Moving Illegal Proceeds: Challenges Exist in the Federal Government's Effort to Stem Cross-Border Currency Smuggling
GAO-11-73
Published: Oct 25, 2010. Publicly Released: Nov 30, 2010.
Skip to Highlights
Highlights
U.S. Customs and Border Protection (CBP) is the lead federal agency responsible for inspecting travelers who seek to smuggle large volumes of cash--called bulk cash--when leaving the country through land ports of entry. It is estimated that criminals smuggle $18 billion to $39 billion a year in bulk cash across the southwest border. The Financial Crimes Enforcement Network (FinCEN) is responsible for reducing the risk of cross-border smuggling of funds through the use of devices called stored value, such as prepaid cards. GAO was asked to examine (1) the extent of actions taken by CBP to stem the flow of bulk cash leaving the country and any challenges that remain, (2) the regulatory gaps, if any, of cross-border reporting and other anti-money laundering requirements of stored value, and (3) if gaps exist, the extent to which FinCEN has addressed them. To conduct its work, GAO observed outbound operations at five land ports of entry. GAO also reviewed statutes, rules, and other information for stored value. This is a public version of a law enforcement sensitive report that GAO issued in September 2010. Information CBP deemed sensitive has been redacted.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Homeland Security | To strengthen CBP's implementation of the Outbound Enforcement Program as well as its planning efforts related to the program, the Secretary of Homeland Security should direct the Commissioner of Customs and Border Protection (CBP) to collect cost and benefit data that would enable a cost/benefit analysis of the Outbound Enforcement Program to better inform decisions on where scarce resources should be applied. These data could include cost data on training and using currency canine for outbound operations as part of the Outbound Workload Staffing Model, cost estimates for equipping officers, installing technology to support outbound operations, assessments of infrastructure needs at port of entry outbound lanes, an estimate of the costs resulting from travelers waiting to be inspected, and information on quantifiable benefits, such as seizures, as well as non-quantifiable benefits resulting from outbound inspections. | We found that U.S. Customs and Border Protection (CBP) was in the early phases of its Outbound Enforcement Program and that CBP had limited data on the expected costs and benefits of the program. As a result we recommended that CBP collect cost and benefit data that would enable a cost/benefit analysis of the Outbound Enforcement Program to better inform decisions on where scarce resources should be applied. On January 2, 2013, CBP reported to GAO that it has conducted studies of Southwest Border outbound crossings and, using data from those studies, developed a cost-benefit analysis report. As this cost and benefit data will enable CBP to better inform decisions on where scarce... resources should be applied, we are closing the recommendation as implemented.
View More |
| Department of Homeland Security | To strengthen CBP's implementation of the Outbound Enforcement Program as well as its planning efforts related to the program, the Secretary of Homeland Security should direct the Commissioner of CBP to direct and ensure that managers at land ports of entry develop policies and procedures that address officer safety, such as detailing how officers should conduct outbound inspections on a busy highway environment. |
We found that U.S. Customs and Border Protection (CBP) had not yet developed policies and procedures to help ensure officer safety in conducting outbound operations. As a result, we recommended that CBP direct and ensure that managers at land ports of entry develop policies and procedures that address officer safety. In August 2012, CBP issued a management directive on outbound enforcement operations. As such, we are closing this recommendation as implemented.
|
| Department of Homeland Security | To strengthen CBP's implementation of the Outbound Enforcement Program as well as its planning efforts related to the program, the Secretary of Homeland Security should direct the Commissioner of CBP to develop a performance measure that informs CBP management, Congress, and other stakeholders about the extent to which the Outbound Enforcement Program is effectively stemming the flow of bulk cash, weapons, and other goods that stem from criminal activities by working with other federal law enforcement agencies involved in developing assessments on bulk cash and other illegal goods leaving the country. | We found that U.S. Customs and Border Protection (CBP) recognized that obtaining better data on the threat of bulk cash smuggling and other illegal activities is one key to understanding the effectiveness of its Outbound Enforcement Program. However, CBP had yet to develop a performance measure that showed the degree to which its efforts were stemming the flow of bulk cash leaving the country. Therefore, we recommended that CBP develop a performance measure that informs CBP management, Congress, and other stakeholders about the extent to which the Outbound Enforcement Program is effectively stemming the flow of bulk cash, weapons, and other goods that stem from criminal activities. In...
|
| Financial Crimes Enforcement Network | To strengthen FinCEN's rulemaking process and to ensure IRS compliance examiners consistently apply the anti-money laundering requirements under the Credit CARD Act, the Director of FinCEN should update its written plan by describing, at a minimum, target dates for implementing all of the requirements under the Credit CARD Act to include FinCEN's overall strategy and risk mitigation plans and target dates for issuing notices of proposed rulemaking and final rules. | The Credit CARD Act of 2009 requires that the Financial Crimes Enforcement Network (FinCEN) develop regulations related to the use of stored value cards for criminal purposes. We found that FinCEN was in the process of developing and issuing regulations and had developed initial plans for issuing the final rules for stored value. However, its plans were missing key elements consistent with best practices for project management. Therefore, we recommended FinCEN update its plan by describing, at a minimum, target dates for implementing all of the requirements under the Credit CARD Act to include FinCEN's overall strategy and risk mitigation plans and target dates for issuing notices of...
|
| Financial Crimes Enforcement Network | To strengthen FinCEN's rulemaking process and to ensure IRS compliance examiners consistently apply the anti-money laundering requirements under the Credit CARD Act, the Director of FinCEN should revise its guidance manual to include specific examination policies and procedures, including for transaction testing, for IRS examiners to follow at a MSB that issues, sells, and/or redeems stored value. | The Credit CARD Act of 2009 requires that the Financial Crimes Enforcement Network (FinCEN) develop regulations related to the use of stored value cards for criminal purposes. In October 2010, we found that FinCEN was developing regulations, as required by the Act, to address gaps in regulations related to the use of stored value for criminal purposes. However, FinCEN had not developed a management plan that includes, among other things, target dates for completing the regulations. We concluded that developing such a plan could help FinCEN better manage its rulemaking effort. In particular, we found that when it issues the regulations, law enforcement agencies and FinCEN may be...
|
Full Report
GAO Contacts
Public Inquiries
Topics
Border controlBorder patrolsBorder securityCash managementCurrency and coinageFederal regulationsFinancial disclosureFinancial instrumentsInspectionLaw enforcementMoney launderingReporting requirementsSmart cardsSmuggling