Washington (CNN) -- A new report confirms suspicions that U.S. taxpayer money for projects in Afghanistan may be diverted to extremists killing American troops.

The United States still has only "limited visibility" of what happens to billions of dollars, "leaving them vulnerable to fraud or diversion to insurgents," according to report released Wednesday from the office of the Special Inspector General for Afghanistan Reconstruction, SIGAR.

The Inspector General says that more than $70 billion has been spent on security and development projects since 2002 in Afghanistan, but lack of oversight, foot-dragging by the Afganistan government and failure to take simple steps like recording cash serial numbers means some of the money is hard to track.

One problem is the use of hawalas -- traditional and informal financial organizations -- instead of banks to transfer funds. Some hawalas are registered with the government, but others are not and refuse to divulge details of their business. The report cites an example of how a U.S. contractor tried to transfer $2.8 million inside Afghanistan that never arrived. "Despite investigations by National Solidarity Program personnel and interventions on the part of the Afghan Attorney General's office, this hawala continues to retain the majority of these funds and refuses to deliver them to the intended communities," the report says.

Another problem is that large amounts of money are smuggled out of the country, maybe as much as $10 million a day. The report says that despite controls at Kabul airport, government officials and other powerful people in Afghanistan can avoid currency checks when they leave.

"Passengers designated by the Afghan government as VIPs bypass the main security and customs screenings used by all other passengers and instead use a separate facility to enter the secured area of the airport," the report says. "While VIPs are required to declare their currency, Afghan officials reportedly have no plans to scan their cash through electronic currency counters." U.S. officials were denied access to that part of the airport to see how VIP passengers were screened.

The agency recommended that the U.S. Ambassador to Afghanistan "improve interagency coordination on financial sector development programs" and also recommended that the secretaries of State and Defense "strengthen oversight over the flow of U.S. funds through the Afghan economy," according to the report.