USAID, IAF Missed Required Drug-Trafficking Checks on LAC Grants
Summary
A USAID Office of Inspector General audit of pre-award risk management found that two of three audited USAID missions in Latin America, and the Inter-American Foundation itself, couldn't show the federally required anti-drug-trafficking screening was performed before local groups received grants -- IAF's own manual never built the check in at all, even as the agency awarded $26.3 million across 142 projects in FY2022.
Zero documented screenings in two of three USAID missions
Under USAID policy implementing Section 487 of the Foreign Assistance Act⧉, agreement officers must route a review to the relevant U.S. embassy's narcotics coordinator confirming an award applicant's key individuals aren't known drug traffickers, before the award goes out. found none of the four sampled awards for /Dominican Republic underwent that review, and /Mexico couldn't produce documentation that its narcotics coordinator had performed the check for any of its five sampled awards. /Mexico also failed to obtain the required signed anti-trafficking certifications for any of its sampled awards -- an omission its own staff attributed to oversight -- while /Peru couldn't locate the signed certification paperwork for two of its six sampled awards.
/Peru was the exception: all of its applicable sampled awards underwent the determination process, though one wasn't completed until after the award had already been issued. traced the gap partly to bureaucratic decay -- the agency's drug-trafficking policy sat unassigned to any responsible office between 2011 and May 2023, and the list of "covered countries" subject to the requirement hadn't been updated since January 2003, so it named six countries the U.S. President no longer designated as covered and omitted five that were.
View data as table
| Dominican Republic | 0% | None of 4 sampled awards underwent the drug-trafficking determination process. |
|---|---|---|
| Mexico | 0% | Narcotics coordinator's review undocumented for any of 5 sampled awards. |
| Peru | 100% | All 5 applicable sampled awards completed the process (1 award ruled exempt as emergency response); one review wasn't finished until after the award was already issued. |
IAF's own manual never required the check
IAF's 14 sampled awards -- one-third of everything the agency awarded in the three audited countries -- fared no better. found IAF did not address the drug-trafficking determination-process requirements for any of the sampled awards, because IAF's Grant-Making Process manual never clearly laid out the Foreign Assistance Act's requirements⧉ in the first place -- it gave staff no instructions on when exemptions applied, how to ask embassies to run the check, or how to follow through once asked. IAF did request that embassies review its proposed projects generally, but never specifically asked them to screen key individuals for trafficking ties.
Neither agency had a formal enterprise risk management framework at the time of the audit either -- IAF officials told auditors they'd been reviewing ERM practices for small agencies but hadn't finalized a policy since OMB first issued its ERM circular in 2016⧉.
The dollars behind the gap kept growing through the audit period. IAF is a centralized Washington, DC agency that makes awards generally between $25,000 and $400,000 directly to grassroots groups; in FY2022 alone it awarded $26.3 million across 142 projects, part of a total active portfolio of 398 awards in 27 LAC countries. 's own direct funding to local LAC entities nearly doubled over the same stretch, from $53 million in FY2020 to $104 million in FY2022, inside a region where the administration had requested nearly $2.1 billion in total foreign assistance for FY2022.
View data as table
| FY2020 | 53 |
|---|---|
| FY2022 | 104 |
- None of /Dominican Republic's four sampled awards, and none of /Mexico's five, had a documented drug-trafficking review -- 9 of 's 15 sampled Latin America awards, 60%, show no proof the federally required screening happened.
- IAF's own vetting process never required the check at all: found the agency never addressed the drug-trafficking determination-process requirements for its 14 sampled awards, because its own grant manual didn't lay out what the Foreign Assistance Act requires.
- Neither nor IAF had a formal enterprise risk management framework in place -- IAF told auditors it still hadn't finalized one eight years after 's governing circular was issued.
- The money kept flowing regardless: IAF awarded $26.3 million across 142 projects in FY2022, and 's direct funding to local LAC entities nearly doubled to $104 million the same year.
- made six recommendations -- three each for and IAF. Both agencies agreed with five; partially agreed with one. Two were closed by the time the report was finalized; four remain open pending completion of corrective action.
This piece describes institutional and procedural failures at the mission and agency level -- documentation gaps, an outdated policy, an incomplete manual -- as itself frames them; it does not attribute wrongdoing to any named individual, and the audit doesn't allege any grant recipient actually had trafficking ties. 's Deputy Administrator for Policy and Programming, its Assistant Administrator for the Bureau for Management, and IAF's President and CEO all received and responded to the draft report; their comments are reproduced in the audit's appendices. As of the report's May 30, 2024 transmittal, four of the six recommendations remained open pending completion of planned corrective action.
Sources(2) ▾
- USAID Office of Inspector General, Pre-Award Risk Management: USAID and IAF Missed Opportunities to Enhance Risk Management of Local Entities in Latin America and the Caribbean (Audit Report 9-000-24-004-P) (2024-05-30) — audit of pre-award risk management at three missions (Dominican Republic, Mexico, Peru) and at the Inter-American Foundation (IAF), for which serves as statutory inspector general. Found that two of three missions and IAF itself could not show the federally required anti-drug-trafficking screening was performed before local-entity grants were awarded, and that neither agency had a formal enterprise risk management framework. Issued directly on oig.usaid.gov, the audit office's own domain. oig.usaid.gov · original document
- USAID Office of Inspector General, Report Fraud, Waste, or Abuse -- USAID Office of Inspector General (2026-07-21) — 's public hotline page, listing the phone number, online eCase portal, and mailing address for reporting fraud, waste, or abuse in - and IAF-related programming -- re-fetched this iteration to source the call to action. oig.usaid.gov · original document
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A USAID Office of Inspector General audit⧉, dated May 30, 2024, tested whether missions and the Inter-American Foundation (IAF) actually run the pre-award check federal law requires before sending U.S. foreign-assistance dollars to local organizations in Latin America and the Caribbean (LAC): a review to confirm the recipients' key individuals have no known involvement with drug trafficking. Auditors sampled 15 of 29 awards and 14 of 42 IAF awards made to entities in the Dominican Republic, Mexico, and Peru. Two of the three missions came up short on documented screening, and IAF's own process never required the check at all on any of its 14 sampled awards.