Venezuela: Illicit Financial Flows and U.S. Efforts to Disrupt Them

What GAO Found

Illicit financial flows related to Venezuela include proceeds from the sale of commodities such as oil and gold, among others, as well as drug trafficking.

Oil remains a major source of income for Venezuela and has been a mechanism for fraud and corruption, according to Treasury officials. Venezuelan oil continues to be exported to other countries, such as China.

Illicitly-mined gold from Venezuela has been refined and its origins otherwise disguised in the Caribbean, Latin America, the Middle East, and Africa before entering international markets, according to U.S. government–funded research. Venezuelan gold was subsequently exported to countries in Europe, the Middle East, and East Asia.

Drugs are trafficked through Venezuela, destined for U.S. and European markets. State has described Venezuela as a preferred route for trafficking drugs, predominately cocaine. Individuals in the Maduro regime collaborated with the National Liberation Army (Ejército de Liberación Nacional, known by its Spanish abbreviation ELN) and dissidents of the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia, known as FARC dissidents) to transport cocaine through Venezuela, according to the Commander of the U.S. Southern Command.

Venezuelan actors—including criminal organizations, corrupt individuals in the Maduro regime, and others—attempt to export these commodities globally and take steps to cloud their origins. Venezuelan actors use shell companies and familial or business contacts acting as proxies to hide their assets. Venezuelan elites continue to use complex transnational mechanisms to move, store, and trade their wealth abroad, according to State-funded research.

U.S. agencies have undertaken efforts to disrupt these flows. State and Treasury have provided assistance to partner countries in the region to build their capacity to disrupt criminal activity in general and, to some extent, financial crimes in particular. However, Treasury officials noted that the volume of illicit financial flows is overwhelming for many partners in the region. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued financial advisories on corruption in Venezuela. Treasury also designated more than 300 individuals and entities related to Venezuela, blocking their assets and generally prohibiting U.S. persons (which include businesses, such as financial institutions) from dealing with them. DOJ and DHS have based criminal investigations on the information they have collected. DOJ has charged at least 35 individuals with money laundering–related crimes connected to Venezuela and secured convictions for some, according to reporting by DOJ’s Fraud Section. DOD monitors drug movements in the region, including those from Venezuela, and has provided money laundering–related intelligence analysis to U.S. law enforcement agencies. Other than these, DOJ, DHS, and DOD do not have any efforts specifically directed at illicit financial activity related to Venezuela.

Why GAO Did This Study

Much of Venezuela is ungoverned, undergoverned, or ill governed, according to the Department of State. In 2019, the U.S. ceased to recognize Nicolás Maduro as Venezuela's president and suspended embassy operations in Venezuela, according to State. U.S. agencies have indicated that the illegitimate Maduro regime allows and tolerates the use of its territory by transnational criminal organizations (TCO), including U.S.-designated foreign terrorist organizations, for drug trafficking and other criminal enterprises. According to the 2022 Caribbean Border Counternarcotics Strategy, the ongoing political instability in Venezuela provides a permissive smuggling environment for TCOs, and Venezuela’s corrupt political and security infrastructure enables officials to participate in, and profit from, these illicit activities.

GAO was asked to review transnational organized crime related to Venezuela. For this report, we analyzed illicit financial flows connected to Venezuela. Specifically, we examined (1) what U.S. agencies know about illicit financial flows connected to Venezuela and (2) U.S. efforts to disrupt those flows. To address our objectives, we analyzed intelligence reports, diplomatic cables, criminal analyses, and U.S. government–funded research. We interviewed officials of the Departments of Defense (DOD), Homeland Security (DHS), Justice (DOJ), State, and the Treasury in Washington, D.C. We also met with U.S. officials at U.S. Southern Command and Joint Interagency Task Force–South in Florida in July 2022.

For more information, contact Chelsa Kenney at 202-512-2964 or KenneyC@gao.gov.