Export-Import-Bank: Additional documentation on stakeholder roles and clarity on fraud risks would strengthen anti-fraud efforts

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brief info

The United States Export-Import Bank supports American jobs by facilitating US exports. It provides loans, loan guarantees and other assistance to US companies unable to obtain private financing for their businesses. It can take risks that the private sector will not take, including the risk of losses due to fraud.

The Bank has implemented anti-fraud practices required by law.

We reviewed its transactions for 2020-2021 to determine if any requests from parties with allegations of fraud or corruption were denied. We did not find any convicts among the applicants.

Our recommendations look at ways the bank could improve its responses to evolving fraud risks and more.

highlights

What GAO found

The Export-Import Bank of the United States (EXIM) has designed and implemented an anti-fraud strategy and worked with stakeholders to ensure its implementation, but the strategy is missing key elements. EXIM’s strategy includes specific control activities to prevent and detect fraud in accordance with leading practices that reflect the types and impact of fraud (see figure).

Types and implications of potential fraud at the Export-Import Bank of the United States

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Additionally, EXIM identified risks that persisted even after being mitigated by existing control activities that exceed their risk tolerance. For these residual risks, EXIM has identified and documented how the agency will respond, making EXIM better able to prevent fraud risks that exceed its appetite. However, EXIM has not linked these residual risks to its anti-fraud strategy. As described in fraud risk management guides, this helps program managers focus their activities. Without these linkages, EXIM cannot provide assurance that it is adequately addressing risk in a dynamic risk environment, or that its approach is addressing the fraud risks it has identified and prioritized. EXIM also works with external stakeholders such as lenders and export credit insurance partners to process transactions covered by EXIM guarantees. However, EXIM did not document the roles and responsibilities of these external fraud control stakeholders in the strategy to ensure that all parties, including external lenders and export credit insurance partners, understand their fraud-related responsibilities.

EXIM has established responsibilities and developed and implemented control activities to meet its anti-fraud requirements as required by readmission laws. GAO also reviewed EXIM 2020-2021 transaction data to determine whether EXIM had appropriately denied requests from parties convicted of allegations of fraud or corruption related to EXIM. GAO’s analysis did not identify any relevant convicted parties in the EXIM transaction data.

Why GAO did this study

EXIM’s mission is to support American jobs by facilitating the export of US goods and services. Taxpayers could be responsible for losses resulting from EXIM’s operations, including losses due to fraud. The 2019 legislation re-authorizing EXIM included an anti-fraud requirement. Specifically, the legislation said that EXIM should reject an application for assistance if an individual has been convicted of fraud or corruption in relation to an application for assistance from EXIM in the past 5 years.

Since 2015, GAO has been required by law to periodically review EXIM’s anti-fraud controls. This report assesses the extent to which EXIM (1) designed and implemented an anti-fraud strategy and worked with stakeholders to ensure its implementation; and (2) established responsibilities and designed and implemented control activities to meet anti-fraud requirements mandated by law. GAO evaluated EXIM’s activities against best practices, reviewed EXIM documentation, and interviewed EXIM managers. GAO also reviewed EXIM transactions from January 1, 2020 to December 31, 2021 – the most recent data available when GAO began its work.

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