State Department: Efforts to Reduce Visa Fraud (Testimony, 05/20/97,
GAO/T-NSIAD-97-167).

GAO discussed its 1996 report on the Department of State's progress in
making its visa issuance process more efficient and less vulnerable to
fraud.

GAO noted that: (1) at the time of GAO's review, State's strategy for
reducing the potential for visa fraud was to: (a) issue visas that are
machine readable; (b) expand automated name-check capability to all
posts; (c) form so-called "lookout" committees to identify suspected
terrorists and others ineligible for visas; and (d) strengthen
compliance with management controls; (2) after assessing State's
progress on these key initiatives, GAO found mixed results; (3) while
the automation initiative had progressed after some delay, operational
problems at some locations diminished the effectiveness of these
efforts; (4) these include: (a) technical problems that limited the
availability and usefulness of the automated data base; (b) inadequate
cooperation by some key U.S. agencies in State's lookout committees; and
(c) lack of compliance with management control procedures; and (5) while
State has continued to move forward in automating its visa-issuance
process, a recent report by State's Inspector General concluded that
many problems still exist.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-NSIAD-97-167
     TITLE:  State Department: Efforts to Reduce Visa Fraud
      DATE:  05/20/97
   SUBJECT:  Passports
             Fraud
             ADP
             International travel
             Terrorism
             Internal controls
             Illegal aliens
             Embassies
             Interagency relations
             Telecommunication
IDENTIFIER:  Dept. of State Consular Lookout and Support System
             Dept. of State Distributed Name Check System
             
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Cover
================================================================ COVER


Before the Committee on the Judiciary, Subcommittee on Immigration
and Claims, House of Representatives

For Release
on Delivery
Expected at
9:30 a.m.  EDT
Tuesday,
May 20, 1997

STATE DEPARTMENT - EFFORTS TO
REDUCE VISA FRAUD

Statement of Benjamin F.  Nelson, Director,
International Relations and Trade Issues,
National Security and International Affairs Division

GAO/T-NSIAD-97-167

GAO/NSIAD-97-167T


(711273)


Abbreviations
=============================================================== ABBREV


============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss our 1996 report\1 on the
Department of State's progress in making its visa issuance process
more efficient and less vulnerable to fraud.  The State Department is
responsible for the issuance and integrity of the U.S.  passport and
visa, the world's most sought-after identity documents.  State's visa
issuance process is the first line of defense against fraudulent
entry into the United States. 


--------------------
\1 Passports and Visas:  Status of Efforts to Reduce Fraud
(GAO/NSIAD-96-99, May 9, 1996). 


   SUMMARY
---------------------------------------------------------- Chapter 0:1

At the time of our review, State's strategy for reducing the
potential for visa fraud was to (1) issue visas that are machine
readable, (2) expand automated name-check capability to all posts,
(3) form so-called "lookout" committees to identify suspected
terrorists and others ineligible for visas, and (4) strengthen
compliance with management controls.  In May 1996, we issued a report
assessing State's progress on these key initiatives based on our work
at the State Department and nine overseas posts.\2

In summary, we found mixed results.  While the automation initiative
had progressed after some delay, operational problems at some
locations diminished the effectiveness of these efforts.  These
include

  technical problems that limited the availability and usefulness of
     the automated data base,

  inadequate cooperation by some key U.S.  agencies in State's
     lookout committees, and

  lack of compliance with management control procedures. 

While State has continued to move forward in automating its
visa-issuance process, a recent report by State's Inspector General
concluded that many problems still exist. 


--------------------
\2 The nine posts are Canberra and Sydney, Australia; London,
England; Guatemala City, Guatemala; Tokyo, Japan; Nairobi, Kenya;
Seoul, Republic of Korea; Mexico City, Mexico; and Johannesburg,
South Africa. 


   NATURE OF THE THREAT
---------------------------------------------------------- Chapter 0:2

As this Subcommittee is well aware, illegal immigration is a growing
and complex problem.  The Immigration and Naturalization Service
(INS) estimates that as of October 1996, 5 million illegal aliens
were residing in the United States.  INS estimates that this number
is increasing by about 275,000 persons annually.  While not the
primary source of illegal immigration into the United States, visa
fraud is a matter of concern.  Illegal aliens are creative in their
use of fraudulent documents to gain entry into the United States.  A
common practice is to paste the photo of an ineligible individual
into a stolen passport with a valid visa or otherwise alter the data
on the visa.  Criminal passport and visa fraud arrests by State's
Bureau of Diplomatic Security have more than doubled from 256 in 1992
to 567 in 1996. 


   STATE'S ROLE
---------------------------------------------------------- Chapter 0:3

Controlling immigration to the United States is primarily INS'
responsibility.  State helps INS by issuing visas to citizens of
other countries who want to visit the United States and identifying
persons who should be excluded.  Issuance of a visa, however, does
not guarantee that the holder will be permitted to enter the United
States.  Rather, it permits the holder to apply at a port of entry. 
Responsibility for granting entry rests with the INS officer who
conducts the inspection at the port of entry.  In fiscal year 1996,
State processed nearly 8 million nonimmigrant visa applications at
over 200 visa-issuing posts.  Thus, it is important that State's
system work as efficiently and effectively as possible. 


   WEAKNESSES IN STATE'S PROCESSES
---------------------------------------------------------- Chapter 0:4

Since 1987, State has recognized the lack of adequate controls over
visa processing as a material weakness and an area of high risk.\3
State's Office of Inspector General has also identified a number of
problems with visa operations.  In response to these weaknesses and
concerns about the growing problem of illegal immigration, State,
beginning in 1989, developed a strategy to reduce the vulnerability
of its processes to fraud.  This strategy included improving and
expanding automated systems and establishing embassy committees to
identify individuals ineligible for visas.  Full implementation of
the machine-readable program was the primary initiative for
eliminating visa fraud.  State's plan also called for providing all
visa-issuing posts with automated access to its global data base
containing names of individuals ineligible for a visa.  Later, State
established embassy lookout committees designed to promote closer
cooperation with other agencies in identifying individuals ineligible
for visas.  These efforts were to be combined with a greater emphasis
on enforcement of internal management controls. 


--------------------
\3 Annual reports are required by the Federal Managers' Financial
Integrity Act. 


      TECHNICAL PROBLEMS REDUCE
      EFFECTIVENESS OF VISA
      AUTOMATION
-------------------------------------------------------- Chapter 0:4.1

In 1989, State began the machine-readable visa program as its primary
initiative for eliminating the use of fraudulent nonimmigrant visas. 
The machine-readable visa is considered a more secure document than
its predecessor because the new visa is printed on synthetic material
that is more secure than paper, is attached to the passport, and has
a machine-readable zone with an encryption code.  At the ports of
entry, INS and the U.S.  Customs Service can check names by scanning
the machine-readable zone of the visa.  The visas also include a
photograph of the traveler. 

The machine-readable visa, in conjunction with expanded access to the
automated lookout system, can significantly reduce the vulnerability
of the system to fraud.  State originally intended to have the
machine-readable visa system installed by 1991.  However, the program
suffered from delays and insufficient funds.  In addition, automated
access to the lookout system was not available at all posts.  In
1994, after the World Trade Center bombing, the Congress directed
State to install automated lookout systems at all visa-issuing posts
by October 30, 1995.  State also made a commitment to install the
machine-readable visa system at all visa-issuing posts by the end of
that fiscal year.  The Congress authorized State to retain
machine-readable visa processing fees to fund these and other
improvements. 

At the time of our review, State had installed the machine-readable
visa system at 200 posts.  In addition, all of the posts had
automated access to the Consular Lookout and Support System (CLASS)
either through direct telecommunications lines to the CLASS data base
in Beltsville, Maryland, or via the distributed name check (DNC)
system, a stand-alone personal computer system with the CLASS data
base on tape or compact disk. 

In April 1997, State testified that (1) every visa-issuing post has
the machine-readable visa system installed, and had direct access to
CLASS; and (2) it had developed and is now installing a new version
of the machine-readable system, called MRV-2, at all visa-issuing
posts.  State spent about $12.9 million on installation of the MRV-2
in fiscal year 1996, plans to spend $24 million in fiscal year 1997,
and has requested $32 million for fiscal year 1998. 

Although most posts had automated name-check capability and
machine-readable visa systems at the time of our review, technical
problems limited their usefulness and availability.  Posts often
experienced transmission problems with the telecommunications lines
that support the system.  U.S.  missions in Mexico City, Guatemala
City, Sydney, Nairobi, and Seoul experienced problems with the
telecommunications lines and interruptions of CLASS.  These
disruptions resulted in considerable delays in visa issuance and
weakened visa controls.  For example, during our visit to Mexico City
we noted that consular staff were using the old microfiche system to
check names during telecommunications disruptions rather than the DNC
that was designed as backup.  They used the microfiche system because
using the DNC to check names was often a slow process.  By doing so,
the post ran the risk of approving a visa for an applicant who had
been recently added to CLASS but had not yet been added to the
microfiche list. 

State's Diplomatic Telecommunications Service Program Office works
with international telecommunications carriers to find solutions
where possible.  However, if the problem is in the telecommunications
lines of the host country, little can be done except to improve the
post's backup system. 


      LACK OF COOPERATION LIMITS
      USEFULNESS OF LOOKOUT
      COMMITTEES
-------------------------------------------------------- Chapter 0:4.2

Effective efforts to limit visa fraud call for the skills, resources,
and coordination of many U.S.  government agencies.  In the aftermath
of the World Trade Center bombing, State directed all diplomatic and
consular posts to form committees with representatives from consular,
political, and other appropriate agencies to meet regularly to ensure
that the names of suspected terrorists and others ineligible for a
visa are identified and put into the lookout system.  Of the nine
posts we visited, all but the consulates in Sydney and Johannesburg
had lookout committees, and those two posts were represented by the
lookout committees at their embassies in Canberra and Pretoria,
respectively. 

Embassy officials at two of the nine posts we visited questioned the
value of the committees, mainly because of the lack of cooperation
from some agencies.  A number of agency representatives were
reluctant to provide to the consular sections the names of suspected
terrorists or others the U.S.  government may want to keep out of the
country.  They attributed their reluctance to the sensitivity of the
information and restrictions on sharing information.  Officials from
one of the law enforcement agencies contacted expressed concern that
the information entered into CLASS could be traced to the originating
agency and compromise its work.  Only one of the agency officials we
interviewed said that he had seen guidance from his agency on the
extent to which this agency could share information.  In addition,
not all agencies were represented on these committees.  For example,
according to a consular official, the committee in Pretoria did not
include representatives from the Federal Bureau of Investigations,
the Customs Service, and the Drug Enforcement Agency.  The committee
in Tokyo also lacked key representatives. 

Consular officials told us that the lookout committees are intended
to augment rather than replace coordination activities at
headquarters.  Additionally, according to consular officials, they
are (1) working closely with individual posts to resolve coordination
problems, (2) maintaining close liaison with participating agencies
at the headquarters level to ensure continued cooperation and
commitment, and (3) soliciting increased participation from agencies
whose contributions were limited in the past.  State says that it has
also taken steps to clarify terrorist reporting channels.  We have
not assessed the effectiveness or extent of these headquarters'
initiatives. 


      OVERSEAS POSTS DO NOT ALWAYS
      ADHERE TO INTERNAL CONTROLS
-------------------------------------------------------- Chapter 0:4.3

Maintaining the integrity of the process requires that posts adhere
to established controls.  This was not always the case.  One common
shortcoming we observed was the use of foreign service nationals
(FSN) to check names through CLASS without the direct supervision of
a U.S.  officer.  FSNs were responsible for checking names at five of
the posts we visited.  The consular officers at these posts relied on
FSNs to notify them when an applicant's name matched one in the CLASS
data base.  At the time of our review, three of the posts also were
not equipped with the machine-readable visa system, which
automatically provides the results of the name check for the U.S. 
officer's review.  Officials of State's Bureau of Consular Affairs
told us that the machine-readable system has since been installed at
these locations and improved procedures and software enhancements now
make unsupervised name checks impossible.  Consular officers are now
required to certify in writing that they have checked the automated
lookout system and that there is no basis for excluding the
applicant.  We have not assessed the extent or the effectiveness of
compliance with this new requirement. 

Other internal control shortcomings were the lack of security over
controlled equipment and supplies and the failure to report and
reconcile daily activities and follow cashiering procedures.  Bureau
of Consular Affairs officials attributed some of these problems to a
lack of resources. 


      INSPECTOR GENERAL REPORTS
      THAT SOME PROBLEMS REMAIN
-------------------------------------------------------- Chapter 0:4.4

In May 1997, State's Office of Inspector General issued a report that
concluded that some of the problems with the machine-readable visa
program still exist.  The Inspector General reported that some posts
are still having difficulties accessing CLASS as a result of
interruptions to telecommunications lines or the mainframe computer. 
Further, the Inspector General identified significant software
limitations with the DNC that may prevent posts from having full
information at the time of visa adjudication.  The report stated that
the Bureau of Consular Affairs has developed and distributed a newer
version of the DNC that will address these limitations. 

The Inspector General further reported that, although all posts now
have the machine-readable visa system, the border security and
inspection process remains vulnerable with respect to validating a
visa.  There is no automated mechanism for transmitting data about
nonimmigrant visa issuance to ports of entry to determine whether the
machine-readable visa being presented for entry into the United Sates
is a valid visa issued by the Department.  Moreover, INS is not
reading the encryption code to authenticate the visa.  According to
State, the new machine-readable visa will have the capability to
electronically transmit relevant nonimmigrant visa data to ports of
entry.  The Inspector General also reported that management and
accountability over machine-readable visa supplies and equipment
continues to be a problem. 

The report attributed some of the problems to severe staffing
shortages and the Bureau of Consular Affairs' failure to address
software and hardware problems early in the development of the
machine-readable visa program.  While recognizing that the new
version of the machine-readable visa is designed to correct some of
the shortcomings, the Inspector General made a number of
recommendations to address other weaknesses in the process. 


   CONCLUSION
---------------------------------------------------------- Chapter 0:5

In closing, the State Department has made progress in automating and
modernizing its visa-issuance process to reduce its vulnerability to
fraud.  However, improvements are still needed to better protect the
integrity of U.S.  entry documents. 


-------------------------------------------------------- Chapter 0:5.1

This concludes my prepared remarks, Mr.  Chairman and Members of the
Subcommittee. 

*** End of document. ***