On March 9, 2011, the Government Accountability Office issued a report detailing the challenges posed to US Customs and Border Protection with its Outbound Inspection Program; essentially, the process by which it attempts to stop bulk cash shipments to both Mexico - which accounts for 97 percent of shipments - and Canada.
Here are a few excerpts from the executive summary:
"The National Drug Intelligence Center (NDIC) has stated that proceeds from drug trafficking generated in this country are smuggled across the southwest border and it estimates that the proceeds total from $18 billion to $39 billion a year."
"This testimony is based on our October 2010 report on cross-border currency smuggling and updated information on bulk cash seizures and the status of one our recommendations. Like the report, it will cover the following three issues: (1) the actions CBP has taken to stem the flow of bulk cash leaving the country through land ports of entry and the challenges that remain, (2) the regulatory gaps that exist for cross-border reporting and other anti-money laundering requirements involving the use of stored value, and (3) the extent to which FinCEN has taken action to address these regulatory gaps."
"In March 2009, CBP reestablished the Outbound Enforcement Program within its Office of Field Operations. As a result of its outbound enforcement activities, CBP seized about $67 million in illicit bulk cash leaving the country at land ports of entry--97 percent of which was seized along the southwest border-- from March 2009 through February 22, 2011. Total seizures account for a small percentage of the estimated $18 billion to $39 billion in illicit proceeds being smuggled across the southwest border annually. CBP has succeeded in establishing an Outbound Enforcement Program, but the program is in its early phases and there is a general recognition by CBP managers and officers that the agency's ability to stem the flow of bulk cash is limited because of the inherent difficulty in identifying travelers who attempt to smuggle cash. Beyond this inherent difficulty, in our October 2010 report we identified management challenges in three main areas. First, addressing limitations in staffing, infrastructure, and technology, among other things, could require substantial capital investments at all ports of entry."
Analysis: If you don't have time to read the whole report, I think it's very helpful to go through the full executive summary, which you can read HERE. I won't go into a full analysis here because the GAO has a good track record for nailing problems with government agencies on the head, and I don't believe this is an exception. One statement in particular that really resonates - at least with me, anyway - is "addressing limitations...could require substantial capital investments at ALL ports of entry." We know DHS has allocated some money towards the expansion and renovation of some POEs. While some of those were in dire need of updating, there was some controversy when this money was initially being doled out (at some point in 2009, I believe) because a considerable amount was going to some POEs on the northern border that don't really get that much cross-border traffic. The GAO report says that ALL POEs could require a significant influx of cash, which is something I've been saying for quite some time.
As always, I like that (it seems on the surface, anyway) CBP is taking the recommendations to heart. But given that CBP is only one cog in the huge bureaucratic wheel that is DHS, it's unlikely that we'll see any major changes occur very quickly.