From the U.S. Government Accountability Office, www.gao.gov Transcript for: Watchdog Report: U.S. Efforts to Stem Currency Smuggling Audio interview by GAO staff with Richard Stana, Director, Homeland Security and Justice Related GAO Work: GAO-11-73: Moving Illegal Proceeds: Challenges Exist in the Federal Government's Effort to Stem Cross-Border Currency Smuggling Released on: November 30, 2010 [ Background Music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the Government Accountability Office. It's November 30, 2010. It's estimated that criminals smuggle between 18 and 39 billion dollars in cash across the southwest border every year. New technologies are making it even harder for border security to thwart smugglers. A group led by Rich Stana, a director in GAO's Homeland Security and Justice team, recently reviewed the federal government's response to currency smuggling. GAO's Jeremy Cluchey sat down with Rich to learn more. [ Jeremy Cluchey: ] What sort of a threat does currency smuggling across U.S. borders pose to the United States? [ Rich Stana: ] Bulk cash is smuggled across our borders by drug trafficking organizations, criminal organizations, and possibly even terror organizations to either finance their activities or to bring the proceeds of their activities out of the country and back to the home country of these organizations. [ Jeremy Cluchey: ] And what sort of processes do they typically use to smuggle the cash across borders? [ Rich Stana: ] Well, there's really two basic types. One, you might consider a 20th century type of operation and that's where you bring packages or some sort of a bundle of physical cash, you put it into a car or put it on someone's knapsack and physically take the cash across the border. That’s commonly known as bulk-cash smuggling and the report addresses that. But there’s also emerging a 21st century type of moving cash out of the country and that's done electronically through things like stored value cards or even cell phones that can move cash from one account to another across national lines. That in particular in my mind is the more troublesome one; it's much harder to defend against. [ Jeremy Cluchey: ] And what sort of steps have federal agencies taken so far to try and address some of these issues? [ Rich Stana: ] In March 2009, Secretary Napolitano announced a program to address bulk cash smuggling, the 20th century smuggling, at our nation’s ports of entry. On all 25 southwest border land borders, there are operations that go on, not all 24/7, in fact none are 24/7, and we can discuss that later-- and some northern border. But it's mostly a southern border activity. With respect to the 21st century method, not a whole lot has been done, and the regulatory framework has lots of holes in it. [ Jeremy Cluchey: ] Your team looked at some of these programs that are currently in place. Can you talk about that process that your team followed? [ Rich Stana: ] Yeah, actually we used a variety of methods to track down operations here. We sent our own GAO auditors to different ports of entry on the southern and northern borders to make direct observations of CBP operations. We examined CBP data. We spoke with CBP individuals, interviewed them on their operations and how they perceive the problems. And we also used our special investigators from FSI to go down to the border, under cover, and test the operations of CBP at the ports themselves. [ Jeremy Cluchey: ] And how effective did your team find these various operations to be? [ Rich Stana: ] Well, they've made some progress, let's put it that way. They have been able to seize 41 million dollars of cash that was trying to get out of the country in various ways. But that's out of a universe of 19 to 38 billion with a “B” dollars. The reasons why it's difficult for them to do this are several. One is, is they really don't have the staff that are devoted to outbound operations 24/7. It's an episodic thing, they try to do it different times a day, spot-check different passengers leaving the country, and so it's not a 24/7 operation. The second thing is, is the infrastructure isn't there. Unlike inbound passengers, outbound passengers really can't be inspected you know in great numbers because you back up the traffic all the way back into the United States and sometimes these ports of entry are located in urban areas so you'd be basically clogging up downtown areas. So the infrastructure is not there. The third thing is that they don't have the technology--they don't have license plate readers, they don't have some of the other equipment to scan passports, and so on so they're kind of behind in that. And finally, there just aren't enough canines. [ Jeremy Cluchey: ] So given these challenges, what recommendations is GAO making in this report? [ Rich Stana: ] On the physical side, on the 20th century side, we're recommending that they take stock using data and other analysis to see what works and what doesn't--at what ports does it work, what doesn't work, where is the through put, where isn't it. And to come up with a better rationalization for the costs and benefits of continuing this operation and how far it ought to go from here. On the 21st century side, as I mentioned earlier, the regulatory framework is really not very complete so we recommended that they do what they need to do to finalize the regulation, to manage the rule making, to put enforcers in a better position to address the stored value cards leaving the country. 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