GAO: CBP Needs to Track Exports Fully to Avoid Drawback Fraud

CBP still hasn't been able to properly police fraud in drawback claims, where importers claim drawback funds for merchandise that was never exported, the Government Accountability Office says in a summary of unresolved recommendations for the Department of Homeland Security.

The paper, released Aug. 26, notes that CBP tried to improve drawback oversight after a 2019 GAO report, denying $163 million in improper refunds from fiscal years 2020, 2021, 2022 and 2023, when a targeting feature in ACE was disabled.

In February 2023, the claim targeting feature was restored, and it randomly selects claims for review. The GAO wrote, "By enabling the claim targeting feature in ACE to randomly target claims for review, CBP should be better positioned to protect U.S. trade revenue from improper payment of drawback claims."

However, while ACE does examine the import data that drawback filers are using, there is no way to track export submissions across drawback claims. In March 2023, CBP wrote a white paper that explored the feasibility of requiring each export to have a unique identifier in ACE. They decided that there is not the ability to do that because of ACE programming, staff constraints and current law.

"Until CBP implements effective control activities for the drawback program, the U.S. government may be subject to revenue loss through duplicate or excessive claims for drawback related to export information," GAO wrote.

The agency said it intends to complete a plan next month "to develop Automated Export System capabilities, set priorities, and align resources." GAO said that plan should include time frames for establishing an AES.