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. State Is Not Providing Reports to Congressional Committees Every 6 Months as Required by INKSNA

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. 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. State Has Not Established a Process That Allows It to Comply with INKSNA’s Required 6-Month Reporting Cycle

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. 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. 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. State  officials have told us that they sometimes must delay work on one report  to work on another. State’s Process Limits Its Ability to Minimize the Time Required to Impose INKSNA Sanctions

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. State imposed sanctions on 23 foreign persons in  December 2014, when it provided its report on transfers it first learned of  in 2011. In addition, State  officials told us that the threat of INKSNA sanctions can be an effective  deterrent. Recommendation for Executive Action

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. Commerce, Defense,  Energy, and Treasury declined to provide comments. Appendix I: Objectives, Scope, and Methodology

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.
Why GAO Did This Study

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.

What GAO Found

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.

What GAO Recommends

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.