DEA Failed to Properly Consider Risks When Laundering Money for Drug Traffickers
Drug enforcement agents routinely ignored oversight mechanisms while laundering millions for illicit organizations, IG finds.
June 17, 2020
Senior Correspondent
The Drug Enforcement Administration failed to institute adequate checks or risk mitigation when engaging in covert operations to launder money for drug traffickers, according to a new audit, and ultimately jeopardized public safety.
DEA agents regularly ignored steps designed to ensure proper oversight when engaged in the undercover activity, known as Attorney General Exempted Operations, the Justice Department's inspector general found in a report released Wednesday. The IG confirmed the operations were critical to disrupting many drug trafficking organizations and led to the arrests of hundreds of criminals, but found the failure to comply with statutory and regulatory requirements has put those activities at risk.
The exempted operations allow DEA agents to be active participants in drug money laundering, including through operating a business, obtaining property and making bank deposits. While the investigations are intended to help the agency disrupt trafficking organizations, make arrests of their leaders and generate revenue, it can also assist in helping them function and obtain proceeds.
“While the ultimate goals of [exempted operations] support the DEA’s mission to disrupt and dismantle [drug trafficking organizations], the collateral consequence of temporarily assisting the basic operation of [trafficking organizations] does not,” the IG said.
The Justice Department never made clear that DEA agents are subject to FBI undercover guidelines, the IG found, leading to those agents often ignoring the procedures. They have consistently failed to document their activities, provide required updates to the attorney general and Congress on the illegal activities in which they were engaging, and conduct financial audits on the money coming in and going out during the investigations.
While guidelines require DEA agents to receive new clearances to continue their undercover laundering investigations every six months, they often failed to do so. Some cases lacked a requisite review committee altogether, the IG said. DEA agents also consistently failed to limit laundering operations to the minimum time necessary to achieve their objectives, leading some investigations to carry on for more than 10 years. This led to DEA agents failing to stay focused on key goals.
“During these extensive operations,” the IG said, “the DEA did not consistently follow the trail of illicit funds and the leads generated by [Attorney General Exempted Operations], follow up on money laundering transactions, or sufficiently document investigative actions taken on these potential illegal activities.”
In one operation that lasted more than six years, DEA added a narcoterrorist and other traffickers to its scope after it began. DEA ultimately laundered $20 million for the drug traffickers during the operation, the IG found, while failing to account for the evolving risks it took on.
Allowing operations to drag on without proper oversight “reduced the DEA’s accountability for achieving the intended result,” the auditors said. Ultimately, the IG said, DEA’s undercover program did not adequately ensure public safety.
“As recognized publicly, [trafficking organizations] are not only involved in drug trafficking, but also participate in violent crimes and have been linked to terrorism,” the auditors wrote. “This elevates the risks that the DEA’s involvement in money laundering activity may inadvertently support particularly egregious criminal activity.”
A failure to properly document and review the data gleaned from their investigations also led DEA to miss connections among the various operations, including which “entities were complicit in [drug] money laundering activities.” Improper control regarding virtual currency “increased the potential for fraud, waste, abuse and unauthorized investigative activity,” the IG said. The auditors also said they found “inflated statistics” in the data DEA did compile in relation to the undercover laundering operations.
DEA management said in response to the report that a 2017 evaluation of the Attorney General Exempted Operations program led to "clearer policy, improved protocols and additional oversight." The IG countered that the new procedures were insufficient to address the widespread problems it identified, and made 19 additional recommendations. DEA agreed with all of them.