Counternarcotics: Treasury Reports Some Results from Designating Drug Kingpins, but Should Improve Information on Agencies' Expenditures

Drug deaths in the United States have been rising for years. According to the Centers for Disease Control and Prevention, in 2017 there were over 70,000 U.S. drug overdose deaths. This national emergency results in part from the activities of international narcotics traffickers and their organizations. The Kingpin Act, enacted in 1999, allows 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.

This report examines (1) how U.S. agencies designate individuals and entities under the 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. GAO reviewed documents from and interviewed officials at Treasury, the Department of State, and other partner agencies. GAO also performed fieldwork in Colombia and Mexico.

Under the Foreign Narcotics Kingpin Designation Act (Kingpin Act), the Department of the Treasury's (Treasury) 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.

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 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. This lack of clear expenditure information could hinder oversight of the Kingpin Act.

OFAC officials noted 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. Results reported by OFAC and its partners include, for example, 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 (1) improve guidance to partner agencies on their Kingpin Act–related expenditures and (2) disclose expenditure data limitations in its annual Kingpin Act reports to Congress. Treasury did not agree or disagree with the recommendations.

The number of deaths due to illicit narcotics in the United States has been  on the rise for many years. The Centers for Disease Control and  Prevention reported deaths from drug overdoses increased over 300  percent, from almost 17,000 in 1999 to more than 70,000 in 2017.  According to the Drug Enforcement Administration (DEA), deaths related  to cocaine and heroin, for example, continue to rise. DEA reported that in  Colombia—the primary source for cocaine seized in the United States— from 2007 to 2017, export quality cocaine increased from close to 700  metric tons to 1,100 metric tons, fueled by record levels of coca  cultivation and cocaine production. Additionally, in more recent years, the  death rate also dramatically increased as a result of the opioid epidemic  in the United States, due to illicit fentanyl and other synthetic narcotics.

The Foreign Narcotics Kingpin Designation Act (Kingpin Act), enacted in  1999, allows the Department of the Treasury (Treasury) to designate and  sanction foreign individuals and entities that contribute to illicit narcotics  trafficking. The Kingpin Act is part of U.S. efforts to combat international  narcotics traffickers and their organizations that threaten the national  security and economy of the United States. Treasury’s Office of Foreign  Assets Control (OFAC), in conjunction with law enforcement agencies  that focus their counternarcotics efforts on seeking criminal charges  against traffickers, implements and enforces the Kingpin Act. OFAC  officials said the Kingpin Act’s sanctions are a unique tool in that they are  designed to deny significant narcotics traffickers and their support  networks access to the U.S. financial system.

You asked us to review issues related to the implementation and  effectiveness of the Kingpin Act. This report examines (1) how U.S.  agencies designate individuals and entities under the 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 reviewed documentation on collaboration and  information-sharing agreements between Treasury and its partner  agencies to determine the ways in which agency participation in the  designation process has been formalized. We also selected nine  designations made since 2015 that represented countries in both the  Western Hemisphere and non–Western Hemisphere regions, including  the countries where we performed fieldwork—Colombia and Mexico.  Findings from our review of these nine designations are not generalizable  to all designations, but provided insight into OFAC’s designation process  and the extent of the variation in the timing and sequence of the steps  leading to the designations. We also interviewed officials from the  mandated partner agencies—the Departments of the Treasury, State  (State), Homeland Security (DHS), and Defense (DOD); the Federal  Bureau of Investigation (FBI); and DEA—and reviewed documents,  including the legal authorities for the designations. In addition, we  received responses from the Central Intelligence Agency (CIA) to  questions we sent.

To examine the extent to which U.S. agencies monitor, enforce, and  report on Kingpin Act sanctions, we interviewed officials from each  partner agency about the methodology they used to calculate their annual  resource and personnel expenditures. We interviewed officials from  OFAC and its partner agencies regarding their roles in sanctions  implementation. In addition, we interviewed officials from two Federal  Banking Agencies (FBA)—the Office of the Comptroller of the Currency  (OCC) and the Board of Governors of the Federal Reserve System  (Federal Reserve)—and five U.S. banks identified 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. We 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.

To examine what is known about the effectiveness of 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 designations 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. In addition, we  interviewed OFAC and partner agency officials in Washington, D.C.,  Colombia, and Mexico, regarding their efforts to assess effectiveness or  results of Kingpin Act designations and challenges in measuring  effectiveness of the act. We also held telephone interviews with partner  agency officials in Panama.

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.

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.

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.

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)

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.

Appendix II: GAO Contact and 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.

The Kingpin Act allows the Treasury Department (in partnership with other federal agencies) to designate and sanction individuals and entities involved in narcotics trafficking. Treasury reported designating about 2,000 people and entities and freezing over $500 million in assets since 2000.

Treasury submits an annual report to Congress on spending and sanctions related to this act.

We 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, which has produced inconsistent data across agencies.

We recommended Treasury improve its guidance.