Nonproliferation: State Should Minimize Reporting Delays That May Affect Sanctions on Trade with Iran, North Korea, and Syria
Published: 2015-05-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The United States uses sanctions to curb weapons of mass destruction proliferation. Under INKSNA, the President is required every 6 months to provide reports to two congressional committees that identify every foreign person for whom there is credible information that the person has transferred certain items to or from Iran, North Korea, or Syria. INKSNA authorizes the President to impose sanctions on the identified person and requires him to provide justification to the two committees if sanctions are not imposed. The President has delegated this authority to State. State's Deputy Secretary makes determinations about whether to impose sanctions.
GAO was asked to review State's INKSNA implementation. This report (1) examines State's timeliness in providing INKSNA reports, (2) reviews State's reporting process, and (3) identifies the potential impact of its reporting timeliness on the imposition of sanctions.
GAO analyzed data and met with officials from the Departments of State, Defense, and Energy, and met with officials from the Department of Commerce.
section_title: What GAO Found
paragraphs: The Department of State (State) is not providing reports to congressional committees in accordance with the 6-month reporting requirements of the 2006 Iran, North Korea, and Syria Nonproliferation Act (INKSNA). Since 2006, it has provided six reports covering a 6-year period (2006 through 2011), instead of 18 reports covering a 9-year period (2006 through 2014), as required by INKSNA. State provided these six reports at irregular intervals averaging 16 months. It provided its most recent report in December 2014, 22 months after it had provided the prior report.
State has not established a process that would allow it to comply with the 6-month reporting cycle required by INKSNA. It uses a complex and lengthy process that involves multiple interagency and internal reviews. Because it processes cases in calendar-year groups, State delays providing a report to the committees until it has resolved all concerns and determined whether to impose sanctions for each transfer in the group. It begins preparing a new report every December, regardless of whether it has completed all previous reports, with the result that State officials sometimes work on several reports simultaneously and may delay work on one report to work on another. State required nearly 3 years to prepare its December 2014 report on transfers that first came to its attention in 2011. Officials told GAO that negotiations and relations with countries can delay the process and assessing transfers in annual groups reduces prospects for confusion among the parties involved in the process (see figure).
By not complying with INKSA's 6-month reporting cycle, State may have limited its ability to minimize delays in choosing to impose INKSNA sanctions. INKSNA requires State to identify foreign persons in a report before opting to impose sanctions on them. As a result, State did not impose INKSNA sanctions on 23 persons for 2011 transfers until December 2014, when it provided its report addressing 2011 transfers. While officials told GAO that threats of possible sanctions can deter questionable transfers, prolonged delays in eventually imposing potential INKSNA sanctions could erode the credibility of such threats and INKSNA's utility as a tool in helping to curb weapons of mass destruction proliferation associated with Iran, Syria, and North Korea.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Secretary of State reconsider State's INKSNA process to ensure that it (1) complies with INKSNA's 6-month reporting cycle, and (2) minimizes delays in its ability to opt to impose sanctions. State concurred with the recommendation but expressed concerns about the difficulty of conducting its process. The GAO report highlights some process efficiencies that State should consider.

section_title: Letter
paragraphs: The advent of global terrorism has heightened concerns about the threat  of proliferation of weapons of mass destruction (WMD) and missiles. The  United States uses export control regimes and sanctions to combat  proliferation by restricting exports of sensitive goods, services, and  technologies and to punish those persons that violate such restrictions. It  imposes WMD-related sanctions under legal authorities that include the  Iran, North Korea, and Syria Nonproliferation Act (INKSNA).
INKSNA requires the President to transmit a report to the Senate  Committee on Foreign Relations and the House Committee on Foreign  Affairs every 6 months in which she or he identifies foreign persons for  which there is credible information indicating they have transferred to, or  acquired from, Iran, North Korea, or Syria certain WMD or conventional or  missile-related items.sanctions on foreign persons identified in the reports. If the President  chooses not to do so, the President must notify the committees and  include a written justification that supports the decision not to sanction.  The President has delegated INKSNA authorities to the Department of  State. The Deputy Secretary of State is responsible for making sanctions  determinations, and authorizing delivery to the two cognizant  congressional committees.
INKSNA also authorizes the President to impose  Because of concerns regarding the timeliness of State’s provision of  INKSNA reports to the committees, you asked us to review State’s  implementation of INKSNA. This report (1) examines State’s timeliness in  providing INKSNA reports, (2) reviews State’s reporting process, and (3)  identifies the potential impact of State’s reporting timeliness on its  imposition of sanctions.
To address these objectives, we reviewed INKSNA and related  legislation. We also obtained and analyzed Department of State data on  report publication dates and processing timelines and assessed relevant  documents from the Departments of State, Defense, and Energy. In  addition, we interviewed officials involved in the INKSNA process from the  Departments of State, Energy, Defense, and Commerce. Appendix I  provides a detailed description of our scope and methodology.
We conducted this performance audit from September 2014 to May 2015  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: INKSNA requires the President to provide reports on March 14 and  September 14 of each year to the Senate Committee on Foreign  Relations and the House Committee on Foreign Affairs, in which he or  she identifies every foreign person for whom there is credible information  that the person has transferred to or from Iran, North Korea, or Syria  certain goods, services, or technologies mostly those controlled through  four multilateral export control regimes and one treaty. Table 1 provides  details on the purpose and items restricted in each one.
In addition to these controlled items, INKSNA also includes a category of  reportable items for goods, services, or technology, on a case-by-case  basis, have the potential to make a material contribution to the  development of nuclear, biological, conventional, or chemical weapons, or  of ballistic or cruise missile systems. According to State officials,  INKSNA’s broad list of reportable transfers and acquisitions and  discretionary authority to impose sanctions provide the U.S. government  an important and flexible tool to achieve its nonproliferation objectives  and sanctioning capabilities found in no other U.S. law. INKSNA’s scope  includes any transfers to or from Iran on or after January 1, 1999; Syria  on or after January 1, 2005; and North Korea on or after January 1, 2006.
INKSNA also authorizes the President to apply a range of measures  against any foreign person the President has identified in a report he or  she has provided to the congressional committees. The measures include  (1) a prohibition on U.S. government procurement of goods or services  from the person and a ban on imports of products produced by that  person, except to the extent the Secretary of State otherwise may  determine; (2) a prohibition on U.S. government provision of assistance,  except to the extent the Secretary of State otherwise may determine; (3)  a prohibition on U.S. government sales of any item on the U.S. Munitions  List, and the termination of any ongoing sales of any defense articles,  defense services, or design and construction services controlled under  the Arms Export Control Act; and (4) that new licenses will be denied, and  any existing licenses suspended, for transfers of items controlled under  the Export Administration Act of 1979 or the Export Administration  Regulations. Once imposed, INKSNA sanctions are in effect for 2 years at  State’s discretion.
In addition, INKSNA requires the President to notify the congressional  committees of his or her rationale for not imposing sanctions against  foreign persons identified in the report. Under INKSNA, the President  cannot apply sanctions to reported persons if he or she finds that (1) the  person did not “knowingly transfer to or acquire from Iran, North Korea, or  Syria” reportable items; (2) the goods, services, or technology “did not  materially contribute to the efforts of Iran, North Korea or Syria, as the  case may be, to develop nuclear, biological, or chemical weapons, or  ballistic or cruise missile systems, or weapons listed on the Wassenaar  Arrangement Munitions List,” (3) the person is subject to the jurisdiction of  a government that is an adherent to “one or more relevant  nonproliferation regimes” and the transfer was consistent with such  regime’s guidelines; or (4) the government of jurisdiction “has imposed  meaningful penalties” on the identified person.
The President has delegated INKSNA authorities to State. The Deputy  Secretary of State exercises this authority by making sanctions  determinations, and authorizing delivery of INKSNA reports to the  committees. State arranges to have the names of the foreign persons  deemed to have engaged in the sanctioned transfers or acquisitions  published in the Federal Register soon after it delivers the reports to the  committees.
From 2006 to May 2015, State imposed sanctions on 82 foreign persons  under INKSNA deemed to have engaged in reportable transfers to or  acquisitions from Iran, North Korea, and Syria, primarily on persons  located in China, Iran, Syria, and Sudan (see table 2). Seventeen of these  foreign persons had INKSNA sanctions imposed on them more than  once.
section_title: State Is Not Providing Reports to Congressional Committees Every 6 Months as Required by INKSNA
paragraphs: State is not providing reports to the two cognizant congressional  committees in accordance with INKSNA’s 6-month reporting  requirements. Since 2006, it has provided six reports covering a 6-year  period (2006 through 2011), instead of 18 reports covering a 9-year  period (2006 through 2014), as required by INKSNA. If State had  submitted a report every 6 months during this 6-year period as required  by law, they would have produced 11 reports. Instead, each of the six  reports covered a period spanning an entire calendar year and focused  on transfers that first came to State’s attention in one of the six calendar  years occurring between 2006 and 2011(see fig. 1). State provided these  six reports at irregular intervals that have averaged 16 months, ranging  between 7 and 22 months apart. It provided its most recent report in  December 2014, 22 months after its previous report. The interval between  the last two reports was the longest interval between reports since the  beginning of 2006.
section_title: State Has Not Established a Process That Allows It to Comply with INKSNA’s Required 6-Month Reporting Cycle
paragraphs: State has not established a process that would allow it to comply with the  6-month reporting cycle required by INKSNA. State uses a complex and  lengthy process that involves multiple interagency and internal reviews to  compile credible information about a group of reportable transfers that  first came to its attention in a single calendar year, and to determine  whether to impose sanctions on foreign persons associated with those  transfers. Because its process focuses on a group of transfers that came  to its attention in a single year, State delays providing a report to the  committees until it has resolved concerns it may have regarding any of  the transfers in the group covered in the report and determined whether  to sanction persons associated with any of those transfers. State officials  begin preparing a new report every December, regardless of whether  they have completed and provided all previous reports. State officials  have told GAO they sometimes must delay work on one draft report to  work on another, and that they can make only a limited amount of  progress toward completing a new report before they have completed  earlier reports. According to State, they use this approach because each  report builds on the previous installment, including any determinations to  defer a decision on sanctions and any determinations on whether to add  nonlisted items to reportability on a case-by-case basis. As a result, State  required almost 3 years to prepare its December 2014 report, which  addressed transfers that first came to its attention in 2011.
subsections: section_title: State Uses a Complex Process Involving Multiple Interagency and Internal Reviews
paragraphs: According to officials in the office responsible for producing the report— State’s Bureau of International Security and Nonproliferation’s Office of  Missile, Biological, and Chemical Nonproliferation (ISN/MBC)—State’s  process for implementing INKSNA consists of the12 following steps, as  depicted interactively in figure 2 and described in appendix II.
State officials told us that while the four State-led interagency working  groups (named in figure 2 above) meet on a regular basis to evaluate  reporting from a wide variety of sources on transfers and flag activity that  might trigger INKSNA or other legal authorities, State typically begins the  report preparation process, starting with compiling the activity for the draft  report, once the relevant calendar year ends. The State Bureau of  International Security and Nonproliferation/State Office of Missile,  Biological, and Chemical Nonproliferation (ISN/MBC), working with other  agencies and the Intelligence Community, compiles a list of transfers that  first came to its working groups’ attention during the previous calendar  year and then provides the list along with any diplomatic histories  associated with each transfer to the Intelligence Community for fact  checking and to determine whether the names of the foreign persons  associated with the transfers are releasable to the Federal Register if  State imposes sanctions. State then distributes the corrected package of  transfers and any other information to the relevant interagency working  group that includes the other federal departments involved in this  process—the Department of Defense (DOD), the Department of Energy  (DOE), and the Department of Commerce (DOC). Next, State chairs an  interagency Policy Committee meeting (held at the deputy assistant  secretary or office director level), where State and other members of the  interagency working groups provide advice on whether each transfer is  reportable under INKSNA and whether it should result in sanctions. This  meeting is followed by reviews by State officials in geographic and  functional bureaus.
ISN/MBC includes the result of these reviews in an action memo that it  sends to the Deputy Secretary of State for the final determination as to  which transfers to include in the report and which persons to sanction in  connection with those transfers. Following the Deputy Secretary’s determinations, State officials prepare the final version of the report,  transmit it to the cognizant congressional committees, and arrange to  have sanctions notices published in the Federal Register.
section_title: State’s Process Requires on Average More than 2 Years to Complete a Report
paragraphs: Using this process, State has required, on average, more than 2 years to  produce each of the six INKSNA reports that it provided to the cognizant  congressional committees between 2006 and 2015. It required almost 3  years to complete the report it provided to the committees in December  2014 covering calendar year 2011. Our analysis of the production times  of State’s six INKSNA reports indicates that the three longest stages of  State’s process involve State’s compilation of potential reportable  transfers into a single list (steps 1 and 2); State’s scheduling and holding  of the sub-Interagency Policy Committee meeting (held at the deputy  assistant secretary or office director level) to discuss the transfers (steps  4 and 5); and the Deputy Secretary’s review of the action memo in  making his or her determinations (steps 8 and 9). For example,  concerning the report State provided in December 2014, the Deputy  Secretary required more than a year to review the action memo for  transfers State learned of in 2011 and to determine which persons to  identify in the report and whether to apply sanctions.
State officials told us that a variety of political concerns, such as  international negotiations and relations with countries involved in  transfers, can delay State’s INKSNA process. They stated that these  concerns can particularly delay the steps that involve internal State  approvals, including the Deputy Secretary’s review and sanctions  determination.
State’s practice of focusing each report on a group of transfers that first  came to its attention in a single calendar year also contributes to the  length of time State’s process requires to complete a report. State does  not provide a report to the congressional committees until it has resolved  concerns it may have about every one of the transfers in the group  covered in the report and determined whether to impose sanctions on  persons associated with each of the transfers in that group. As a result, a  single problematic case in a group can delay State’s provision of the  report, which may include other INKSNA-reportable transfers that State  may be otherwise ready to report to Congress.
As a result of this practice of focusing each report on a single year’s  group of transfers and acquisitions, State officials must either complete a  report within a year or manage the preparation of a backlog of multiple  reports, each covering a different calendar year and each in a different  stage of State’s process. Under State’s process, State officials begin  preparing a new report every December, regardless of whether they have  completed and provided all previous reports. State data indicate that  State officials were simultaneously processing three reports, covering  calendar years 2011, 2012, and 2013, in the last 6 months of 2014. State  officials have told us that they sometimes must delay work on one report  to work on another. For example, State officials told GAO that they  delayed work on the report State issued in December 2014 (which  covered calendar year 2011) for 4 months so that they could focus on  completing delivery of the report to Congress covering calendar year  2010.
As a result of its process, State’s delays in reporting on transfers and  acquisitions have recently increased. As shown in figure 3, State’s report  on transfers that first came to its attention in 2010 was provided 26  months after the end of 2010, while its report on transfers that first came  to its attention in 2011 was provided 36 months after the end of 2011—a  nearly 40 percent increase in the time elapsed between the year  addressed and the date that State provided the report. State’s draft report  on transfers it first learned of in 2012 is now in its 30th month of  preparation and, as of April 2015, had fallen 9 months behind the pace  set by its predecessor.
State officials cited two reasons for State’s decision to review and report  on transfers in groups covering a single year.
The parties involved in the complex, multistep process can review and  clear a single group of transfers per year in sequence more quickly  and with less confusion than would be possible with the 6-month cycle  required by INKSNA. Officials stated, for example, a shorter cycle  could be confusing, as it could require these parties to make decisions  on overlapping groups of transfers in different stages of the process in  the same time frame.
While State officials stated they intend to institute 6-month reports  once they have cleared the backlog, they acknowledged they might  still find it difficult to meet this requirement. INKSNA allows State to  add to reportability transfers of items (goods, services, or  technologies) not on any of the multilateral control lists that  nonetheless make material contributions to WMD. State officials  stated that they must complete reports sequentially to ensure that  they correctly identify transfers of newly reportable items.
section_title: State’s Process Limits Its Ability to Minimize the Time Required to Impose INKSNA Sanctions
paragraphs: By using a process that does not comply with INKSA’s 6-month reporting  cycle, State has limited its ability to minimize delays affecting the potential  imposition of INKSNA sanctions. INKSNA does not allow State to impose  INKSNA sanctions on foreign persons until State has identified them in a  report to the congressional committees. Because State does not have a  process enabling it to provide INKSNA reports every 6 months as  required, it cannot impose INKSNA sanctions on foreign persons within  the time frames established by INKSNA. Those time frames would allow  State to impose sanctions on a foreign person between 6 and 12 months  after it first obtained credible information of the person’s involvement in a  reportable transfer. For example, in any given year in which State  decided to sanction a person for a reported transfer or acquisition, the  sanction would be effective no later than December if State had learned  about the transfer between January 1 and June 30 of that year, if it had  identified that person in a report provided to the committees in September  as required by INKSNA.
However, State’s delay in providing its reports to congressional  committees between 2006 and 2014 may undermine its ability to impose  potential INKSNA sanctions in accordance within the time frames defined  in INKSNA. Because State may not impose INKSNA sanctions on foreign  persons until it has identified them in a report, its late reports may have  delayed by more than 2 years State’s imposition of sanctions on some of  these foreign persons. Our analysis of the reports covering the calendar  years 2006 through 2011 indicates that State was not able to impose  sanctions on foreign persons deemed responsible for transactions  included in the reports until an average of 28 months after the end of that  reporting period. The intervals ranged between 22 and 36 months.
State’s delay in providing its most recent report may have imposed the  longest delay on State’s ability to impose INKSNA sanctions, which are  discretionary. State imposed sanctions on 23 foreign persons in  December 2014, when it provided its report on transfers it first learned of  in 2011. The sanctions pertained to transfers that had first come to  State’s attention between 36 and 48 months earlier. If State had  established a process enabling it to provide reports to the committees  every 6 months, it would have had the ability to impose sanctions on one  or more of these 23 persons more than 2 years earlier.
State officials acknowledged these delays, but told us that they believe  that the threat of imposing sanctions can be as effective as the imposition  of sanctions in achieving the behavior changes that sanctions are  intended to motivate. They stated that at various times in the reporting  cycle, State may use the information it is compiling to meet the INKSNA  reporting requirement to notify foreign governments about suspected  transfers taking place within their jurisdictions and request that they take  appropriate action. This use is in accordance with provisions in INKSNA  that (1) encourage State to contact foreign governments with jurisdiction  over the person, in order to afford the government the opportunity to  provide explanatory, exculpatory, or additional information with respect to  the transfer, and (2) exempt foreign persons from INKSNA sanctions if  the foreign government has imposed meaningful penalties on that person.  They noted that the threat of INKSNA sanctions itself can prompt foreign  governments to take actions to halt transfers or to penalize or deter  persons within their jurisdiction who are suspected of conducting these  transfers, which may stop the activity before it meets the threshold for  reporting under INKSNA.
section_title: Conclusions
paragraphs: State officials praise INKSNA as a valuable tool in combating proliferation  of WMD associated with Iran, Syria, and North Korea. However, State  has established a complex and lengthy reporting process that prevents it  from providing INKSNA reports on a 6-month schedule to the Senate  Committee on Foreign Relations and the House Foreign Affairs  Committee, as required by INKSNA. This process may limit State’s ability  to impose potential sanctions at an earlier date, in accordance with the  time frames established in INKSNA.
While State officials state that their process of reviewing and reporting on  transfers in groups covering a single calendar year allows them to  prepare reports more quickly and with less confusion than groups  covering 6 months, our analysis demonstrates that State is falling further  and further behind in providing the reports and is now juggling a backlog  of draft reports at different stages of that process. In addition, State  officials told us that the threat of INKSNA sanctions can be an effective  deterrent. However, State’s current process has increased the interval of  time between the occurrence of a reportable transfer and State’s decision  to impose sanctions on the foreign persons identified by State as  responsible for those transfers. The imposition of sanctions no sooner  than 3 or more years after the transfer occurred may diminish the  credibility of the threatened sanction. In addition, reporting delays of this  magnitude are not consistent with the time frames established by  Congress when it enacted INKSNA.
section_title: Recommendation for Executive Action
paragraphs: The Secretary of State should reconsider State’s INKSNA process to  ensure that it (1) complies with INKSNA’s 6-month reporting cycle, and  (2) minimizes delays in its ability to opt to impose sanctions.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Departments of State,  Commerce, Defense, Energy and Treasury for comment. State provided  written comments, which we reprinted in appendix III, as well as technical  comments, which we incorporated, as appropriate. Commerce, Defense,  Energy, and Treasury declined to provide comments.
In its written comments, State concurred with our recommendation but  said they need to clear their backlog before delivering reports semi- annually. Moreover, they expressed concern that the draft report does not  take into account the inherent difficulties of meeting the law’s very tight  deadlines and the substantial increases in scope of reportable activity. In  addition, State said that the report does not place sufficient priority on the  need for careful preparation and thorough vetting. In response, GAO  noted that the report shows that the time State requires to produce the  reports for Congress has increased since 2006, the period covered by our  report, despite no additional changes to the scope of the law over that  period. We also recognize State’s need to carefully prepare and  thoroughly vet each INKSNA report. We also recognize that some  transfers that are reportable under INKSNA may require several years to  investigate and vet prior to being included in an INKSNA report. However,  our review found that State’s process could allow a single such  problematic transfer to delay State’s reporting to Congress of other  transfers that State may have already investigated and vetted.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date.  At that time, will send copies to the appropriate  congressional committees and the Secretaries of State, Commerce,  Defense, Energy, and Treasury. In addition, the report is available at no  charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-9601 or melitot@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report (1) examines the Department of State’s (State) timeliness in  providing Iran, North Korea, and Syria Nonproliferation Act (INKSNA)  reports; (2) reviews State’s reporting process; and (3) identifies the  potential impact of State’s reporting timeliness on its imposition of  sanctions.
To examine State’s timeliness in providing INKSNA reports, we reviewed  the reporting requirements established under section 2(b) of INKSNA, the  six reports provided by State to the House Committee on Foreign Affairs  and the Senate Committee on Foreign Relations covering the period  between calendar year 2006—when transfers and acquisitions involving  North Korea were first incorporated into the INKSNA reporting  requirements—and calendar year 2011, when the latest report was  provided by State to the two committees in December 2014. We reviewed  the Federal Register entries announcing the sanctions on 82 of the  foreign persons named in the six reports and the dates those sanctions  became effective. We also interviewed officials from the office within  State responsible for producing the reports—the Office of Missile,  Biological, and Chemical Nonproliferation in the Bureau of International  Security and Nonproliferation (ISN/MBC) —the Department of Defense  (DOD), and the Department of Energy (Energy) to confirm the timing of  these reports.
To review State’s reporting process, we reviewed State documents and  interviewed officials at State and the Departments of Defense (DOD) and  Energy (DOE) to determine the extent to which each agency participated  in the State-led interagency working groups that identify transfers  potentially meeting INKSNA’s reporting and sanctions criteria and their  role in the sub-Interagency Policy Committee meetings that voted on  which transfers to recommend for reporting and for sanctions. Using the  information from these interviews and documents provided by State, we  developed a graphic to depict State’s process. We requested data from  State on the length of time it took to accomplish particular steps in the  process for the last six reports and analyzed that data to determine where  delays in the process were occurring. We also identified the date that  State provided each report and determined the number of months  separating that date from the end of the calendar year each report  addresses. On the basis of our review, we determined that the data  received from the State Department were sufficiently reliable for our  analysis of State’s process.
In addition, we also interviewed Department of Commerce (Commerce)  and Department of the Treasury (Treasury) officials to identify their  participation in the INKSNA reporting process.
To identify the potential impact of the timeliness of the INKSNA reports on  the imposition of sanctions, we reviewed the deadlines for the imposition  of sanctions established in sections 2(b) and 3(c) of INKSNA, the 2006- 2011 calendar year INKSNA reports, and the House report that  accompanied the bill that became the Iran Nonproliferation Act of 2000.  We also interviewed officials from State to discuss the timing and  effectiveness of the sanctions.
section_title: Appendix II: State’s Iran, North Korea, and Syria Nonproliferation Act (INKSNA) Process
paragraphs: According to officials from the Department of State (State) Office of  Missile, Biological, and Chemical Nonproliferation in the Bureau of  International Security and Nonproliferation (ISN/MBC) State’s process for  producing the Iran, North Korea, Syria Nonproliferation Act (INKSNA)  reports consists of the following steps.  1.  Four State-led interagency working groups meet on a regular basis to  evaluate reporting from a wide variety of sources on transfers of  proliferation concern. The groups also identify activity relevant to  INKSNA or other legal authorities.  2.  ISN/MBC solicits lists of transfers deemed potentially reportable under  INKSNA from the four working groups based on information received  during the reporting year. ISN/MBC adds the diplomatic history  describing efforts to address transfers with relevant foreign  governments, creating a package of information on transfers.  3.  ISN/MBC sends the package of transfers to the Intelligence  Community for its members to check the information for accuracy and  determine whether foreign persons’ names are releasable to the  Federal Register if State decides to impose sanctions on them.  4.  ISN/MBC receives a corrected package from the Intelligence  Community, sends it out to the federal departments involved in the  interagency process ( the Departments of Defense, Energy, and  Commerce), and the National Security Council (NSC) calls for a sub- Interagency Policy Committee (IPC) meeting to be scheduled to  discuss the transfers.  5.  Sub-IPC discusses each transaction. Attendees provide advice on  whether each transfer is reportable under INKSNA and whether it  should result in sanctions.  6.  ISN/MBC sends the package of transfers, along with the results of the  sub-IPC meeting, to other relevant State regional and functional  bureaus to obtain their views and approval.  7.  ISN/MBC compiles a draft action memo that contains the  recommended outcome for each transfer. The memo also contains  the views of the attendees from the sub-IPC meeting. ISN and other  relevant management levels clear the memo.  8.  ISN sends the action memo to the Office of the Deputy Secretary (D)  to review the transfers and the recommended actions and conduct  iterative rounds of questions and consultations on certain transfers  with other State offices before the memo is ready for the Deputy  Secretary of State.  9.  The Deputy Secretary of State approves the action memo once he or  she makes a decision on every transfer for the given calendar year,  and D sends it back to ISN/MBC.  10. ISN/MBC prepares (1) the final INKSNA report for the committees,  and (2) the draft Federal Register notice. It then sends them to the  State Bureau of Legislative Affairs (H).  11. H adds a cover letter and provides the report to the clerks/security  officers of recipient committees: the House Committee on Foreign  Affairs and the Senate Committee on Foreign Relations.  12. Within days, the Federal Register publishes the notice announcing the  names of the foreign persons who have been sanctioned.
section_title: Appendix III: Comments from the Department of State
subsections: section_title: GAO Comment
paragraphs: Comment 1:  The scope of INKSNA, as currently written, has not  changed since 2006, which was the start time for GAO’s analysis. The  report shows that the time State requires to produce the reports for  Congress has increased since 2006, despite no additional changes to the  scope of the law. While INSKNA’s six month reporting deadlines may be  tight, the report demonstrates that the State Department should consider  more efficient processes for meeting those deadlines. For example,  State’s practice of reporting transfers in entire groups could allow a single  problematic transfer to delay the reporting of other transfers that State  may have already investigated and vetted.
Comment 2: We recognize State’s need to carefully prepare and  thoroughly vet each INKSNA report.  We also recognize that some  transfers that are reportable under INKSNA may require several years to  investigate and vet prior to being included in an INKSNA report. However,  our review found that State’s process could allow a single such  problematic transfer to delay State’s reporting to Congress of other  transfers that State may have already investigated and vetted.
Comment 3: The report highlights the fact that State has opted to submit  annual reports instead of the six-month reports required by law.   However, it does not assume that State’s decision to do so is the key  driver of the current backlog. The report instead calls attention to State’s  current process that could allow a single problematic case in a group to  delay its reporting on other transfers within that group.  We also note the  report demonstrates that the backlog is growing and is not, as State  suggests, being eliminated.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact:
section_title: Staff Acknowledgments:
paragraphs: In addition to the contact named above, Pierre Toureille (Assistant  Director), B. Patrick Hickey, Jennifer Young, Ashley Alley, Tina Cheng,  Debbie Chung, Justin Fisher, and Judy McCloskey made key  contributions to this report.