Treasury Expands Do Not Pay System to Prevent Improper Payments

The Treasury Department is expanding the reach of its Do Not Pay system across federal agencies as part of a broader effort to catch fraudulent and improper payments before government funds are disbursed.

By the end of the fiscal year, the Bureau of the Fiscal Service (BFS) expects 70% to 80% of government programs to be fully able to use the system, up from just 4%, according to Executive Director of Financial Integrity Justin Marsico.

“The result at the end of the fiscal year is going from 4% of government programs that were fully able to use DNP to something much, much greater. We’re looking at somewhere between 70 and 80%, with the rest to follow going into the next fiscal year,” Marsico said Friday at ACT-IAC’s Fraud Forum.

The Do Not Pay system gives agencies access to multiple data sources and tools to verify eligibility and identify potentially improper payments. But Marsico said time-consuming paperwork and data-sharing requirements previously prevented many government programs from using DNP to its fullest capability.

President Donald Trump’s executive order “Protecting America’s Bank Account Against Fraud, Waste, and Abuse” and an accompanying Office of Management and Budget memo sought to address those administrative and data-sharing barriers and expand agencies’ use of DNP.

“BFS overhauled the onboarding process, but what really changed this effort is the clear policy direction from OMB to all of the 23 agency CFOs that they needed to get through the process to onboard to DNP by September 30,” said Marsico.

BFS also created a DNP working group to help agencies navigate the onboarding process. The group initially met biweekly before moving to weekly meetings because of growing interest, bringing together agency privacy officials, general counsel and IT professionals to work through implementation and data-sharing requirements, Marsico said.

“Through all of these strategies together–removing the barriers and forming the working group–we have all 23 of the agencies’ CFOs to sign data sharing agreements with DNP,” said Marsico. “We are also at the point where you will see agencies are posting Federal Register notices to inform the public where their programs are going to be using DNP in the future.”

Moving Fraud Detection Earlier

Alongside expanding agencies’ use of DNP, Treasury is strengthening its ability to identify potentially improper payments before funds are disbursed.

Federal law already requires agencies to review relevant databases to verify eligibility and prevent improper payments before releasing federal funds. Executive Order 14249 built on those requirements by directing Treasury to strengthen its pre-certification verification processes and requiring agencies to provide payment files early enough for Treasury to conduct fraud and improper-payment screening.

Marsico said that under the previous process, some payments could be issued before BFS screened them against datasets such as the Social Security Administration’s Death Master File. Although agencies could attempt to recover improper payments afterward, doing so created additional administrative work that earlier screening could avoid.

Treasury’s payment verification process has allowed agencies to identify potentially improper payments before they are issued, including payments intended for deceased individuals.

“Agencies have stopped 10,000 payments worth a total of $115 million that would have gone to deceased persons,” said Marsico. “Some of that money might have been able to be reclaimed through a post-payment process, but that would be more work for agencies, financial institutions and in some cases, the recipients. So it’s a savings of administrative work as well as savings of our resources.”

Making Payment Risk Easier to Identify

A DNP match or elevated risk does not automatically mean an agency should stop a payment. Instead, the results give agencies information they can use to conduct additional due diligence and determine whether a payment is appropriate.

BFS is also expanding the data available through DNP to help agencies validate income, assets and other information. Some potential data sources are commercially available but can be costly for federal agencies, while access to others may be restricted under federal tax laws, Marsico said.

Despite those hurdles, BFS added 10 new data sources this year, including USAspending, VA’s Benefits Enterprise Platform, USDA’s Credit Alert System, OpenCorporates and GSA’s Federal Audit Clearinghouse.

Marsico said agencies have already screened more than 84 million records using the new risk model, a figure he expects to grow as more programs gain access to DNP.

“We are pleased that so far we’ve had customers screen over 84 million records with our risk model, which annualized will get us to 500 million queries against this new model,” Marsico said. “I expect those numbers to go up significantly in FY27 as we get agencies fully onboarded.”