Fast Facts

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.

The Five Countries with the Most Kingpins and Significant Facilitators of Narcotics Trafficking, 2000-2019

Mexico: 62; Colombia: 32; Afghanistan: 17; Honduras: 11; Pakistan: 8

Mexico: 62; Colombia: 32; Afghanistan: 17; Honduras: 11; Pakistan: 8

Skip to Highlights
Highlights

What GAO Found

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.

Number of Kingpin Act Designations, from 2000 to 2019

Fig 05_7_v3_designations by year_102827_njd

Why GAO Did This Study

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.

Skip to Recommendations

Recommendations

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.

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of the Secretary 1. 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)
Closed - Implemented
In commenting on the report, Treasury officials provided technical comments but did not agree or disagree with this recommendation. Nevertheless, Treasury officials took steps to address this recommendation. Specifically, in July 2020 officials from Treasury's Office of Foreign Assets Control provided GAO guidance they sent to partner agencies clarifying, for example, the types of Kingpin Act-related activities for which the agencies should report expenditure data. The memo stated that to improve consistency and reliability of Kingpin Act expenditure data, agencies should consider more automated methods in order to track relevant expenditures. For example, agencies should explore whether their respective case management systems or similar databases, which may already track personnel and resource expenditures, allow for the use of program codes or other markers that would note when their own investigations overlap with Kingpin Act investigations. The memo also stated that when reporting personnel and resource expenditures to OFAC, agencies should indicate whether they acted as the lead agency contributing to Kingpin Act investigation and provide a brief statement of the methodology used to compile expenditure data. The officials also provided the annual report issued in 2020 which cited the updated guidance provided in response to GAO's report in presenting the year's Kingpin Act-related expenditures. GAO reviewed the documentation and determined that Treasury implemented GAO's recommendation with these actions.
Office of the Secretary 2. 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)
Open
In commenting on the report, Treasury officials provided technical comments but did not agree or disagree with this recommendation. Nevertheless, Treasury officials subsequently reported taking steps to address this recommendation. Specifically, in July 2020, officials from Treasury's Office of Foreign Assets Control provided GAO documentation of their management decision to include information about limitations in the consistency and reliability of agency expenditure data in their annual reports. GAO is requesting additional documentation showing that they have included the information about limitations in their annual report.

Full Report

GAO Contacts