Title: Federal Efforts to Combat Criminals' Illicit Financial Activities

Description: Criminal organizations and terrorist groups use money
laundering to carry out their crimes, including human and drug
trafficking. Federal agencies work together to investigate these
activities and have developed several strategies to combat these crimes.
But what do we know about how effective these efforts are? We'll find
out more from GAO’s Triana McNeil.

Related work: GAO-25-106568, Illicit Finance: Agencies Could Better
Assess Progress in Countering Criminal Activity 

Released: February 2025

{Music}

[Triana McNeil:] We need to really be focusing our efforts and being
able to keep up with these criminal organizations because they stay on
the cutting edge.

[Holly Hobbs:] Hi, and welcome to GAO's Watchdog Report. Your source for
fact-based, nonpartisan news and information from the U.S. Government
Accountability Office. I'm your host, Holly Hobbs. Criminal
organizations and terrorist groups use money laundering to carry out
their crimes, including human and drug trafficking. Federal agencies
work together to investigate these activities and have developed several
strategies to combat these crimes. But what do we know about how
effective these efforts are? We'll find out more from GAO’s Triana
McNeil, who led work for a new report on this topic. Thanks for joining
us.

[Triana McNeil:] Thank you. Thank you for having me.

[Holly Hobbs:] So, Triana, maybe we can start with how big of a deal is
this? How big of an issue is it?

[Triana McNeil:] It's huge. Illicit finance is a really big deal for the
U.S. financial system. The top two threats are money laundering and
terrorist financing. And I'll give you a couple of statistics. So in
2023, the year for which we had the most recent available data, the U.S.
seized almost $2 billion in money laundering related assets. And in the
same time frame, we disrupted 562 transnational criminal organizations.
The goal was 350. So that just shows we blew right through that goal.
This is a huge problem.

[Holly Hobbs:] How exactly are they doing this? How? How does it work?
What are the mechanics of it?

[Triana McNeil:] So, basically, they're conducting their crimes. They're
then funneling that money through our financial system, and then they're
using the proceeds to commit more crimes. So, you might have drug
traffickers. They use their proceeds to buy legitimate real estate. They
then use the proceeds of real estate transactions to fund terrorism
abroad. Another example. We call them bust outs. So criminal
organizations will use fraudulent identities, and they'll get lines of
credit. They'll use credit cards. And they'll establish great credit
over a long period of time. And then they max it out. They use those
proceeds to do whatever criminal activities that they want to do. And
that's particularly challenging because a lot of these fraudulent
identities are synthetic identities. They're not stolen. They create
them. They'll get a Social Security number from someone. From another
person, they'll use their birth date. They cobble it together, and it's
just super hard to try to track down the perpetrators that use synthetic
identities.

[Holly Hobbs:] What is the federal government doing to try to combat
these crimes?

[Triana McNeil:] So it's twofold. You've got federal agencies whose
primary mission is to investigate and prosecute these criminal
organizations. So, you've got the FBI. They investigate criminal
organizations, and they investigate violations of U.S. drug laws. You
got the DEA. Their whole mission is to enforce the U.S. drug laws, but
they also try to dismantle these drug cartels and other drug
organizations. So that’s the individual federal agencies, but then
you've got this government-wide approach. You've got a number of
strategies that involve multiple agencies. They're collaborating and
coordinating with the goal of combating illicit finance. So the National
Drug Control Strategy—that’s led by an office in the White House, it
involves all of the drug control agencies. One of their huge goals is to
reduce demand for drugs. But they also are trying to dismantle these
financial networks that are involved in drug trafficking. And you've got
another strategy that's focused on combating terrorist and other illicit
finance activities. That's ran out of the Treasury Department. It
involves financial regulators, federal law enforcement, as well as our
intelligence agencies. And their main goal is to counter all the
significant threats to our financial system. And so the government-wide,
all-of-government approaches are really what's key to combating illicit
finance.

[Holly Hobbs:] Do we know how effective these strategies are?

[Triana McNeil:] Unfortunately, we do not. We've reviewed a number of
these strategies. The two I mentioned are just two. There are multiple
other ones. They have goals. But they don't have the performance
information, which is results-oriented, outcome-oriented information,
that can track the progress toward the goals and the strategies. They
need to start tracking performance information. And not outputs. Outputs
can be good. But oftentimes that's like widgets. We need to get at the
effectiveness. And we need to focus on the outcomes. Because without
knowing that type of information it's hard to tell if we should be
redirecting resources to more effective activities and efforts.

{MUSIC}

[Holly Hobbs:] So government-wide strategies are key to combatting
illicit financial actives. But federal agencies aren’t collecting the
performance information they need to know how effective their efforts
are. So, Triana, what more do we think the federal government should be
doing to understand the effectiveness of its efforts? 

[Triana McNeil:] It's all about collecting performance information. The
Treasury Department was one of the agencies where we made this
recommendation. They disagreed. But in our conversations with them, they
acknowledged they could do quarterly data calls for all the
participating agencies in the strategy that they lead. And that would
arm them with the type of information to chart progress toward their
goals. And so, with our recommendation follow up, we're going to hold
their feet to the fire. We want to see—where is this information, what
activities, what oversight are you doing of your strategy? Because the
government needs to understand—is this the right approach or do we need
to pivot and do something different?

[Holly Hobbs:] And last question what's the bottom line of this report.

[Triana McNeil:] I want to make three points. Number one, this is a huge
problem for our financial system. Number two, it's going to require an
all-of-government approach. And number three we have to get this
performance information because there's so many different entities
involved. And they're trying all these different things. And we need to
really be focusing our efforts and being able to keep up with these
criminal organizations because they stay on the cutting edge.

[Holly Hobbs:] That was Triana McNeil talking about our new report about
efforts to combat illicit finance. Thanks for your time, Triana.

[Triana McNeil:] Thank you.

[Holly Hobbs:] And thank you for listening to the Watchdog Report. To
hear more podcasts, subscribe to us on Apple Podcasts, Spotify or
wherever you listen. And make sure to leave a rating and review to let
others know about the work we're doing. For more from the congressional
watchdog, the U.S. Government Accountability Office, visit us at
GAO.gov.