The Naval Postgraduate School & The U.S. Department of Homeland Security

OIG Report Investigates ATF Use of Undercover Income-Generating Operations

Last month the OIG (Office of the Inspector General) released an audit report on ATF (Bureau of Alcohol, Tobacco, Firearms, and Explosives) use of income-generating, undercover operations. The report audited the "churning investigations" of the agency, which refers to the authority to use proceeds generated from undercover operations to offset necessary and reasonable operational expenses related to the same operations.

"The Office of the Inspector General [...] conducted this audit to determine whether ATF: (1) properly authorized income-generating undercover operations (churning investigations); and (2) provided adequate management and oversight of its churning investigations."

OIG found that "ATF proceeded with churning investigations without proper approval, misused the proceeds from churning investigations, and failed to account properly for cigarettes and assets purchased during churning investigations." These violations have culminated in more than $127 million in unaccounted government funds.

OIG believes that ATF "should develop and implement clear policy regarding the permissible uses of churning funds, implement policies and procedures that minimize the risk of fraud and abuse, and strengthen policies and procedures for protecting the identity of confidential informants and undercover agents." These guidelines for improvement are outlined in one recommendation to the Deputy Attorney General and sixteen recommendations to ATF itself.