. partner agencies and foreign governments. (See fig. 2.) We determined the designation process through interviews with OFAC and partner agency officials, and selected nine cases to review the implementation of the designation process. OFAC’s Kingpin Act designation process includes the following six steps: 1. Identify potential targets. OFAC first identifies potential targets for investigation and Kingpin Act designation. OFAC’s partner agencies can submit recommendations for potential targets. According to OFAC officials, they consider information provided about potential Tier 1 targets from the recommending agency, such as whether the targets are on the U.S. multiagency list of priority drug trafficking targets, what unique identifiers the recommending agency can provide to minimize the chance of investigating the wrong target, and which drug(s) and quantities the targets traffic and to which markets. Additionally, OFAC considers (1) the likelihood that the target would meet the legal criteria for designation and have an impact, (2) the expectation that designation would complement rather than hinder law enforcement and foreign counterpart investigations and operations, (3) any unintended negative consequences on third parties, and (4) the current availability of OFAC resources. According to OFAC officials, Tier 2 targets are generally identified as part of the investigation of a Tier 1 target or designee. Officials said the decision to pursue designation depends on whether there is sufficient evidence to demonstrate that the target satisfies the designation criteria in the act. As early as at this step, but at some point before designation, OFAC coordinates with partner agencies to ensure that they do not have an ongoing investigation or other diplomatic interactions that will be adversely affected by a Kingpin Act designation. 2. Gather evidence. OFAC gathers evidence on the identified target to determine whether it meets the criteria for identification or designation and whether there is a network associated with the target. OFAC requests information on the target from other partner agencies. According to OFAC officials, they do not request information from all of OFAC’s partner agencies during the investigation of each target if they deem the information provided by a subset of the partner agencies to be sufficient evidence. OFAC also conducts its own research and uses all sources—including public and classified—to develop an evidentiary package. OFAC works with partner agency headquarters, and domestic and international field offices (as needed for each case) to collect information on either a person’s drug trafficking activities or activities that support drug trafficking organizations. OFAC and partner agency officials said they also collect information about targets from their foreign government partners and counterparts, as appropriate. OFAC also ensures that the derogatory information collected is linked to the target and not, for example, another person with the same name. 3. Assemble evidentiary package. OFAC compiles the collected information into an evidentiary package maintained in its electronic case management system. According to OFAC officials, the case management system documents the date when each step is completed and contains sign off by an approving official. In addition, OFAC officials said the case management system contains a summary of the evidence OFAC gathered to justify designating an individual or entity, and links to the source documents provided by partner agencies. Because the information in the evidentiary package may be sensitive, classified, and compiled from multiple sources, OFAC typically does not share the evidentiary packages with its partner agencies, with the exception of DOJ for legal review purposes. However, under certain circumstances, OFAC may allow partner agencies to review portions of an evidentiary package after ensuring that there is a specific need to know and that there is adherence to rules for disclosure to another agency. 4. Legal review. OFAC provides the evidentiary package first to Treasury’s Office of General Counsel and then to DOJ’s Civil Division for legal review. Treasury’s Office of General Counsel reviews the package for legal sufficiency, while DOJ assesses the risks associated with potential future litigation resulting from the identification or designation. According to OFAC and DOJ officials, attorneys often seek clarification or additional evidence from OFAC at this stage. In those cases where Treasury’s Office of General Counsel deems the basis for designation or identification to be legally sufficient and DOJ determines that the identification or designation presents an acceptable level of litigation risk, they give OFAC clearance to finalize the evidentiary package and proceed with the action. 5. Consult with partner agencies. Once the evidentiary package passes legal sufficiency, OFAC consults with all of its partner agencies to obtain concurrence. OFAC presents the names of individuals or entities it has decided to designate and a high-level summary of the reasons for designation to its partner agencies for final consultation and concurrence. According to officials from each of the partner agencies, this allows them the opportunity to identify if OFAC’s plan to designate a target will damage any of their operations or ongoing investigations or cause unacceptable damage to diplomatic relations with the host government in the country where the target resides or maintains citizenship. This consultation phase also allows for OFAC and other Treasury offices, such as the Office of Terrorist Financing and Financial Crimes (TFFC), as well as partner agencies to develop an engagement plan for outreach with relevant parties, including foreign governments and the press, as appropriate. While partner agencies at the U.S. embassy in the country of the proposed designation are given the opportunity to concur with OFAC’s decision to designate, agency representatives in headquarters give final agency concurrence. OFAC does not designate anyone unless all partner agencies concur. If an agency tells OFAC at any point during the process that designating a target would damage the agency’s investigation or operations, OFAC officials said they coordinate with the partner agency to determine how to proceed. For example, OFAC may delay the Kingpin Act designation until the partner agency has completed its investigation and can take simultaneous action against the target. 6. Designate the target(s). If all partner agencies concur with OFAC’s designation proposal, OFAC takes action to identify the Kingpins and designate any affiliated targets. The evidentiary package is provided to the OFAC Director who, if concurring with the designation, signs a memorandum that identifies or designates the targets. At this time, OFAC also adds the individuals and entities to the SDN List. OFAC announces the actions publicly and records them in the Federal Register. Figure 3 provides an example of an OFAC announcement of a Kingpin Act designation. According to Treasury officials, OFAC also coordinates with other Treasury offices and partner agencies at headquarters and U.S. embassies to execute an outreach and engagement plan. Once OFAC has taken these steps, it begins to monitor and enforce compliance with the sanctions it imposes against Kingpin Act designees. Flexibility in Designation Process Allows OFAC to Coordinate with Partner Agencies and Foreign Governments OFAC and U.S. partner agency officials said flexibility built into the process can affect the length of time it takes to investigate a target and the sequence of steps taken. For example, OFAC’s coordination with multiple U.S. partner agencies and foreign governments throughout the process may influence the sequence of steps taken. In addition, drug traffickers often change their organizations and operations in an attempt to evade investigators, which can contribute to the length of time to complete an investigation. According to OFAC officials, the process is intended to ensure that: designations do not jeopardize other agencies’ ongoing investigations, OFAC’s actions are coordinated with other planned civil or criminal actions against each target to maximize the disruption to the drug trafficking organization, and investigators can collect sufficient evidence to designate targets despite targets’ constantly changing efforts to evade detection. Coordination with partner agencies. Multiple U.S. agencies may have concurrent investigations of a Kingpin Act target, requiring coordination between OFAC and U.S. partner agencies to include decisions about how sharing information could affect their own investigations. When agencies withhold information about a target to ensure that their own investigation of the target is not compromised, it may take longer for OFAC to develop an evidentiary package that satisfies the Kingpin Act’s designation criteria. In addition, the length of the designation process and the sequence of steps also depend on how far along other agencies’ investigations of a target are. For example, if a law enforcement agency is able to provide enough evidence when the potential target is first identified and OFAC officials think little additional investigation is needed to further develop an evidentiary package, they may complete more than one of the designation steps concurrently in order to designate the target as quickly as possible. According to OFAC and partner agency officials, the coordination allows them to agree to and plan the civil and criminal actions to be taken to maximize the U.S. government’s efforts to disrupt the drug trafficking organization. Coordination with foreign government officials. According to OFAC and U.S. partner agency officials at headquarters, in Mexico, and in Colombia, foreign government officials determine whether to share derogatory information about Kingpin Act targets on a case-by-case basis. OFAC and partner agency officials in Colombia credited host government information sharing as a primary factor in OFAC’s ability to complete evidentiary packages for Colombian targets and one reason why OFAC has been able to investigate and designate more individuals and entities in Colombia than in other countries. Coordination with foreign partners also allows OFAC to time designations strategically to coincide with civil and criminal actions against the target by foreign governments. For example, on May 17, 2019, the Under Secretary for TFI and a Mexican government official announced coordinated, sanctions-related actions. The Under Secretary announced the Kingpin Act designation of seven individuals and six entities affiliated with the Cartel de Jalisco Nueva Generacion (CJNG) and its close ally, the Los Cuinis drug trafficking organizations. Treasury coordinated closely for months with the Mexican Financial Intelligence Unit, the Mexican Attorney General’s Office, and the Mexican Federal Police on this action. The Mexican Financial Intelligence Unit froze the Mexican bank accounts held by all of the designees, according to Treasury officials. Although actions like this sometimes require them to delay a designation, OFAC officials noted that the results of coordination can increase the impact of Kingpin Act designations. Changes to drug trafficking organizations. According to OFAC and partner agency officials, drug traffickers attempt to evade investigators by being unpredictable and making changes to their organizational structure and operations. Changes to the organization may result in the need for longer investigations if information gathered about an individual trafficker or a trafficking organization becomes outdated or irrelevant. Operational changes include such things as using shell companies or virtual assets, which several OFAC and partner agency officials said complicate their attempts to gather evidence of proceeds from drug trafficking, and can also lengthen the designation process. Based on our analysis of nine Kingpin Act designations, we found that the duration and sequence of steps leading to designations varied. According to OFAC officials, each investigation includes a unique set of circumstances that affect the length and sequence of steps. From initiation to designation, the nine cases we reviewed ranged from 6 months to 38 months (See fig. 4.) Time spent preparing the evidentiary packages for the cases ranged from 3 months to 31 months. Although OFAC got partner agency concurrence for seven cases after attorneys had begun the legal review of evidentiary packages, OFAC documented completion of this step before legal review had begun for two cases. The timing for submitting the case to partner agencies for initial designation consideration varied, including one case that OFAC did not submit until the month that attorneys completed legal reviews of the evidentiary package. For one case, OFAC followed most of the steps twice before designating the target. OFAC officials told us that if the decision is made to delay a designation after they have completed all of the steps leading up to designation, it may be necessary to go through the steps again to determine whether there is new derogatory information about the target and whether the information in the evidentiary package is still current and legally sufficient before designating the target. OFAC Has Informed Partner Agencies of the Designation Process in Several Ways, Which Partner Agencies Generally Find Sufficient to Understand Their Roles OFAC officials reported that they disseminate information about the designation process and agencies’ roles and responsibilities for the process in several ways. Treasury’s website includes Frequently Asked Questions that explain how agencies should interact with OFAC and each other and a hotline number that agencies can use if they need additional information. OFAC has provided presentations and memos to its partner agencies that further explain the Kingpin Act designation process. Treasury has also issued Kingpin Act regulations, which, among other things, define key terms related to the act and clarify prohibited activities. Because DEA is involved in the majority of OFAC’s Kingpin Act investigations, OFAC and DEA have signed a memorandum of understanding that further clarifies how they work together and share information related to Kingpin Act cases. Among other things, it establishes the terms for OFAC to have a staff person co-located at DEA and to have access to DEA files that support Kingpin Act investigations. According to OFAC officials, it does not have a similar formal collaboration mechanism with its other partner agencies. OFAC’s partner agencies reported that they generally understand their responsibilities under the Kingpin Act and how to find answers to their questions about the Kingpin Act designation process. Several officials stated that their responsibilities include recommending potential targets, participating in interagency group meetings, deciding whether to concur with OFAC’s decisions to investigate or designate persons, and responding to specific requests for information from OFAC. Officials from the headquarters of each of the Kingpin Act partner agencies said they found the information available from OFAC about the designation process sufficient to help them understand their roles. Most partner agencies in Colombia and Mexico, where the majority of Kingpin Act designations have taken place, reported that the presence of an OFAC Attaché in those countries made it easy for them to ask for clarification on the process as needed. OFAC and Partner Agencies Monitor and Enforce Kingpin Act Financial and Nonfinancial Sanctions, but OFAC Does Not Ensure Consistency and Transparency of Mandated Personnel and Resource Reporting OFAC Works with Federal Banking Agencies to Monitor and Enforce Kingpin Act Financial Sanctions OFAC monitors and enforces financial sanctions against Kingpin Act designees implemented by U.S. financial institutions. OFAC regulations and a memorandum of understanding with Federal Banking Agencies (FBA)—such as the Federal Reserve and the Office of the Comptroller of the Currency (OCC)—establish sanctions compliance and information sharing responsibilities. For example, OFAC regulations require banks to report all blockings of designee property to OFAC within 10 days of the occurrence and recommend that banks designate a Compliance Officer responsible for monitoring compliance with its programs, and an officer responsible for overseeing blocked funds. According to the memorandum, each FBA will provide OFAC the following types of information to help OFAC monitor bank compliance with sanctions programs, including Kingpin Act sanctions: Notification of any apparent unreported sanctions violations discovered during their examinations of financial institutions. Information on their examinations into a bank’s OFAC compliance policies, procedures, and processes. Notification of any deficiencies in a bank’s compliance programs, such as cases when a bank failed to respond to supervisory warnings concerning OFAC compliance violations. FBAs have established a schedule for regular examinations of U.S. banks, which generally include their OFAC compliance programs. Federal Reserve and OCC officials stated that their legal and bank examiner staff address sanctions compliance regimes as part of their general examination duties. They are not responsible for determining sanctions violations, but assess the bank’s compliance program as a whole for soundness. Both FBAs said they perform bank examinations every 12 to 18 months, and determine the extent to which they should review the bank’s OFAC compliance program during the examination. For example, OCC officials said that, in accordance with the guidelines, they review banks’ internal testing of their OFAC compliance programs. According to OCC and Federal Reserve officials, banks have compliance programs to identify and block OFAC designees, including Kingpin Act designees, from accessing the U.S. financial system. According to OFAC and FBA officials, the U.S. banks with the most international branches and non-U.S. clients are most likely to hold assets or facilitate financial transactions of foreign nationals. FBA examinations confirm that bank programs include procedures for ensuring compliance with OFAC sanctions, including Kingpin Act sanctions. We met with officials from the five U.S. banks that FBA officials said have the largest presence in Latin American countries, and bank officials reported that their compliance programs check daily for evidence they are maintaining any customer relationship or allowing any transactions involving designated individuals. OFAC has imposed a range of penalties on banks that have violated the terms of Kingpin Act sanctions. OFAC and bank officials said that a bank is noncompliant when it either fails to freeze a Kingpin Act designee’s assets at that bank or processes a transaction involving a Kingpin Act designee. According to Treasury officials, Treasury makes public any civil monetary penalties it imposes and OFAC has imposed monetary penalties on banks for Kingpin Act compliance violations in 12 cases for a total of $17 million since 2000. Officials from the five banks we spoke with said they self-report cases of noncompliance with OFAC sanctions against Kingpin Act designees as required. For example, one of the banks stated that they identify and report between six and 12 cases of noncompliance to OFAC each year. OFAC officials said when a bank self-reports a violation OFAC often issues them a cautionary letter. According to OFAC officials, they issue this as a warning when they have no reason to believe that the bank committed the violation intentionally or that it is evidence of a systematic problem that the bank has not taken steps to address. The OFAC officials said the letter may or may not include a required response from the bank. State and OFAC Enforce Non-financial Kingpin Act Consequences, Including Denying Visas and Blocking Property State has denied visa applications and revoked visas of Kingpin designees, prohibiting them from traveling to the United States after they were designated. According to both OFAC and State’s Consular Affairs officials, State contacts OFAC whenever a visa adjudicator finds information in State’s Consular Affairs database regarding a possible OFAC concern about a visa applicant. State’s officials use their Consular Lookout and Support System database to identify any information entered by U.S. government agencies, including OFAC, to indicate that an individual does not qualify for a U.S. visa. Although the consular database does not specify that OFAC’s concern is specifically related to a Kingpin Act designation, they do not issue a visa without discussing with OFAC whether the applicant’s designation disqualifies them from a visa. The consular database does not specify which OFAC flags are related to the Kingpin Act, and State was unable to provide us the number of visas that have been revoked or denied under the program. OFAC has also blocked (or denied access to) designees’ U.S. property as part of Kingpin Act sanctions. According to OFAC officials, they seek to identify U.S. property that designees own or control as part of their investigation of designees both before and after they are designated. As a result of those investigations, OFAC officials said they have blocked 15 U.S.-incorporated companies, nine real estate properties, and 21 other “tangible” properties (such as automobiles, aircraft, and boats), which remained blocked as of August 2019. An individual’s property is no longer blocked if that individual is removed from the SDN list. U.S. citizens, corporations, and financial institutions are not permitted to do business with blocked companies. OFAC Meets Annual Reporting Requirement, but Provides Limited Guidance to Partner Agencies on Expenditure Data and Does Not Disclose Data Limitations OFAC has met the mandated requirement to report to Congress on agencies’ personnel and resources expended on the imposition of Kingpin Act sanctions, but provided limited guidance to partner agencies that has resulted in inconsistent data on Kingpin Act–related expenditures. Furthermore, OFAC has not disclosed limitations to the consistency or reliability of the expenditure data in its reports. The Kingpin Act requires Treasury, no later than July 1 each year, to provide the Permanent Select Committee on Intelligence of the House of Representatives and the Select Committee on Intelligence of the Senate a report describing the status of sanctions imposed, including the personnel and resources directed towards the imposition of such sanctions during the preceding fiscal year, and providing background information with respect to newly-identified significant foreign narcotics traffickers and their activities. OFAC has submitted annual reports to Congress since 2003. Each report includes information from OFAC on both agencies’ expenditures and on designations announced during the year. To prepare the report, OFAC requests partner agency expenditures. OFAC sends annual emails requesting the amount agencies spent on personnel and resources for their Kingpin Act activities. For at least the last 3 years, OFAC has sent the partner agencies a memo stating that for personnel expenses, agencies could estimate the percentage of time spent by staff members on activities directly attributable to implementing the Kingpin Act during the year covered in the report and multiply by the staff members’ salaries during the year. However, the guidance does not clarify or provide examples of types of personnel expenditures that agencies should consider as attributable to implementing the Kingpin Act. As a result, agencies must interpret for themselves what to include in their estimated personnel expenditure submissions to OFAC. The memo listed some examples of what agencies could include as resource expenditures related to the implementation of the Kingpin Act, such as research materials and information access, travel, equipment, supplies, outside services, and security. OFAC officials said they are not more prescriptive with their guidance because the Kingpin Act is not specific about which expenses to report. Agencies reported different methods for determining expenditure amounts and the information on agency personnel expenditures varied substantially from year to year. Officials from some of the partner agencies reported calculating estimates of personnel expenditures based on the paygrades of personnel engaged in Kingpin Act investigations or interagency meetings, while others stated that they did not report expenditures because they determined that their level of engagement was minor and did not warrant reporting. According to DEA officials, they do not report on personnel expenditures for the time they spend investigating Kingpin Act targets because the investigations simultaneously support their own cases against the targets. According to officials from some agencies, such as DHS, they only reported personnel expenditures for cases on which they were the lead investigative agency. As a result, DHS reported $2.4 million in personnel expenditures in fiscal year 2015, $0 between fiscal years 2016 and 2018, and then about $2 million in fiscal year 2019. Other partner agencies, such as DOD and State, report personnel expenditures even though they do not lead specific Kingpin Act investigations. 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. See figure 5 for the Kingpin Act–related personnel expenditures reported by Treasury and its partner agencies. Agencies’ determinations of what they include as resource expenditures vary as well. For example, several agencies have reported no resource expenditures for the last 3 years, but State has reported a small resource expenditure that, according to State officials, accounts for transportation expenses for Kingpin Act interagency meetings. OFAC officials said they do not know what agencies are including in their annual expenditure reports because OFAC does not seek information from agencies explaining their annual expenditure submissions and OFAC reports them as submitted. Moreover, OFAC officials said they did not verify the amounts reported to confirm, for example, why DHS and DOD reported personnel expenditures in some years many times greater than DOJ personnel expenditures, even though DOJ is the lead investigative agency for the majority of Kingpin Act cases. The Kingpin Act requires OFAC to report on the personnel and resources expended on the imposition of Kingpin Act sanctions each year. Additionally, federal internal control standards require entities to ensure that they are using quality information to achieve their objectives. Although Treasury reported in the most recent annual report from July 2019 that OFAC’s significant increase in resource expenditures was due to the addition of overseas costs and database contracts, the annual reports do not account for significant changes in agencies’ expenditures from year to year. Because OFAC does not provide guidance that clarifies what agencies are required to include in their annual expenditure submissions or disclose the limitations in the consistency and reliability of expenditure data from partner agencies, 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. As a result, Congress may not be able to provide informed oversight of personnel and resources expended on implementing the Kingpin Act. Agencies Noted Challenges That Impede Their Assessment of the Effectiveness of Kingpin Act Sanctions, but OFAC and Its Partners Report a Range of Results Agencies Reported Challenges in Assessing Effectiveness of Kingpin Act Sanctions in Achieving Policy Goals, but Treasury Has Assessed Some Individual Designations OFAC and partner agency officials identified challenges that make it difficult—or impossible—to assess the overall effectiveness of the Kingpin Act sanctions in achieving U.S. policy goals to reduce illicit narcotics within the United States. These officials noted that the primary challenge in assessing the effectiveness of Kingpin Act sanctions is that they cannot isolate the impact of Kingpin Act sanctions from those of multiple other efforts and factors. For example, whether the estimates of the amount of drugs entering the United States is increasing or decreasing depends upon the sum total of activities of counternarcotics programs managed by organizations in the United States, other countries, and the international community. In addition, we have previously reported other challenges that agency officials have stated can make it difficult to assess the effectiveness of economic sanctions, including frequent shifts in policy goals and objectives, and a lack of reliable data. Treasury officials noted that sanctions are often used in conjunction with other policy tools, such as diplomatic engagement and export controls. According to Treasury officials, distinguishing the impact of each tool leveraged is exceedingly difficult due to the limited information available via intelligence and law enforcement channels. Moreover, while Treasury’s partner agencies said Kingpin Act designations contribute to their counternarcotics goals, these agencies’ are unable to quantify contributions specifically related to the Kingpin Act in measuring progress toward their own agencies’ goals. Partner agency officials said they do not consider the Kingpin Act to be a government program for which effectiveness can be assessed; rather, they stated that the Kingpin Act is one tool among many that U.S. government agencies can use where appropriate in their efforts to combat drug trafficking. According to partner agency officials, effectiveness of sanctions in achieving policy goals is often discussed at an interagency level, which allows the U.S. government to consider these issues in the larger policy context, because sanctions are often only one element of broader government-wide strategies to achieve U.S. policy goals. Treasury conducts some assessment of both the potential and observed impacts of specific Kingpin Act designations. The Office of Intelligence and Analysis (OIA), Treasury’s intelligence component, conducts both predesignation and postdesignation assessments. OIA officials noted that they consider it part of their mission to inform Treasury policymakers of potential impact before a designation occurs. According to OIA officials, OIA’s predesignation assessments are narrowly focused and can be delivered in any number of formats, including emails, spreadsheets, and briefings. OFAC officials said they provide OIA with name and summary evidentiary information on a potential target. According to OIA officials, they use the information to assess the potential level of impact (e.g., negligible or significant) a Kingpin Act designation may have on the target, its network, or other third parties, based on a variety of factors. For example, OIA may determine that a Kingpin Act designation can result in significant impact if evidence indicates that a designation will impose high costs and obstacles for a target to continue drug trafficking activity. According to OIA officials, such assessments have been required by the Under Secretary since 2018 and OIA has completed predesignation assessments on all Kingpin Act designations during that time period for senior Treasury officials’ consideration. Additionally, since 2018, OIA has completed two postdesignation assessments. OIA officials said they share these assessments with OFAC so it can incorporate the lessons learned into future investigations or to develop new designations. OIA officials said that the decision to conduct postdesignation assessments of Kingpin Act designations is based on resources and the availability of information to assess impact. OFAC officials said they have not undertaken formal, systematic assessments on the impact of Kingpin Act designations because OFAC’s staffing resources are primarily assigned to designation investigations and reviewing of petitions for Kingpin Act designation reconsideration. OFAC and Its Partner Agencies Have Reported Results, Including That Kingpin Act Sanctions Have Frozen Assets and Aided in Drug Trafficking Investigations OFAC and its U.S. partner agencies reported on various results related to Kingpin Act sanctions. OFAC reported that it had designated more than 2,000 individuals and entities under the Kingpin Act as of June 2019. (See fig. 6 for the number of individuals and entities designated by year.) These designations are about evenly split between designations of individuals and designations of entities across the four designation classifications. OFAC reported 195 Tier 1 designations (B1 and B4 classification), and 2,033 Tier 2 designations (B2 and B3 classification). OFAC also reported that it has frozen more than half a billion dollars of sanctioned individuals’ or entities’ assets under the Kingpin Act between 2000 and 2019. According to OFAC data, almost 80 percent of the total assets frozen were from one individual in 2017. For the remaining years, the amount frozen fluctuated between $1.7 million and $36.4 million without a clear upward or downward trend. Further, law enforcement partner agencies cited the Kingpin Act as an important tool in aiding their investigations that may result in actions such as indictment or arrest of designees. For example, in one of our nine cases, a federal grand jury indicted Raul Flores Hernandez—the suspected leader of a Guadalajara-based drug trafficking organization—in August 2017 for moving large quantities of cocaine from South America to Mexico for distribution and further transportation into the United States. OFAC designated him (as well as 21 of his alleged criminal associates and 42 businesses and other entities affiliated with his drug trafficking organization) under the Kingpin Act concurrent with the indictment. According to OFAC and DEA officials, sharing information about Flores Hernandez was essential to both the designations and the indictment. According to these officials, disrupting the access of significant narcotics traffickers and their networks to the U.S. financial system and barring them from travel to the United States has been helpful in motivating several designees to cooperate with law enforcement investigations. Moreover, U.S. agencies report that the ability to sanction entire drug trafficking networks increases pressure on traffickers to cease involvement with illicit narcotics. OFAC officials stated that removing designees from the OFAC list is, in some cases, evidence of disruption of drug trafficking organization or other positive behavior change. To be removed, designees must petition OFAC and demonstrate that they no longer meet the criteria to be designated under the Kingpin Act. As of June 2019, OFAC had removed 399 individuals and entities previously designated under the Kingpin Act, of which five were Tier 1 designations (B1 and B4 classification), and 394 were Tier 2 designations (B2 or B3 classification). Foreign government officials also reported that Kingpin Act sanctions have assisted them in imposing penalties on drug traffickers. Foreign government officials we met with in Colombia reported that their Supreme Court issued a ruling that permits their countries’ banks to terminate accounts of, and deny service to, Kingpin Act designees because of the risk the banks would face if they continued those business relationships. According to Mexican government officials, a bankers’ association, the Financial Intelligence Unit, and the bank regulator in Mexico issued guidance supporting Mexican banks’ rights to deny service to Kingpin Act designees. Mexican government officials also stated that once the United States publicly identifies a Mexican national as a drug trafficker by designating him or her under the Kingpin Act, Mexican law enforcement entities face less public opposition when they arrest, imprison, or extradite the individual. According to government officials we met with in Colombia, information that OFAC and other U.S. agencies share as part of their Kingpin Act investigations help them justify seizing designees’ assets. For example, according to OFAC officials, OFAC, DEA, and Colombian authorities led a joint investigation that led to the October 2018 Colombian asset seizure of 202 assets of two individuals in Colombia valued at over USD $500 million. The Colombian seizure included farms, land, houses, hotels, apartments, businesses, commercial properties, emerald mines, horses and vehicles. Some Kingpin Act designations have had unintended consequences for foreign persons other than those targeted by the sanctions. The Congressional Research Service has reported that some designations have been associated with significant economic losses and unemployment by individuals not involved in illicit narcotics when large companies are liquidated in the process. Treasury officials stated that foreign drug trafficking organizations often attempt to integrate their illicit proceeds into the legitimate economy by owning or controlling businesses that may employ individuals who are not associated with drug trafficking activities. According to Treasury officials, it is imperative that Treasury designate businesses that are owned or controlled by drug trafficking organizations, despite the employment of individuals who may not have knowledge of the illicit activities. They said that prior to designating such foreign businesses, Treasury coordinates closely with other U.S. government agencies, the relevant U.S. embassy, and with the relevant foreign counterparts to minimize the impact on employees who lack knowledge of the illicit activities. According to the Congressional Research Service, some designations have also been associated with upticks in drug trafficking–related violence when, in combination with law enforcement action, drug trafficking organizations are dismantled and competing groups vie for abandoned territory. Furthermore, some designations have negatively affected public perceptions of the United States within the designee’s country of residence, according to OFAC and partner agency officials. For example, OFAC and State officials stated that there was significant public criticism of U.S. intervention when OFAC designated a Mexican celebrity in conjunction with a significant narcotics trafficker. OFAC officials said it can be difficult to address public opposition to a Kingpin Act designation because the information in the evidentiary package is sensitive and cannot be revealed publicly. Conclusions The Kingpin Act enables the U.S. government to sanction significant international narcotics traffickers and their networks worldwide by designating foreign individuals and entities, resulting in the freezing of their U.S. assets and an inability to conduct transactions, including financial transactions, with U.S. businesses. OFAC and its partner agencies consider the Kingpin Act a valuable tool as part of U.S. counternarcotics strategy, but have noted that the plethora of counternarcotics efforts make it difficult to isolate the effects of the Kingpin Act. OFAC has reported on personnel and resources directed toward imposing Kingpin Act sanctions annually to Congress. However, OFAC provided limited guidance to agencies about what expenditure data to report. As such, we observed considerable inconsistencies in resource expenditures reported by various partner agencies, and also determined that methods for determining expenditures varied by agency. Moreover, OFAC does not disclose agency data limitations, such as explaining why the data may vary from year to year, before reporting the information to Congress. Without consistent agency data and disclosure of data limitations regarding information on agency resources devoted to Kingpin Act activities, Congress may be limited in its ability to conduct oversight of implementation of the Kingpin Act. Recommendation for Executive Action We are making the following 2 recommendations to the Department of the Treasury: The Secretary of the Treasury should ensure that the Office of Foreign Assets Control provides its partner agencies more specific guidance regarding Kingpin Act–related expenditure data to improve the consistency of data submitted by these agencies. This could include, for example, how agencies account for expenditures that support Kingpin Act investigations when they are not the lead and for what types of activities resource expenditure data are required. (Recommendation 1) The Secretary of the Treasury should ensure that the Office of Foreign Assets Control discloses information about limitations in the consistency and reliability of the agency expenditure data in its annual reports to Congress. (Recommendation 2) Agency Comments We provided a draft of this report to Treasury, DHS, State, DOD, DOJ, CIA, the Federal Reserve, and ONDCP for comment. We received technical comments from Treasury, DHS, and the Federal Reserve, which we incorporated as appropriate. The remaining agencies informed us that they had no comments. Treasury did not agree or disagree with our recommendations. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretary of the Treasury, the Acting Secretary of Homeland Security, the Secretary of State, the Secretary of Defense, the Assistant Attorney General for Administration, the Director of the Central Intelligence Agency, the Chair of the Board of Governors of the Federal Reserve System, and the Deputy Director of the Office of National Drug Control Policy. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-2964 or GurkinC@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II. Appendix I: Objectives, Scope, and Methodology Our objectives were to examine (1) how U.S. agencies designate individuals and entities under the Foreign Narcotics Kingpin Designation Act (Kingpin Act); (2) the extent to which U.S. agencies monitor, enforce, and report on sanctions under the Kingpin Act; and (3) what agencies have done to assess the effectiveness of the Kingpin Act. To examine the process for designating individuals and entities under the Kingpin Act, we interviewed officials from the mandated partner agencies—the Departments of the Treasury (Treasury), State, Homeland Security (DHS), and Defense; the Federal Bureau of Investigation (FBI); and the Drug Enforcement Administration (DEA)—and reviewed documents, including the statutes that comprise the Kingpin Act. We also reviewed documentation on collaboration and information-sharing agreements between Treasury’s Office of Foreign Assets Control (OFAC) and its partner agencies to determine the ways in which agency participation has been formalized in the designation process. In addition, we received responses from the Central Intelligence Agency to questions we sent. We selected and reviewed a nongeneralizable sample of Kingpin Act designations made since 2015 to understand OFAC’s designation process and the extent of the variation in the timing and sequence of the steps leading to the designations. From the countries with the most designations, we considered only B1 and B4 designations. Additionally, we only considered designations that occurred after May 2015, when the authority to designate was delegated from the President to the Secretary of the Treasury, so that the process followed for designation would most closely resemble the current process. We considered cases with a range in number of B2 and B3 designations affiliated with the B1 or B4 designee. Furthermore, we ensured that we selected cases from both Western Hemisphere countries where most of the designations have occurred (including cases in Colombia and Mexico where we performed fieldwork), and non–Western Hemisphere countries to learn whether the process differs geographically. To account for those criteria, we selected nine cases to review. OFAC provided data on the milestone dates and results associated with the cases from its electronic case management system. We were unable to independently assess the data provided against the system, but we were able to corroborate some dates, such as designation dates, with public documents such as press releases. In addition, OFAC officials answered our questions about the variance in case data they provided by explaining factors that contributed to the length or sequence of investigative steps of each case. As a result, we deem the case study data provided by OFAC to be sufficiently reliable for the purposes of this report. To examine the extent to which U.S. agencies monitor, enforce, and report on Kingpin Act sanctions, we interviewed officials from OFAC and its partner agencies regarding their roles in sanctions implementation. We also interviewed officials from some of the Federal Banking Agencies (FBA) that OFAC officials said had responsibilities to help monitor bank programs for compliance with OFAC sanctions, including the Kingpin Act financial sanctions—the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System—and five U.S. banks recommended by the FBAs as having the largest presence in Latin American countries to assess implementation of economic sanctions, including any penalties incurred for sanctions violations. In addition, we met with officials from financial regulator agencies and the national banking associations in Colombia and Mexico to understand how U.S. enforcement of Kingpin Act sanctions affected their operations. To assess the extent to which OFAC included information required by the Kingpin Act for Treasury’s reports to Congress, we also reviewed the annual reports OFAC submitted to Congress from 2003 to 2019 and OFAC guidance sent to partner agencies from 2017 through 2019 seeking their input into the reports. We interviewed officials from each partner agency about the methodology they used to calculate their annual resource and personnel expenditures. Because we found that the agencies calculate their personnel expenditures differently and OFAC does not verify the amounts reported, we did not find the data reliable and are presenting the data to illustrate the problems with their reliability. To examine what agencies have done to assess the effectiveness of the Kingpin Act, we interviewed OFAC and U.S. partner agency officials in Washington, D.C., Colombia, and Mexico, regarding their efforts to assess effectiveness and results of Kingpin Act designations and any challenges in measuring effectiveness. We also held telephone interviews with U.S. partner agency officials in Panama. We interviewed OFAC and Office of Intelligence and Analysis (OIA) officials regarding the type of assessments being done on the Kingpin Act. We reviewed strategic planning documents from the partner agencies to identify their counternarcotics objectives and, if available, related performance measures they track. We also used information from the nine designation cases we selected and interviewed U.S. partner agency officials as well as host government, financial industry, international organization, and nonprofit officials in Colombia and Mexico, to get perspectives on the results of Kingpin Act designations. To report on designations and removals of the Kingpin Act, we used OFAC’s official brochure detailing the complete listing of Kingpin designations as of June 11, 2019. The data in the brochure are taken from OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List. The data include designations from years 2000-2019 categorized by type of designation. We compared the data in the brochure against the SDN List for accuracy and asked OFAC officials about their efforts to ensure the reliability of the SDN List data. We determined the data were sufficiently reliable for the purposes of our report. To report the amount of foreign designees’ assets frozen, we collected available data from OFAC for calendar years 2008-2018. To obtain the types and number of U.S. assets that have been blocked under the Kingpin Act, we interviewed OFAC officials and reviewed their published data. It was beyond the scope of this engagement to independently verify the number of U.S. assets blocked. We conducted this performance audit from May 2018 to December 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Appendix II: GAO Contact and Staff Acknowledgements GAO Contact Staff Acknowledgements In addition to the contact named above, Jennifer Grover, Mona Sehgal (Assistant Director), Jeffrey Baldwin-Bott (Analyst in Charge), Travis Cady, Marisela Perez, and Barbara Shields made key contributions to this report. Ashley Alley, Martin De Alteriis, Neil J. Doherty, Toni Gillich, Jeff Harner, John Hussey, and Triana McNeil also contributed to this report.


Background The Freedom of Information Act establishes a legal right of access to government information on the basis of the principles of openness and accountability in government. Before FOIA’s enactment in 1966, an individual seeking access to federal records faced the burden of establishing a “need to know” before being granted the right to examine a federal record. FOIA established a “right to know” standard, under which an organization or person could receive access to information held by a federal agency without demonstrating a need or reason. The “right to know” standard shifted the burden of proof from the individual to a government agency and required the agency to provide proper justification when denying a request for access to a record. Any person, defined broadly to include attorneys filing on behalf of an individual, corporations, or organizations, can file a FOIA request. For example, an attorney can request labor-related workers’ compensation files on behalf of his or her client, and a commercial requester, such as a data broker who files a request on behalf of another person, may request a copy of a government contract. In response, an agency is required to provide the relevant record(s) in any readily producible form or format specified by the requester, unless the record falls within a permitted exemption that provides limitations on the disclosure of information. FOIA Amendments and Guidance Call for Improvements in How Agencies Process Requests Various amendments have been enacted and guidance issued to help improve agencies’ processing of FOIA requests. For example: The Electronic Freedom of Information Act Amendments of 1996 (1996 FOIA amendment) strengthened the requirement that federal agencies respond to a request in a timely manner and reduce their backlogged requests. Executive Order 13392, issued by the President in 2005, directed each agency to designate a senior official as its chief FOIA officer. This official was to be responsible for ensuring agency-wide compliance with the act. The chief FOIA officer was directed to review and report on the agency’s performance in chief FOIA officer reports. The OPEN Government Act, which was enacted in 2007 (2007 FOIA amendment), made the 2005 executive order’s requirement for agencies to have a chief FOIA officer a statutory requirement. It also required agencies to include additional statistics, such as more details on processing times, in their annual FOIA reports. The FOIA Improvement Act of 2016 (2016 FOIA amendment) addressed procedural issues, including requiring that agencies (1) make records available in an electronic format if they have been requested three or more times; (2) notify requesters that they have not less than 90 days to file an administrative appeal, and (3) provide dispute resolution services at various times throughout the FOIA process. Further, the act required OMB, in consultation with the Department of Justice, to create a consolidated online FOIA request portal that allows the public to submit a request to any agency through a single website. FOIA Request Process The 1996 FOIA amendment required agencies, including DHS, to generally respond to a FOIA request within 20 working days. Once received, the request is to be processed through multiple phases, which include assigning a tracking number, searching for responsive records, and releasing the records to the requester. In responding to requests, FOIA authorizes agencies to use nine exemptions to withhold portions of records, or the entire record. These nine exemptions can be applied by agencies to withhold various types of information, such as information concerning foreign relations, trade secrets, and matters of personal privacy. FOIA allows a requester to challenge an agency’s final decision on a request through an administrative appeal or a lawsuit. Agencies generally have 20 working days to respond to an administrative appeal. DHS Covers Many Areas of Government Information Created in 2003, DHS assumed control of about 209,000 civilian and military positions from 22 agencies and offices that specialize in one or more aspects of homeland security. By the nature of its mission and operations, the department creates and has responsibility for vast and varied amounts of information covering, for example, immigration, border crossings, law enforcement, natural disasters, maritime accidents, and agency management. According to its 2018 Chief FOIA Officer Report, DHS’s organizational structure consists of 24 offices, directorates, and components. FOIA requests are split between the department’s Privacy Office, which acts as its central FOIA office, and FOIA offices in the department’s component agencies. Three of the major operational components of DHS are: U.S. Citizenship and Immigration Services (USCIS) promotes an awareness and understanding of citizenship, and ensures the integrity of the nation’s immigration system. Its records include asylum application files and other immigration-related documents. Customs and Border Protection (CBP) secures the border against transnational threats and facilitates trade and travel through the enforcement of federal laws and regulations relating to immigration, drug enforcement, and other matters. The agency maintains records related to agency operations, activities, and interactions. Immigration and Customs Enforcement (ICE) promotes homeland security and public safety through the criminal and civil enforcement of federal laws governing border control, customs, trade, and immigration. It maintains information related to the law enforcement records of immigrants and detainees, as well as information pertaining to human trafficking/smuggling, gangs, and arrest reports. According to its 2018 Chief FOIA Officer Report, DHS and its component agencies reported that they processed 374,945 FOIA requests in fiscal year 2018—the most of any federal government agency. As of its 2018 report, the department had a backlog of 53,971 unprocessed requests— the largest backlog of any federal agency. DHS Implemented Six Key FOIA Requirements to Help Improve its FOIA Operations Amendments and guidance relating to FOIA call for agencies, including DHS, to implement key requirements aimed at improving the processing of requests. Among others, these requirements call for agencies to (1) update response letters, (2) implement tracking systems, (3) provide FOIA training, (4) provide records online, (5) designate chief FOIA officers, and (6) update and publish timely and comprehensive regulations. As we noted in our June 2018 report, DHS had implemented these six FOIA requirements. Update response letters: The FOIA amendments require that certain information be included in agency response letters. For example, if part of a FOIA request is denied, agencies are required to inform requesters that they may seek assistance from the FOIA public liaison of the agency or the National Archives and Records Administration’s Office of Government Information Services (OGIS); file an appeal to an adverse determination within a period of time that is not less than 90 days after the date of such adverse determination; and seek dispute resolution services from the FOIA public liaison of the agency or OGIS. DHS had updated its FOIA response letters to include this specific information, as required per the amendments. Implement tracking systems: DHS used commercial automated systems, as called for by various FOIA amendments and guidance, and had established telephone or internet services to assist requesters in tracking the status of a request. The department used modern technology (e.g., mobile applications) to inform citizens about FOIA. The commercial systems allowed requesters to submit a request and track the status of that request online. In addition, DHS developed a mobile application that allowed FOIA requesters to submit a request and check its status. The department’s FOIA tracking systems were compliant with requirements of Section 508 of the Rehabilitation Act of 1973 (as amended), which required federal agencies to make their electronic information accessible to people with disabilities. Provide FOIA training: DHS’ chief FOIA officer offered FOIA training opportunities to staff in fiscal years 2016 and 2017, as required by the 2016 FOIA amendments. Specifically, the department provided training in responding to, handling, and processing FOIA requests. Provide records online: DHS posted records online for three categories of information, agency final opinions and orders, statements of policy, and frequently requested orders as required by 2009 memorandums from both the President and the Attorney General. Designate chief FOIA officers: DHS designated its Chief Privacy Officer as its Chief FOIA Officer. This position was a senior official at the assistant secretary or equivalent level, as required by a 2005 executive order and the 2007 FOIA amendments. Update and publish timely and comprehensive regulations: Guidance from the Department of Justice Office of Information Policy (OIP) encourages agencies to, among other things, describe their dispute resolution process; describe their administrative appeals process; notify requesters that they have a minimum of 90 days to file an administrative appeal; include a description of unusual circumstances and restrictions on an agency’s ability to charge certain fees when FOIA’s times limits are not met; and update agency regulations in a timely manner (i.e., update regulations by 180 days after the enactment of the 2016 FOIA amendment). DHS had addressed these five requirements in updating its regulations, as called for in the 2016 FOIA amendment and in related OIP guidance. DHS Identified Methods for Backlog Reduction, but Still Had Fluctuations The Attorney General’s March 2009 memorandum called on agency chief FOIA officers to review all aspects of their agencies’ FOIA administration and report to Justice on steps that have been taken to improve FOIA operations and disclosure. Subsequent Justice guidance directed agencies that had more than 1,000 backlogged requests in a given year to describe their plans to reduce their backlogs. Beginning in calendar year 2015, these agencies were to describe how they had implemented their plans from the previous year and whether that had resulted in a backlog reduction. In June 2018, we reported that DHS received about 191,000 to about 326,000 requests per year—the most requests of any agency—for a total of 1,320,283 FOIA requests in fiscal years 2012 through 2016. Further, the department had a backlog ranging from 28,553 in fiscal year 2012 to 53,971 in fiscal year 2018. The total numbers of these requests and backlogs are shown in table 1. We also reported that DHS, in its chief FOIA officer reports from fiscal years 2012 to 2016, stated that it had implemented several methods to reduce backlogs. According to the reports, the DHS Privacy Office, which is responsible for oversight of the department’s FOIA program, worked with components to help address the backlogs. The reports noted that the Privacy Office sent monthly emails to component FOIA officers on FOIA backlog statistics, convened management meetings, conducted oversight, and reviewed workloads. Leadership met weekly to discuss the oldest pending requests, appeals, and consultations, and determined steps needed to process those requests. In addition, in 2018, we noted that several other DHS components reported implementing actions to reduce backlogs. CBP hired and trained additional staff, encouraged requesters to file requests online, established productivity goals, updated guidance, and used better technology. USCIS, the National Protection and Programs Directorate, and ICE increased staffing or developed methods to better forecast future workloads to ensure adequate staffing. ICE also implemented a commercial off-the-shelf web application, awarded a multimillion-dollar contract for backlog reduction, and detailed employees from various other offices to assist in the backlog reduction effort. Due to these efforts by the Privacy Office and other components, the backlog dropped 66 percent in fiscal year 2015, decreasing to 35,374 requests. Yet, despite the continued efforts, the backlog numbers increased again. According the 2018 Chief FOIA Officer’s report, the department ended 2018 with a backlog of 53,971 requests. DHS attributed these increases to several factors, including an increase in the number of requests received, the increased complexity and volume of responsive records for those requests, and the loss of staff needed to process the requests. In June 2018, we reported that one reason DHS was struggling to consistently reduce its backlogs is that it lacked documented, comprehensive plans that would provide a more reliable, sustainable approach to addressing backlogs. In particular, it did not have documented plans that described how it intended to implement best practices for reducing backlogs over time. These best practices, as identified by Justice’s OIP, included specifying how DHS would use metrics to assess the effectiveness of backlog reduction efforts and ensuring that senior leadership supports backlog reduction efforts. In our June 2018 report, we recommended that the department take steps to develop and document a plan that fully addresses best practices with regard to the reduction of backlogged FOIA requests. In response, DHS reported that it had initiated a department-wide compliance assessment and stated that it planned to use the results of the assessment to help guide it in identifying best practices and areas of improvement. As of this month (October 2019), the department stated that the draft plan is currently with the components for review and is pending clearance. Until it has a final plan that fully addresses best practices, DHS will likely continue to struggle to reduce its backlogs to a manageable level. This is particularly important, as the number and complexity of requests will likely increase over time. Duplication Exists in Certain Components’ Processing of Immigration Files Among the most frequent FOIA requests made to DHS are those for immigration files. These files usually contain various types of information pertaining to immigrants, including asylum applications, law enforcement records, and border crossing documents. As such, they may contain information and records that are generated by various DHS components or other agencies. In 2014, we reported that within DHS, three components—USCIS, CBP, and ICE—created most of the documents included in immigration files. USCIS was the custodian of the files, and all FOIA requests for such files were either initiated with, or referred to, USCIS for processing. Specifically, to process a FOIA request for an immigration file, the USCIS staff to whom the request was assigned first manually entered the requester’s data, such as a name and address, into USCIS’s FOIA system to establish a record of the request. Next, the staff retrieved and scanned the documents in the requested file and reviewed the documents. If all of the documents were generated by USCIS, the staff made redactions as needed, sent the documents to the requester, and closed out the request. Further, if the FOIA request covered files containing documents generated by CBP, then USCIS was able to process the request on the basis of an agreement to that effect with CBP. By having USCIS process such requests for CBP documents, the two components avoided duplication in their response to a FOIA request. In November 2014, however, we reported that USCIS and ICE did not have such an agreement for documents generated by ICE. Thus, the USCIS staff was to identify any such documents and make them available to ICE’s FOIA staff for their separate processing. In doing so, we noted that USCIS and ICE engaged in duplicative processing of FOIA requests for those immigration files containing documents related to law enforcement activities that were generated by ICE. Specifically, to facilitate ICE’s review of such files, USCIS staff transferred copies of the ICE-generated documents to a temporary electronic storage drive maintained by USCIS. ICE retrieved the documents, and the ICE staff then re-entered the data to create a new FOIA request in ICE’s FOIA processing system. The staff then proceeded with processing the requested documents, and released them to the requester—in essence, undertaking a new, and duplicate, effort to respond to the FOIA request. Figure 1 depicts the duplication that occurred in USCIS’s and ICE’s downloading and re-entering of data to respond to FOIA requests for immigration files. We noted that, up until April 2012, USCIS and ICE had an agreement whereby USCIS processed ICE’s documents contained in an immigration file. However, the components’ officials stated that, since that agreement ended, the components had not made plans to enter into another such agreement. According to ICE’s FOIA Officer, USCIS’s processing of ICE’s documents in immigration files was viewed as being too costly. Nonetheless, while there would be costs associated with USCIS processing ICE’s documents in immigration files, the potential existed for additional costs to be incurred in the continued duplicate processing of such files. Our work has noted that duplication exists when two or more agencies or programs are engaged in the same activities or provide the same services to the same beneficiaries. We concluded that the duplicate processing of a single FOIA request by USCIS and ICE staff contributed to an increase in the time needed to respond to a FOIA request for immigration files. Because USCIS did not send the immigration file to ICE until it had completed its own processing of the relevant documents— which, according to USCIS, took on average 20 working days—ICE usually did not receive the file to begin its own processing until the 20-day time frame for responding to a request had passed. We pointed out that re-establishing an agreement that allows USCIS to process ICE-generated documents included in requests for immigration files, to the extent that the benefits of doing so would exceed the cost, could enable the two components to eliminate duplication in their processes for responding to such a request. Further, it could help reduce the time needed by these components in responding to a request. Therefore, in November 2014, we recommended that DHS direct the Chief FOIA Officer to determine the viability of re-establishing the service- level agreement between USCIS and ICE to eliminate duplication in the processing of immigration files. We stressed that, if the benefits of doing so would exceed the costs, DHS should re-establish the agreement. We also reported on our finding and recommendation regarding duplicate processing in our reports and updates on fragmentation, overlap, and duplication, issued in 2015 through 2019. In response, DHS indicated that it was working on a system intended to address the duplication. Specifically, in August 2018, DHS’s Privacy Office Director of Correspondence/Executive Secretary stated that the Privacy Office was leading a working group in collaboration with the Office of the Chief Information Officer to develop requirements for a single information technology solution for processing incoming FOIA requests. The director added that DHS used three disparate systems to track, manage, and process FOIA requests and that moving USCIS and ICE to one processing solution should result in processing benefits and lower overall administrative costs. We continue to track DHS’s progress in implementing this recommendation. However, as of October 2019, DHS’s Privacy Office stated that these actions were still in progress. In conclusion, DHS has implemented a number of key FOIA practices. However, it does not have a comprehensive plan to address its FOIA backlog, nor has it yet addressed duplication in its FOIA process. Addressing both of these issues is important, as the number and complexity of requests will likely increase over time and DHS may be challenged in effectively responding to the needs of requesters and the public. Chairwoman Torres Small, Ranking Member Crenshaw, and Members of the Subcommittee, this completes my prepared statement. I would be pleased to respond to any questions that you may have. GAO Contact and Staff Acknowledgments If you or your staffs have any questions about this testimony, please contact Vijay A. D’Souza, Director, Information Technology and Cybersecurity, at (202) 512-6240 or dsouzav@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this testimony statement. GAO staff who made key contributions to this testimony include Neela Lakhmani and Anjalique Lawrence (assistant directors), Kara Epperson, Christopher Businsky, Nancy Glover, and Scott Pettis. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.