Economic Sanctions:

Agencies Face Competing Priorities in Enforcing the U.S. Embargo on Cuba

GAO-08-80: Published: Nov 30, 2007. Publicly Released: Dec 18, 2007.

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The 48-year U.S. embargo on Cuba aims to deny resources to the Castro regime by prohibiting most trade, travel, and financial transactions with Cuba. The departments of Commerce, Homeland Security (DHS), Justice, and the Treasury are responsible for enforcing the embargo as well as protecting homeland and national security. Since 2001, U.S. agencies have changed the embargo's rules in response to new laws and policies. GAO was asked to examine (1) the rule changes in 2001-2005 and their impact on U.S. exports, travel, cash transfers, and gifts to Cuba; (2) U.S. agencies' embargo-related activities and workloads; and (3) factors affecting the embargo's enforcement. GAO analyzed laws, regulations, and agency data, interviewed agency officials, and observed agency activities at Port Everglades and Miami International Airport, Florida.

The loosening of embargo rules on some exports led to increased agricultural shipments to Cuba, but the impact of tighter restrictions on travel, cash transfers, and gifts is unknown. In 2001, responding to a new law, Treasury's Office of Foreign Assets Control (OFAC) and Commerce's Bureau of Industry and Security (BIS) loosened embargo restrictions on some trade with Cuba. U.S. exports to Cuba--mostly agricultural products--rose from about $6 million to about $350 million from 2000 to 2006. In 2004, responding to new administration policy, OFAC tightened rules on travel to Cuba, for example, by requiring that all family travelers obtain specific Treasury licenses and reducing the permitted frequency of family visits from once a year to once every 3 years, and it also tightened rules for sending cash transfers and gift parcels. Because reliable data are not available, the impact of these tighter restrictions on travel, cash transfers, and gifts cannot be determined. U.S. agencies enforce the Cuba embargo primarily by licensing and inspecting exports and travelers and by investigating and penalizing or prosecuting embargo violations. BIS processed twice as many exports license applications for Cuba in 2006 than in 2001, and OFAC issued about 40 percent more Cuba travel licenses in 2006 than in 2003. Reflecting the administration's embargo-tightening policy, DHS's Customs and Border Protection (CBP) inspects all exports to Cuba at Port Everglades and, since 2004, has increased intensive, "secondary" inspections of passengers arriving from Cuba at the Miami airport; in 2007, CBP conducted these inspections for 20 percent of arrivals from Cuba versus an average of 3 percent of other international arrivals. CBP data and interviews with agency officials suggest that the secondary inspections of Cuba arrivals at the airport may strain CBP's ability to carry out its mission of keeping terrorists, criminals, and other inadmissible aliens from entering the country. Moreover, recent GAO reports have found weaknesses in CBP's inspections capacity at key U.S. ports of entry nationwide. After 2001, OFAC opened more investigations and imposed more penalties for embargo violations, such as buying Cuban cigars, than for violations of other sanctions, such as those on Iran. In contrast, BIS, DHS's Immigration and Customs Enforcement, and Justice have primarily investigated, penalized, or prosecuted export violations and crimes that present a greater threat to homeland and national security or public safety. U.S. officials and others told GAO that several factors hinder enforcement of the Cuba embargo, sometimes acting in concert. (1) Lack of cooperation from foreign countries has undercut the embargo's effectiveness and hampered inspections and investigations. (2) Divided U.S. public opinion, particularly regarding the new travel and cash transfer restrictions, has contributed to widespread, small-scale embargo violations and the selling of fraudulent religious and other travel licenses, among other problems. (3) Some embargo violations are difficult to detect or control, such as fraudulent licenses and on-line money transfers via third countries. (4) The embargo's complexity and changing rules may have led to unintended violations by some individuals and companies.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In its "60-day letter," DHS wrote that, as recommended in our report, the Miami Service Port/Miami International Airport management team had reevaluated the level of resources devoted to enforcing the US embargo on Cuba at the airport. DHS stated that the CBP reevaluation had been completed through a series of meetings with senior management at the field office, local port management, and local subject matter experts including airline and carrier personnel. DHS also identified some of the different factors CBP considered to determine resource needs, and stated that CBP had used a "risk-based approach" in assessing these factors. DHS reported that, using the stated factors and principles, CBP officials had determined that the agency had achieved an effective balance between the resources dedicated to enforcing the Cuba embargo laws and those dedicated to other missions, such as keeping terrorists, criminals, and inadmissible aliens out of the United States. Our assessment is that the DHS letter provides a reasonable description of the steps CBP took in its reevaluation of the resources employed at the Miami airport in support of the US embargo on Cuba.

    Recommendation: In light of the recognized weaknesses in CBP's inspections capacity at major ports of entry, the Secretary of Homeland Security should direct CBP to re-evaluate whether the current level of resources focused on secondary inspections of passengers arriving from Cuba at the Miami airport effectively balances its responsibility for enforcing the Cuba embargo with its responsibilities for keeping terrorists, criminals, and inadmissible aliens out of the country.

    Agency Affected: Department of Homeland Security

  2. Status: Closed - Not Implemented

    Comments: Treasury expressed neither agreement nor disagreement with our draft recommendation that OFAC assess the consistency of its resource allocations related to Cuba embargo violations with the risk of these violations to U.S. security. Treasury stated that OFAC's resources for investigating and penalizing violations of the Cuba embargo and other sanctions programs are allocated according to the agency's priorities, legal obligations to enforce all sanctions laws fairly, and volume of work. Treasury reiterated that Cuba-related cases represent a smaller portion of OFAC's enforcement work and require fewer resources than the number of such cases suggests. Treasury did not respond to GAO's efforts in 2012 to obtain updated information about the Department's position on this recommendation.

    Recommendation: In addition, in light of OFAC's responsibilities for administering more than 20 sanctions programs, including sanctions against countries engaged in terrorism, weapons proliferations, and narcotics trafficking, the Secretary of the Treasury should direct OFAC to assess its allocation of resources for investigating and penalizing violations of the Cuba embargo with respect to the numerous other sanctions programs it administers.

    Agency Affected: Department of the Treasury

 

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