Foreign Regimes' Assets: The United States Faces Challenges in Recovering Assets, but Has Mechanisms That Could Guide Future Efforts
GAO-04-1006
Published: Sep 14, 2004. Publicly Released: Oct 20, 2004.
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Highlights
For many years, the United States has used economic sanctions, including the freezing of foreign regimes' assets, when such regimes have been determined to be a threat to the nation. In light of recent efforts to "recover"--or target, identify, freeze, and transfer--Iraqi assets, GAO was asked to examine overall U.S. efforts to recover foreign regimes' assets. This report (1) describes the approach the U.S. government uses to recover foreign regimes' assets, (2) examines the challenges the United States faces in recovering foreign regimes' assets, and (3) examines the mechanisms the United States has used to recover Iraqi assets and their applicability to future efforts.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Treasury | To improve the U.S. government's readiness to move forward quickly in future asset recovery efforts, the Departments of the Treasury and State should work with U.S. intelligence and law enforcement agencies to improve the accuracy and completeness of account identifying information needed by financial institutions to identify and freeze assets of foreign regimes. |
Closed – Implemented
Treasury's 60-day response letter noted that it was working with State and other agencies, including the intelligence community to continually improve identifiers. In January 2005, Treasury's Assistant Secretary for Terrorist Financing & Financial Crimes stated before the UN Security Council 1267 Sanctions Committee that over the past three years, Treasury and State in conjunction with other agencies had made great strides to improve the quality and quantity of this identifier information. Specifically, the overwhelming majority of designations issued over this period have included essential identifier information and that are constantly improving our efforts in this regard.
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| Department of State | To improve the U.S. government's readiness to move forward quickly in future asset recovery efforts, the Departments of the Treasury and State should work with U.S. intelligence and law enforcement agencies to improve the accuracy and completeness of account identifying information needed by financial institutions to identify and freeze assets of foreign regimes. |
Closed – Implemented
According to the Department of State in its 60-day response letter, it continues to work with foreign governments, Treasury, U.S. intelligence and law enforcement agencies to improve accuracy and completeness of account identifying information needed by financial institutions to identify and freeze assets of foreign regimes.In January 2005, Treasury's Assistant Secretary for Terrorist Financing & Financial Crimes stated before the UN Security Council 1267 Sanctions Committee that over the past three years, Treasury and State in conjunction with other agencies had made great strides to improve the quality and quantity of this identifier information. Specifically, the overwhelming majority of designations issued over this period have included essential identifier information and that are constantly improving our efforts in this regard.
|
| Department of the Treasury | To improve the U.S. government's readiness to move forward quickly in future asset recovery efforts, the Department of the Treasury should seek legislative authority, if necessary, to enhance OFAC's ability to ensure financial institution compliance with sanctions by allowing financial regulators to share complete information from their examinations with OFAC. |
Closed – Implemented
In September 2004, (Foreign Regimes' Assets: The United States Faces Challenges in Recovering Assets, but Has Mechanisms That Could Guide Future Efforts, GAO-04-1006), GAO recommended that the Department of the Treasury seek legislative authority, if necessary, to enhance OFAC's ability to ensure financial institution compliance with sanctions by allowing financial regulators to share complete information from their examinations with OFAC. In April 2006, Treasury's Office of Foreign Assets Control (OFAC) and the heads of the key federal banking agencies (FBA) signed a Memorandum of Understanding that contained procedures for the FBA's sharing information relating to potential sanctions violations and examinations with OFAC for potential enforcement actions.
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| Department of the Treasury | To improve the U.S. government's readiness to move forward quickly in future asset recovery efforts, the Departments of the Treasury and State should develop and document a compilation of lessons learned from the current effort to recover Iraq's assets that could assist in appropriately institutionalizing and leveraging all mechanisms available for future efforts. |
Closed – Implemented
According to Treasury's Under Secretary for Terrorism and Financial Intelligence in 2006, over the past two years, Treasury had learned a number of lessons about how best to use financial tools to apply financial pressure and isolate terrorists, proliferators, and others whose goal it is to undermine our security. As a result, they began relying more "targeted" measures, aimed at specific actors engaged in illicit conduct. He also cited the extensive abuse of the Oil for Food program in Iraq as just one example of classic "sanctions busting" behavior and stated they eventually learned, the companies hurt by that sanctions program were the ones that played by the rules. Also, in 2007, Treasury's Secretary stated that Since September 11th, Treasury has been applying lessons learned in a more focused effort against global terrorist threats. He also cited a number of cases where lessons learned have been used to go after the financial assets of regimes in North Korea and Iran. He also mentioned State's role in pursuing these issues at the United Nations to further designate, sanction, and cut off financial networks.
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| Department of State | To improve the U.S. government's readiness to move forward quickly in future asset recovery efforts, the Departments of the Treasury and State should develop and document a compilation of lessons learned from the current effort to recover Iraq's assets that could assist in appropriately institutionalizing and leveraging all mechanisms available for future efforts. |
Closed – Implemented
According to Treasury's Under Secretary for Terrorism and Financial Intelligence in 2006, over the past two years, Treasury had learned a number of lessons about how best to use financial tools to apply financial pressure and isolate terrorists, proliferators, and others whose goal it is to undermine our security. As a result, they began relying more "targeted" measures, aimed at specific actors engaged in illicit conduct. He also cited the extensive abuse of the Oil for Food program in Iraq as just one example of classic "sanctions busting" behavior and stated they eventually learned, the companies hurt by that sanctions program were the ones that played by the rules. Also, in 2007, Treasury's Secretary stated that Since September 11th, Treasury has been applying lessons learned in a more focused effort against global terrorist threats. He also cited a number of cases where lessons learned have been used to go after the financial assets of regimes in North Korea and Iran. He also mentioned State's role in pursuing these issues at the United Nations to further designate, sanction, and cut off financial networks.
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Topics
Foreign governmentsForeign policiesIntergovernmental fiscal relationsSanctionsSearch and seizureTangible assetsIraq War and reconstructionFinancial institutionsInternational organizationsExecutive orders