Furthermore, several partners and other  NPOs told us that such challenges posed potential risks to project  implementation. USAID Implementing Partners’ Reports Do Not Capture Potential Risks Posed by Banking Access Challenges

USAID’s partners’ written reports do not capture potential risks posed by  banking access challenges because USAID generally does not require  most partners to report in writing any challenges that do not affect  implementation. Six of the 7 projects that noted experiencing banking  access challenges were USAID projects. The sixth—a partner that noted its project was adversely  affected by banking access challenges—did not include these challenges  in its reporting to USAID, although the challenges met the reporting  threshold of adversely affecting project implementation. However, those reports lacked sufficient detail  for us to determine the type, severity, or origin of the challenges. Without this information,  USAID does not have a record of the frequency and prevalence of the  challenges and may not be aware of the full extent of risks to achieving its  humanitarian assistance objectives. Treasury and State Have Taken Various Actions to Help Address Banking Access Challenges Encountered by NPOs, While USAID Efforts Have Been Limited by a Lack of Communication Both within the Agency and Externally

Both Treasury and State have taken actions to help address banking  access challenges encountered by NPOs; however, USAID’s efforts to  address these challenges have been limited by a lack of communication  about them—both within the agency and with external entities. Within USAID, we found that information on banking access challenges  faced by partners was not always communicated beyond staff directly  overseeing the project. Further, an NPO trade association and  other NPOs told us that it is difficult to find a person at USAID to engage  with on banking access challenges. (Recommendation 1)
The Administrator of USAID should take steps to communicate  information on banking access challenges faced by partners both within  USAID and with external entities, such as other U.S. agencies and U.S.  implementing partners. USAID concurred with our recommendations. Appendix I: Banking Access Challenges Experienced by State and USAID Did Not Affect Operations in High Risk Countries

	State and USAID Experience Some Banking Access Challenges, Such as Delays in Overseas Transfers of Funds

While the Department of State (State) and the U.S. Agency for  International Development (USAID) have encountered some banking  access challenges, such as closed accounts and delays in transferring  funds, these challenges did not affect their operations for providing  assistance to high-risk countries. Appendix II: GAO-Selected Countries Have an Increased Risk of Financial Crimes

For this review, we selected four countries—Syria, Somalia, Haiti, and  Kenya—that may have a higher risk of financial crimes because of  conflict, instability, or other issues. We selected them based on factors  including the level of humanitarian assistance they received from U.S.  agencies, their inclusion on multiple financial-risk-related indices, and  geographical diversity. The United States has provided  approximately $1.2 billion in humanitarian assistance for Somalia  since 2012. Appendix III: Objectives, Scope and Methodology

This report examines (1) the extent to which implementing partners of the  Department of State (State) and the U.S. Agency for International  Development (USAID) experience banking access challenges that affect  their implementation of humanitarian assistance projects, (2) USAID  implementing partners’ reporting on banking access challenges, and (3)  actions relevant U.S. agencies have taken to help address banking  access challenges encountered by nonprofit organizations (NPO). For our first objective, to examine the extent to which implementing  partners of State and USAID experienced banking access challenges that  affected their implementation of humanitarian assistance projects, we  conducted semi-structured interviews with 18 partners about (1) one of 18  specific projects we had selected in one of our high-risk countries and (2)  their experiences implementing their global portfolio of humanitarian  assistance projects over the previous 5 years. In order to determine our  sample of partners, we selected a weighted, non-generalizable sample of  18 projects located in our four selected high-risk countries.
Why GAO Did This Study

Since 2012, the United States has provided approximately $36 billion in humanitarian assistance to save lives and alleviate human suffering. Much of this assistance is provided in areas plagued by conflict or other issues that increase the risk of financial crimes. The World Bank and others have reported that humanitarian assistance organizations face challenges in accessing banking services that could affect project implementation.
GAO was asked to review the possible effects of decreased banking access for nonprofit organizations on the delivery of U.S. humanitarian assistance. In this report, GAO examines (1) the extent to which State and USAID partners experienced banking access challenges, (2) USAID partners' reporting on such challenges, and (3) actions U.S. agencies have taken to help address such challenges. GAO selected four high-risk countries—Syria, Somalia, Haiti, and Kenya—based on factors such as their inclusion in multiple financial risk-related indices, and selected a non-generalizable sample of 18 projects in those countries. GAO reviewed documentation and interviewed U.S. officials and the 18 partners for the selected projects.

What GAO Found

Implementing partners (partners) for 7 of 18 Department of State (State) and U.S. Agency for International Development (USAID) humanitarian assistance projects that GAO selected noted encountering banking access challenges, such as delays or denials in transferring funds overseas. Of those 7 projects, 1 partner told us that banking access challenges adversely affected its project and 2 additional partners told us that the challenges had the potential for adverse effects. Moreover, the majority of partners (15 out of 18) for the 18 projects noted experiencing banking access challenges on their global portfolio of projects over the previous 5 years.
USAID's partners' written reports do not capture potential risks posed by banking access challenges because USAID generally does not require most partners to report in writing any challenges that do not affect implementation. Six of the 7 projects that encountered challenges were USAID-funded. Of those 6 USAID projects, 5 partners told us that these challenges did not rise to the threshold of affecting project implementation that would necessitate reporting, and 1 did not report challenges although its project was adversely affected. Additionally, GAO's review of about 1,300 USAID partner reports found that the few instances where challenges were mentioned lacked sufficient detail for GAO to determine their type, severity, or origin. Without information on banking access challenges that pose potential risks to project implementation, USAID is not aware of the full extent of risks to achieving its objectives.
The Department of the Treasury (Treasury) and State have taken various actions to help address banking access challenges encountered by nonprofit organizations (NPO), but USAID's efforts have been limited. Treasury's efforts have focused on engagement between NPOs and U.S. agencies, while State has issued guidance on the topic to its embassies and designated an office to focus on these issues. In contrast, USAID lacks a comparable office, and NPOs stated that it is difficult to find USAID staff to engage with on this topic. Further, GAO found that awareness of specific challenges was generally limited to USAID staff directly overseeing the project. Without communicating these challenges to relevant parties, USAID may not be aware of all risks to agency objectives and may not be able to effectively engage with external entities on efforts to address these challenges.

What GAO Recommends

GAO recommends that USAID should take steps to (1) collect information on banking access challenges experienced by USAID's partners and (2) communicate that information both within USAID and with external entities, such as other U.S. agencies and partners. USAID concurred with our recommendations.