Gangs in Central America

Summary: The Mara Salvatrucha (MS-13) and its main rival, the "18th Street" gang, continue to undermine citizen security and subvert government authority in parts of Central America. Gang-related violence has been particularly acute in El Salvador, Honduras, and urban areas in Guatemala, contributing to some of the highest homicide rates in the world. Congress has maintained an interest in the effects of gang-related crime and violence on governance, citizen security, and investment in Central America. Congress has examined the role that gang-related violence has played in fueling mixed migration flows, which have included asylum seekers, by families and unaccompanied alien children (UAC) to the United States. Since FY2008, Congress has appropriated funding for anti-gang efforts in Central America.

Summary: Central American governments have struggled to address the gang problem. From 2012 to 2014, the government of El Salvador facilitated a historic—and risky—truce involving the country's largest gangs. The truce contributed to a temporary reduction in homicides but strengthened the gangs. Since taking office in June 2014, President Salvador Sanchez Cerén has adopted repression-oriented anti-gang policies similar those implemented in the mid-2000s, including relying on the military to support anti-gang efforts. El Salvador's attorney general is investigating allegations of extrajudicial killings committed by police engaged in anti-gang efforts. Successive Honduran governments have generally relied on suppression-oriented policies toward the gangs as well, with some funding provided in recent years to support community-level prevention programs. The Guatemalan government has generally relied on periodic law-enforcement operations to round up suspected gang members.

Summary: U.S. agencies have engaged with Central American governments on gang issues for more than a decade. In July 2007, an interagency committee announced the U.S. Strategy to Combat Criminal Gangs from Central America and Mexico, which emphasized diplomacy, repatriation, law enforcement, capacity enhancement, and prevention. Between FY2008 and FY2013, Congress appropriated roughly $38 million in International Narcotics Control and Law Enforcement (INCLE) funds through a special line item for anti-gang efforts in Central America. Since FY2013, approximately $10 million in Central American Regional Security Initiative (CARSI) funding has been assigned to continue those anti-gang initiatives. Significant additional support has been provided through CARSI for violence-prevention efforts in communities affected by gang violence, as well as for vetted police units working on transnational gang cases with U.S. law enforcement. Recently, U.S. and Salvadoran officials have also targeted the financing of MS-13, which the Treasury Department's Office of Foreign Assets Control (OFAC) designated as a Transnational Criminal Organization subject to U.S. sanctions in October 2012, pursuant to Executive Order (E.O.) 13581.

Summary: This report describes the gang problem in Central America, discusses country approaches to deal with the gangs, and analyzes U.S. policy with respect to gangs in Central America. Congressional oversight may focus on the efficacy of anti-gang efforts in Central America; the interaction between U.S. domestic and international anti-gang policies, and the potential impact of U.S. sanctions on law-enforcement efforts. See also CRS Report R41731, Central America Regional Security Initiative: Background and Policy Issues for Congress, and CRS Report R43702, Unaccompanied Children from Central America: Foreign Policy Considerations.

Congress has expressed ongoing concern about the high rate of violent crimes committed by drug traffickers, organized criminal groups, and gangs in Central America, particularly in the "northern triangle" countries of El Salvador, Guatemala, and Honduras (see Figure 1 ). Central American governments, the media, and some analysts have attributed a significant proportion of homicides to maras (gangs), many of which have ties to the United States. U.S. concerns about gangs are due in part to the role gangs have played in the violence, extortion, and forced recruitment that has fueled internal displacement, as well as the record-level emigration of unaccompanied alien children (UAC) and families to the United States. The U.N. High Commissioner for Refugees (UNHCR) has asserted that gang violence is contributing to a "refugee-like" situation in the northern triangle. Governments maintain that recent migration has been due to a number of factors and that their efforts are reducing violence and illegal emigration.

In recent years, Congress has considered what level of U.S. assistance is most appropriate to help Central American countries combat gang activity and what types of programs are most effective in that effort. Members of Congress have also taken an interest in the impact on the gang problem of U.S. deportations of individuals with criminal records to Central America, as well as the evolving relationship between Mexican transnational criminal organizations (TCOs) and the gangs. Congress is currently examining the degree to which governments in the region are taking steps to address gangs in a way that does not cause human rights abuses, as required by conditions included in the FY2016 Consolidated Appropriations Act ( P.L. 114-113 ).

This report describes the gang problem in Central America, discusses country approaches to deal with the gangs, and analyzes U.S. policy with respect to gangs in Central America. It concludes with possible questions for oversight that Congress may consider.

Scope of the Gang Problem in Central America

Experts have long debated the formal definition of the term gang and the types of individuals that should be considered gang members . Generally, experts agree that most gangs have a name and some sense of identity, which can sometimes be indicated by symbols such as clothing, graffiti, colors, and hand signs that are unique to the group. Gangs are thought to be composed of members ranging in age from 12 to 24, but some gang members are older adults and others are younger, often forcibly recruited. These definitions are evolving. According to the U.S. National Gang Center, group criminality is the most important factor used to identify gang-related activity in the United States, followed by displaying gang symbols. Gangs may be involved in criminal activities ranging from graffiti, vandalism, petty theft, robbery, extortion, and assaults to more serious criminal activities, such as drug trafficking, rape, and murder.

When referring to gangs in Central America, some studies use the terms pandillas and maras interchangeably, whereas others distinguish between the two. Studies that distinguish between the two types of Central American gangs generally define pandillas as localized groups that have long been present in the region and maras as a more recent phenomenon with transnational roots. For a variety of reasons discussed below, pandillas are more prevalent in Nicaragua, whereas maras are dominant in the northern triangle.

The major gangs operating in Central America with ties to the United States are the "18 th Street" gang (also known as M-18), and its main rival, the Mara Salvatrucha (MS-13). The 18 th Street gang was formed in the 1960s by Mexican youth who were not accepted into existing Hispanic gangs in the Rampart section of Los Angeles. It was the first Hispanic gang to accept members from all races and to recruit members from other states. MS-13 was created during the 1980s by Salvadorans in Los Angeles who had fled the country's civil conflict. Both gangs later expanded their operations to Central America but remain active in the United States. According to U.S. estimates by the Department of Justice in 2015, the 18 th Street gang is reportedly active in 20 states, whereas the MS-13 is present in 46 states and the District of Columbia.

The expansion of MS-13 and 18 th Street presence in Central America accelerated after the United States began deporting illegal immigrants, many with criminal convictions, back to the northern triangle region after the passage of the Illegal Immigrant Reform and Immigrant Responsibility Act (IIRIRA; P.L. 104-208 ) of 1996. Many contend that gang deportees "exported" a Los Angeles gang culture to Central America (where local gangs were already present). Gangs have recruited new members from among vulnerable youth in poor neighborhoods and in prisons; forcible recruitment is common. Studies have shown that, as happened in the United States, gang leaders in Central America have used prisons to increase discipline and cohesion among their ranks.

Estimates of gang membership in Central America vary, with several widely cited estimates published in 2012. At that time, State Department officials estimated that there were roughly 85,000 MS-13 and 18 th Street gang members in northern triangle countries. In contrast, the U.N. Office on Drugs and Crime (UNODC) estimated total MS-13 and M-18 membership in the region at 54,000 (see Figure 2 below). According to UNODC, there were roughly 20,000 gang members in El Salvador; 22,000 in Guatemala; and 12,000 in Honduras. El Salvador had the highest concentration of gang members, with some 323 gang members for every 100,000 citizens, double the level of Guatemala and Honduras. In comparison, in 2007, UNODC cited total gang membership of some 64,500, with country membership totals of 10,500 in El Salvador; 14,000 in Guatemala; and 36,000 in Honduras.

Nicaragua has a significant presence of local gangs, but comparatively few MS-13 and M-18 members. Many attribute this in part to the strength of social networks and community policing programs established by the Sandinistas during the 1980s. Nicaragua also has received far fewer deportees from the United States than the northern triangle countries. Costa Rica, Panama, and Belize also have gangs, although most of the gangs in those countries are more often described as pandillas than maras .

In recent years, Costa Rica, Nicaragua, and Panama have reported some MS-13 and M-18 presence in their countries. The increased presence in these countries could be occurring because of deliberate expansion efforts made by the gangs or because of gang members fleeing from rival gangs, or it could be a result of tough gang policies in countries such as El Salvador driving gang members into neighboring countries. In April 2016, Panamanian police captured MS-13 members and deported them to El Salvador.

Although MS-13 and M-18 began as loosely structured street gangs, some evidence suggests that they have become more organized and sophisticated in some countries and that some clicas (cliques) may coordinate with cliques in other countries. By 2008, U.S. law enforcement had found evidence suggesting that some MS-13 leaders jailed in El Salvador were ordering retaliatory assassinations of individuals in the Washington, DC, metro area, as well as designing plans to unify their cliques with those in the United States. More recent investigations have shown evidence of MS-13 leaders seeking to buy high-powered firearms in Mexico and Guatemala. Still, the term transnational criminal organization , or TCO, might be misleading when used to describe the maras across the region. Some researchers contend that the Central American gangs' primary focus continues to be on local issues, such as dominating a particular extortion racket or drug distribution area.

The northern triangle countries have among the highest homicide rates in the world (see Figure 3 ). Some Central American officials have blamed gangs for most of the homicides committed in their countries. Gang-related murders occur when gangs discipline their members or punish those who attempt to leave, dispute territory, confront law enforcement and their families, and punish those who fail to comply with their orders. Gangs have also targeted witnesses to crimes.

Gang experts have argued that, although gang members may be more visible than other criminals, violence perpetrated by gangs is part of a broader spectrum of violence in Central America. Child abuse and spousal rape are major problems in the three northern triangle countries. All three countries have among the highest rates of femicide (killing of women) in the world. El Salvador and Guatemala also have the highest proportion of homicide victims under the age of 20. Moreover, transnational criminal organizations, smugglers, and other violent groups are also prevalent.

The decline in homicides that occurred after the Salvadoran government facilitated a gang truce in March 2012 lends evidence to the assertion that gangs are responsible for a significant percentage of violence in that country. Some also maintain that recent reductions in homicides in El Salvador may be due more to a nonaggression pact among the gangs than to the "extraordinary measures" adopted by the government in March 2016. Although gangs appear to be responsible for a significant percentage of murders in urban areas of Honduras and Guatemala, homicide rates also have been elevated in border regions and places where varying combinations of local groups transporting drugs, Mexican crime groups, and crime families are active.

Women and children are often targets of gang violence in Central America. Gang initiations for men and women differ. Whereas men are subject to a beating, women are often forced to have sex with various members of the gang. After joining a gang, women are expected to commit crimes (such as serving as drug mules or carrying contraband into prisons), sometimes dressed like men, but also to perform household duties, such as cooking and cleaning for the group. Female gang members are expected to tolerate infidelity from their partners, but women may be murdered if they are unfaithful. Non-gang affiliated women and girls have been murdered as a result of turf battles, jealousy, and revenge. Those who have refused to help a gang or reported a crime are particularly vulnerable, as are those who are related to or have collaborated with the police. Gangs also engage in sex trafficking involving women and children, particularly in Honduras and in Guatemala City. Threats and harassment by gangs have led thousands of youth to abandon school, including some 39,000 in El Salvador in 2015.

Gangs have been involved in a broad array of other criminal activities, as well. Those activities include extortion; money laundering; and drug, auto, and weapons smuggling. Gangs have increasingly been involved in extortions of residents, bus drivers, and business owners in major cities throughout the region. Failure to pay often results in harassment or violent reprisals. In 2014, some 179 bus, minibus, and taxi drivers were assassinated in Guatemala. In July 2015, the MS-13 and 18 th Street gangs in El Salvador threatened public transportation operators to go on strike or face reprisals. The operators complied with the gangs' threats, and the country's transport system remained paralyzed for three days. The Honduran government cracked down on the MS-13 gang's finances in February 2016 in an operation that seized more than $1 million and several properties and businesses operated by the gang. In July 2016, the Salvadoran government arrested more than 70 people who had allegedly laundered the gang's money through motels, brothels, and other businesses.

Although some studies maintain that ties between Central American gangs and other organized criminal groups have increased, other studies have downplayed the connections. Some gangs engage in local drug distribution, but gangs generally do not have a role in transnational drug trafficking. A gang's role in the drug trade depends on the country and area in which it operates. Some clicas act as facilitators by, for example, allowing a transnational criminal organization to land drug shipments on a clandestine airstrip in their territory in exchange for payment. MS-13 members reportedly have been contracted on an ad-hoc basis by Mexico's warring criminal organizations to carry out revenge killings.

Factors Exacerbating the Gang Problem in Central America

Legacies of War and Authoritarian Rule: Arms and Violence

The northern triangle countries have long histories of armed conflict and political repression. A legacy of conflict and authoritarian rule has inhibited the development of democratic institutions and the rule of law. Protracted armed conflicts also contributed to widespread proliferation of illicit firearms, as well as a tendency to resort to violence as a means of settling disputes. Some 80% of homicides in Honduras between 2008 and 2015 involved the use of a firearm, the vast majority of which were unlicensed. Many current gang leaders grew up witnessing extreme violence in their homes and communities. Some were displaced to cities in the United States or neighboring countries (such as Costa Rica), whereas others were left behind by parents who died or fled during the conflict.

Poverty and a Lack of Educational and Employment Opportunities

In addition to war, authoritarian rule, and emigration, the social fabric in the northern triangle countries has been stressed by economic factors such as poverty, inequality, and unemployment, with few opportunities for growing youth populations. According to the World Bank, poverty is acute in Honduras, where 63% of people live in poverty, and in Guatemala, where 59% of people live in poverty. All three northern triangle countries are also characterized by inequality, with income disparities exacerbating the social exclusion of ethnic minorities and gender discrimination.

Poverty and inequality are reinforced by the lack of social mobility and persistent youth unemployment and underemployment. In 2010, more than 25% of youth aged 15-24 in El Salvador and Honduras neither worked nor studied. According to data from the Inter-American Development Bank, fewer than 45% of youth outside the highest income quintile graduate high school in those countries. High-school graduation rates are even lower in Guatemala, particularly among indigenous groups. Gangs target unemployed youth and, in the absence of family or community support, many of these youth have turned to gangs for social support, a source of livelihood, and protection.

Societal stigmas against gangs and gang deportees from the United States have made the process of leaving a gang extremely difficult. Many organizations that work with former gang members, particularly those with criminal records, say that offender reentry is a major problem. Ex-gang members report that employers are often unwilling to hire them. Tattooed former gang members, especially returning deportees from the United States who are often native English speakers, have had the most difficulty finding gainful employment. Some gang members have gone through complete tattoo removal, a long and expensive process, to better integrate into society.

The implementation of aggressive anti-gang roundups has overwhelmed prisons in Central America. Prison conditions in the region are generally harsh, with severe overcrowding, inadequate sanitation, and staffing shortages. Many facilities that were already overpopulated have been filled with thousands of suspected gang members, many of whom have yet to be convicted of any crimes. In El Salvador, some 31,148 inmates (including 13,868 current or former gang members) were being held in prisons designed to hold a maximum of 10,035 people in late 2015. In Guatemala at about the same time, 19,972 people were being held in facilities with a capacity of 6,742.

Gangs are often able to carry out criminal activities from behind bars, sometimes with assistance from corrupt prison officials. As discussed above, some assess that prison conditions have helped gangs to become larger, better organized, and more cohesive. Some observers have described prisons as "finishing schools" where, rather than being rehabilitated, first-time offenders often deepen their involvement in illicit gang activities.

U.S. Removals (Deportations) to Central America and the Gang Problem

Policymakers in Central America have expressed ongoing concerns that U.S. deportations of individuals with criminal records are exacerbating the gang and gang-related citizen security problems in the region. For more than a decade, Honduras, Guatemala, and El Salvador have received the highest numbers of U.S. deportees (after Mexico). Obama Administration officials have repeatedly asserted that a larger proportion of recent deportees were removed on criminal grounds, but a breakdown of criminal versus noncriminal deportations is not publicly available at a country level.

Since the mid-2000s, Central American officials had been asking the U.S. government to consider providing a complete criminal history for each individual who has been deported on criminal grounds, including whether or not he or she is a member of a gang. Although U.S. Immigration and Customs Enforcement (ICE) does not provide a complete criminal record for deportees, it may provide some information regarding an individual's criminal history when specifying why the individual was removed from the United States. ICE does not indicate gang affiliation unless gang affiliation is the primary reason why the individual is being deported. However, in January 2014, the State Department and the Department of Homeland Security (DHS) signed an agreement to expand a Criminal History Information Sharing (CHIS) program. Honduras, Guatemala, El Salvador participate in CHIS.

The types of support services provided to deportees returning from the United States and Mexico to northern triangle countries vary but are generally limited in size and scope. Until recently, the few shelters and programs that existed to receive and reintegrate deportees in Central America tended to be funded and administered by nongovernmental organizations (NGOs), the Catholic Church, or the International Organization for Migration. Guatemala appears to provide the most deportee assistance upon arrival, but all three countries have limited resources for reintegration services and for tracking deportees once they return.

Country efforts to deal with gangs vary. In general, governments in the northern triangle have adopted more aggressive law-enforcement approaches than other Central American countries. Tough anti-gang approaches carried out in the mid-2000s failed to stave off rising crime rates in the region and resulted in negative unintended consequences. El Salvador's ill-managed truce (see " El Salvador's 2012 Gang Truce and Dissolution ," below) has discouraged governments from negotiating with the gangs. Experts have urged governments to move away from enforcement-only policies toward "second-generation" anti-gang programs similar to the types of efforts that have been employed in U.S. cities such as Boston and Los Angeles. These approaches involve prevention of violence, intervention to prevent retaliatory violence, enforcement, and reentry of rehabilitated gang members.

Regional cooperation to address gang challenges is occurring among security and defense ministers, as well as attorney generals. Prosecutors from the three northern triangle countries have signed an agreement pledging to work together to prosecute gangs. The three presidents have signed an agreement to create a regional task force to address the gangs that will facilitate intelligence sharing and extraditions among the three countries, among other aims.

Mano Dura (Heavy-Handed) Anti-gang Policies

Mano d ura is a term used to describe the type of anti-gang policies initially put in place in El Salvador, Honduras, and, to a lesser extent, Guatemala in response to popular demands and media pressure for these governments to "do something" about an escalation in gang-related crime. Mano dura approaches have typically involved incarcerating large numbers of youth (often those with visible tattoos) for illicit association and increasing sentences for gang membership and gang-related crimes. A Mano d ura law passed by El Salvador's Congress in 2003 was subsequently declared unconstitutional but was followed by a s uper m ano d ura package of anti-gang reforms in July 2004. These reforms enhanced police power to search and arrest suspected gang members and stiffened penalties for convicted gang members. Similarly, in July 2003, Honduras enacted a penal code amendment that made maras illegal and established sentences of up to 12 years in prison for gang membership. Changes in legislation were accompanied by the increasing use of joint military and police patrols to arrest gang suspects. Guatemala introduced similar legislation in 2003, but the legislation was not enacted.

Mano d ura reforms initially proved to be a way for Central American leaders to show that they were getting tough on gangs and crime, despite objections from human rights groups about the leaders' infringements on civil liberties and human rights abuses (including cases of torture and extrajudicial killings of gang suspects). Early public reactions to the tough anti-gang reforms were positive, supported by media coverage demonizing the activities of tattooed youth gang members. M ano d ura policies enabled police to arrest large numbers of suspected gang members, including some 14,000 youth in El Salvador between mid-2004 and late 2005. In addition, according to Salvadoran officials, even though many suspects were eventually released, gang detainees provided law-enforcement officials with intelligence information.

Despite the early results of m ano d ura policies, long-term reduction of gangs and related crime proved to be fleeting. Most youth arrested under mano dura provisions were subsequently released for lack of evidence that they committed any crime. Some youth who were wrongly arrested for gang involvement joined gangs while in prison. Gang roundups exacerbated prison overcrowding, and intergang violence within the prisons resulted in inmate deaths. Credible reports assert that extrajudicial youth killings by vigilante groups have continued since mano dura was implemented. In response to mano dura, gangs have also changed their behavior to avoid detection.

El Salvador's 2012 Gang Truce and Dissolution

Upon taking office in 2009, then-Salvadoran president Mauricio Funes initially sought to move away from mano dura and toward a focus on crime prevention. Two years into his term, crime rates remained at elevated levels and people became frustrated. Funes moved his minister of defense, David Munguía Payés, a retired general, to head the Ministry of Justice and Public Security. With Munguía Payés's backing, a Catholic bishop and a former legislator (who was the minister's aid in the Defense Ministry) brokered a secret truce between the MS-13 and 18 th Street gangs. In March 2012, Munguía Payés agreed to transfer high-ranking gang leaders serving time in maximum-security prison to less secure prisons to facilitate negotiations. Munguía Payés denied his role in facilitating the truce until September 2012.

Between the time the prison transfers took place and May 2013 (when Munguía Payés was removed from his post for unrelated reasons), the Salvadoran government reported that homicide rates dramatically declined. Gang leaders pledged not to forcibly recruit children into their ranks or to perpetrate violence against women. Gang leaders also turned in small amounts of weapons and offered to engage in broader negotiations. The initial apparent success of the Salvadoran truce led the Honduran government to consider a similar initiative.

Although some, including officials from the Organization of American States, praised the truce, many others expressed skepticism, maintaining that disappearances increased after the truce took effect and gangs garnered media attention and political power. Gangs continued to conduct illicit activities using cell phones in the prisons and refused to give up control over their territories or to stop extortion. El Salvador's attorney general is investigating several officials who were involved in facilitating the truce for allegedly providing as much as $25 million to gang leaders and their affiliates.

The truce began to unravel after then-president Funes withdrew support for the truce mediators and reduced communication between imprisoned gang leaders and gang members in the streets in mid-2013. By April 2014, average murder rates had risen to some nine murders per day; gang attacks on police also occurred with increasing frequency. These trends worsened considerably in 2015, as El Salvador posted the world's highest homicide rate.

Church leaders have voiced support for renewed dialogue with gang members; however, the Sánchez Cerén administration opposes negotiating with the gangs—directly or indirectly. Gang-police confrontations escalated after the government returned gang leaders involved in the truce to maximum-security prisons in early 2015. El Salvador's attorney general has recently begun investigating allegations of police involvement in extrajudicial killings that took place during an apparent massacre in March 2015. Until mid-2016, the Salvadoran government had struggled to quell violence among the gangs, which became more fragmented and powerful after the truce.

Military Involvement in Public Security and Human Rights

El Salvador, Guatemala, and Honduras have deployed thousands of military troops to help their often underpaid and poorly equipped police forces carry out public security functions, without clearly defining when those deployments might end. Upon taking office in January 2014, Honduran President Juan Orlando Hernández ordered the military to conduct intensive patrols of high-crime neighborhoods in the capital with the police. Among the units involved in the ongoing operation are two hybrid forces that Hernández helped to establish while he was the head of the Honduran Congress: the military police force, or PMOP ( Policía Militar de Orden Público ), which is under the control of the Ministry of Defense, and a military-trained police unit under the control of the police, the TIGRES ( Tropa de Inteligencia y Grupos de Respuesta Especial de Seguridad ). In May 2015, the Salvadoran government created three battalions to help police in anti-gang efforts; at that time, some 7,000 soldiers were already involved in public security efforts. In March 2016, Salvadoran President Sánchez Cerén deployed hundreds of military reservists. Since taking office in January, Guatemalan President Jimmy Morales has extended the mandate of some 4,500 soldiers organized in nine groups that were involved in domestic security efforts during the previous government.

The involvement of the military in domestic security has raised concerns regarding human rights in these countries. As in other parts of Latin America, deploying the military into the streets can be politically popular, but doing so usually fails to produce sustainable improvements in security conditions and often leads to human rights violations. According to the State Department's Country Repo rts on Human Rights Practices , there were credible reports of security forces' involvement in unlawful killings in all three countries in 2015. The Office of the Ombudsman for Human Rights in El Salvador reported that from June 2014 to May 2015 it received 2,202 complaints of human rights violations, 92% of which were allegedly committed by the police and/or the military.

Approaches in Other Central American Countries

Although their efforts have received considerably less international attention than those of El Salvador, Honduras, and Guatemala, other Central American countries have developed a variety of programs to deal with their gang problems. In Panama, President Juan Carlos Varela started an initiative in 2014 called Barrios Seguros (Safe Streets), where gang members willing to abandon criminality and be reintegrated into society are offered amnesty and job training to reduce gang violence. The initiative is currently active in seven provinces and has served more than 4,100 people.

Nicaragua has adopted a national youth crime prevention strategy that, at least on an official level, includes the active involvement of the police in preventive and rehabilitative efforts and focuses on family, school, and community interventions. With support from other countries and NGOs, the Nicaraguan National Police's Juvenile Affairs Division runs at least two anti-gang activities a month. The Ministry of the Interior is administering a five-year program, which is supported by the Inter-American Development Bank, to target at-risk youth in 11 different municipalities.

Prospects for Country Prevention and Rehabilitation Efforts

Central American leaders, including those from the northern triangle countries, appear to have moved, at least on a rhetorical level, toward more comprehensive anti-gang approaches than during the mano dura era of the mid-2000s. All of the Central American countries have created institutional bodies to design and coordinate crime-prevention strategies and have units within their national police forces engaged in prevention efforts. Prevention is also a key component of the Alliance for Prosperity in the Northern Triangle plan launched in 2014 by all three countries for which the governments are seeking donor support to complement their budget outlays.

Despite this rhetorical shift, government-sponsored gang prevention programs in the northern triangle have thus far tended to be relatively small scale, ad hoc, and underfunded. Of the $318.2 million collected through Honduras' security tax between 2012 and July 2016, just 6% was allocated to prevention programs. El Salvador's security plan, El Salvador Seguro (Secure El Salvador), prioritizes prevention, but the government lacks the funding to implement the programs the plan proposes and must obtain legislative approval for multilateral loans to support the plan. The Salvadoran Congress has been reluctant to approve additional debt unless the debt is primarily aimed at supporting the military and police.

Governments have been even less involved in sponsoring rehabilitation programs for individuals seeking to leave gangs, with most reintegration programs funded by church groups or NGOs. Resource constraints and a reluctance to work with gang members have thus far limited such anti-gang programs. Nevertheless, pilot projects based on experiences in cities in the United States, Brazil, Mexico, and Colombia have had some nascent success in Honduras. Those projects have involved individual and family therapy for youth deemed most at risk for joining gangs, intervention efforts to prevent retaliatory violence, and rehabilitation programs for those seeking to leave gangs and for nonviolent offenders in prisons.

In the mid-2000s, U.S. officials and Members of Congress expressed serious concerns about gangs and violence in Central America and their spillover effects on the United States. For several years, however, concerns about gang-related violence were overshadowed by broader concerns about drug trafficking and organized crime in Central America, particularly after Mexico's aggressive anticrime efforts pushed Mexican transnational criminal organizations (TCOs) deeper into the sub-region. The failed truce in El Salvador and the escalating gang-related violence that has fueled illegal emigration from that country and parts of Honduras since 2014 has refocused attention on gangs in Central America.

Congressional Interest and Appropriations

Congress has expressed concern about the problem of transnational gangs and interest in the effectiveness of U.S. international anti-gang efforts. Since the 110 th Congress, interest in the topic of gangs and violence in Central America has included concerns about the domestic and international criminal activities of the gangs, as well as the relationship between gangs and Mexican TCOs. Members of Congress have also expressed interest in the effects of U.S. deportation policy and mano dura approaches in the region on Central American gangs. As Congress has appropriated significant funding for anti-gang efforts, it has also conducted oversight of the efficacy of U.S. programs that affect Central American gangs.

Between FY2008 and FY2013, Congress appropriated roughly $38 million in global International Narcotics Control and Law Enforcement (INCLE) funds for anti-gang efforts in Central America. A regional gang adviser based in El Salvador has coordinated Central American gang programs since that time. The INCLE line item for Central American gang programs ended in FY2013. Since FY2013, approximately $10 million in Central American Regional Security Initiative (CARSI) funding has been assigned to continue specific anti-gang initiatives. Hundreds of millions more has supported broader law-enforcement and prevention efforts that have impacted the gang phenomenon.

Evolution of U.S. International Anti-gang Efforts

U.S. agencies have been engaged on both the law-enforcement and the preventive side of dealing with Central American gangs for more than a decade. In 2004, the Federal Bureau of Investigation (FBI) created an MS-13 Task Force to improve information sharing and intelligence gathering among U.S. and Central American law-enforcement officials. In 2005, the Bureau of Immigrations and Customs Enforcement (ICE) within DHS created a national anti-gang initiative called "Operation Community Shield"; ICE also has a National Gang Unit. Also in 2005, the U.S. Agency for International Development (USAID) undertook a comprehensive assessment of the gang problem in Central America and Mexico. USAID found that although a few U.S. programs addressed some aspects of the gang phenomenon, several new initiatives would be needed in the areas of prevention, law enforcement, and rehabilitation and reintegration.

Throughout 2005 and 2006, an interagency committee worked to develop a U.S. Strategy to Combat Criminal Gangs from Central America and Mexico, which was announced at a July 2007 U.S.-Central America Integration System summit on security issues. The strategy acknowledged that, based on previous U.S. and regional experiences, future anti-gang efforts should be holistic, comprehensive, and regional in scope. It called for active engagement with governments and institutions in the region. The strategy stated that the U.S. government would pursue coordinated anti-gang activities in five broad areas: diplomacy, repatriation, law enforcement, capacity enhancement, and prevention. In January 2008, the State Department sent a regional gang adviser to El Salvador to coordinate the State Department's Central American gang programs. Those programs have included training and technical assistance to law-enforcement and corrections officials, anti-gang workshops and training at the International Law Enforcement Academy in San Salvador, and regional coordination efforts.

In April 2010, the Government Accountability Office (GAO) published a report concluding that the U.S. government had developed and implemented an interagency anti-gang strategy that outlines the threats posed by Central American gangs and the activities each agency is doing to respond to those threats. However, GAO recommended that the strategy be revised to include better coordination mechanisms between the agencies and performance measures.

The U.S. government has expanded its citizen-security and law-enforcement programs in Central America beyond anti-gang efforts and antidrug programs through CARSI, a regional security initiative for which Congress appropriated roughly $1.5 billion from FY2008 to FY2016. CARSI has five primary goals: (1) create safe streets for the citizens in the region; (2) disrupt the movement of criminals and contraband within and between the nations of Central America; (3) support the development of strong, capable, and accountable Central American governments; (4) reestablish effective state presence and security in communities at risk; and (5) foster enhanced levels of security and rule-of-law coordination and cooperation between the nations.

In 2015, the Woodrow Wilson Center for International Scholars published a comprehensive assessment of CARSI that raised concerns about the organization's lack of a comprehensive strategy to improve citizen security in the region, tendency to focus on combating drug trafficking with vetted units rather than on broader law-enforcement reform and professionalization, and weak program evaluation (aside from USAID's community-based prevention programs).

The State Department's Bureau of Western Hemisphere Affairs (WHA) manages CARSI funding, with the Bureau of International Narcotics and Law Enforcement Affairs (INL) implementing most State Department programs. INL has sponsored trainings and technical exchanges for police, prison officers, and justice-sector operators from across the region. INL has also provided training and equipment to vetted police units and intelligence analysts and established more than 50 community policing/model police precinct locations in El Salvador, Guatemala, and Honduras. INL has trained hundreds of police officers, who have provided training to more than 200,000 youth through the Gang Resistance Education and Training program. INL has embedded U.S. law-enforcement advisers and prosecutors with investigative units that are conducting money-laundering investigations targeting the leadership of MS-13 in El Salvador. INL is supporting gang-related research as well, including a study under way by Florida International University to examine whether and how gang members in El Salvador can leave a gang without putting their lives at risk.

Additionally, WHA has transferred resources to the Department of Justice; the Department of Homeland Security, particularly ICE; and USAID to enable those agencies to counter the impact of gangs in the region. State Department funding is also supporting a regional corrections adviser, who is assisting with prison-reform programs in the region.

U.S. Agency for International Development

USAID has implemented a variety of country and regional gang-prevention programs. Under CARSI, USAID supports an approach to crime and violence prevention that directly targets at-risk individuals and communities while simultaneously helping municipalities to develop and implement crime-prevention plans. In Honduras, municipalities have received support in rehabilitating public spaces, installing street lighting, and procuring materials for schools and recreational facilities. National-level security and justice-sector reform efforts are designed to strengthen the institutions charged with enforcing and administering justice, including programs aimed at improving victims assistance, juvenile justice, and respect for human rights. USAID also produces and disseminates research on what works in crime and violence prevention.

USAID uses geographic and demographic risk factors to provide population-based interventions to individuals and communities at high risk of becoming victims or perpetrators of crime and violence. The creation of more than 200 youth outreach centers in high-violence communities has provided youth with safe places where they can study, participate in recreational activities, and receive job training and job placement assistance. USAID has built prominent public-private partnerships with local and multinational companies. For example, mobile phone providers Claro and Tigo deliver free Internet access to outreach centers in El Salvador and Honduras, and in El Salvador, Microsoft trains thousands of youth on software and information technology. Governments also support some programs. The Honduran government has provided $3 million from its security tax to support USAID's violence-prevention programming.

Through Vanderbilt University, USAID concluded a rigorous three-year impact evaluation of its CARSI-funded community-based crime and violence-prevention programs in 120 high-crime urban treatment and control communities in El Salvador, Guatemala, Honduras, and Panama. Final results demonstrated that crime victimization is lower and public perception of security is higher in USAID's CARSI treatment communities. Until recently, however, USAID and INL were working in separate municipalities and were not closely coordinating their efforts.

USAID and INL are now working to implement a "place-based" model in which prevention and policing programs are co-located and closely coordinated. USAID is providing community-resiliency programs in communities where INL is training law enforcement in community-based policing. The model is active in selected sites in Guatemala, Honduras, and El Salvador and is based on evidence from Los Angeles, Ciudad Juárez, and Medellin that integrated prevention and law-enforcement efforts can have significant impacts in even the most violent communities. USAID and the State Department are in the process of obtaining a waiver from the Office of Foreign Asset Control (OFAC) to ensure that programming they have planned to support the rehabilitation of former gang members does not violate sanctions on MS-13 members. USAID and INL aim to expand the place-based model to more locations in the coming year.

Within the Department of Justice (DOJ), the FBI is implementing several programs to improve the capacity of law enforcement in Central America to carry out investigations and share intelligence on gang suspects. The FBI also focuses on developing and protecting witnesses who will testify in gang cases. The Office of Overseas Prosecutorial Development, Assistance, and Training (OPDAT) has provided training on prosecuting gang-related cases to judicial officials in the region. The deployment of a Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) regional adviser to San Salvador is enabling ATF to support transnational gang investigations involving U.S.-origin firearms. FBI, OPDAT, and ATF programs are supported by CARSI or other State Department funding and are carried out in collaboration with INL. The programs include the following:

Central American Fingerprinting Ex change (CAFÉ): A criminal file and fingerprint retrieval initiative that has incorporated thousands of fingerprints of gang members from Mexico, El Salvador, Belize, Honduras, and Guatemala into the FBI's Integrated Automated Fingerprint Identification System since 2006. The data are accessible to Central American police officials. Transnational Anti-Gang (TAG) Units : A program that began in El Salvador in October 2007 involving the creation of vetted police units that work with FBI agents stationed in San Salvador to investigate gang-related cases that have a nexus with the United States. TAG activities have been expanded into Guatemala and Honduras and have contributed to successful indictments of MS-13 members in major cities across the United States. Central American Law Enforcement Exchange (CALEE) : A joint FBI-INL program that brings law-enforcement officials from Central America together with their counterparts from several large U.S. cities to share information and intelligence.

Since 2005, ICE's Operation Community Shield has led to the arrest of more than 32,200 gang members in the United States, including thousands of MS-13 and 18 th Street gang members. In addition to Operation Community Shield, ICE formed an anti-gang task force in Honduras to gather intelligence to support gang investigations in Honduras and the United States. ICE special agents are also based at other U.S. embassies in the region, including in Guatemala and El Salvador. ICE supports Transnational Criminal Investigative Units (TCIUs) in El Salvador, Honduras, Guatemala, and Panama. The TCIUs focus on transnational investigations and border crimes, some of which have a nexus with gangs. As previously mentioned, the State Department and DHS signed an agreement in 2014 to expand the Criminal History Information Sharing (CHIS) program, which has been used to share information on criminal deportees with Mexican law-enforcement officials, to Guatemala, Honduras, and El Salvador.

On October 11, 2012, the Treasury Department designated the MS-13 as a significant TCO whose assets will be targeted for economic sanctions pursuant to Executive Order (E.O.) 13581. Issued in July 2011 as part of the Obama Administration's National Strategy to Combat Transnational Organized Crime, E.O. 13581 enables the Treasury Department to block the assets of members and associates of designated criminal organizations and prohibit U.S. citizens from engaging in transactions with these individuals. The Treasury Department worked with ICE to build evidence to support the designation of the MS-13 based on the gang's involvement in "drug trafficking, kidnapping, human smuggling, sex trafficking, murder," and other serious criminal offenses that threaten U.S. and Central American citizens. As of July 2016, eight individuals appear to have been designated as subject to U.S. sanctions.

Although evidence suggests that some MS-13 cliques collaborate with groups based in El Salvador, some analysts maintain that transnational collaboration is not the norm for the MS-13. Salvadoran officials seemed surprised by the designation, with then-president Funes asserting that U.S. officials may be "overestimating the economic risk or financial risk resulting from the criminal actions of the MS." OFAC officials have confirmed that the amount of money transferred out of the United States from MS-13 gang members or their families or affiliates is very limited. Nevertheless, U.S. law enforcement is working with special police and prosecutors to investigate some of the designated MS-13 leadership for money-laundering offenses committed under Salvadoran law.

Evolving Gang Threat. To what degree are the gangs in Central America becoming more organized and sophisticated? Are their concerns primarily local or transnational? What types of ties do these gangs have with other criminal organizations based in Central America and with Mexican TCOs? To what extent are cliques in the region communicating with groups in the United States? U.S. Strateg y . Nine years after the adoption of an interagency strategy to combat the gangs, what have been the results of U.S. efforts? How is the success or failure of the strategy being measured? How are domestic and international efforts in support of the strategy being coordinated? CARSI. Analysts have criticized CARSI for lacking a comprehensive strategy and rigorous monitoring and evaluation. To what extent, if at all, does CARSI have a guiding strategy behind its programs? How has that strategy evolved over time? How are the successes or gaps in the implementation of that strategy being measured and adjusted? Leveraging U.S. A ssistance. To what extent are U.S. anti-gang efforts being coordinated with those of other donors? Has the private sector stepped forward to complement any donor-led initiatives? Have any recipient countries been able to take over responsibility for programs that began with U.S. funding? How effective are regional anti-gang efforts? New Tools. To what extent are countries in the region using new tools—such as asset forfeiture and wiretapping—to go after the gangs? How has the Treasury designation of MS-13 as a TCO affected U.S. and Salvadoran efforts against that gang? Gangs as Terrorist Groups . What are the implications of the government of El Salvador designating gangs as terrorists?

Question: What do the Mara Salvatrucha gang and its main rival do?

Answer: The Mara Salvatrucha (MS-13) and its main rival, the "18th Street" gang, continue to undermine citizen security and subvert government authority in parts of Central America.

Question: Why do El Salvador, Honduras, and urban areas in Guatemala have some of the highest homicide rates in the world?

Answer: Gang-related violence has been particularly acute in El Salvador, Honduras, and urban areas in Guatemala, contributing to some of the highest homicide rates in the world.

Question: How is Congress involved in gang-related crime in Central America?

Answer: Congress has maintained an interest in the effects of gang-related crime and violence on governance, citizen security, and investment in Central America.

Question: What is a cause of mixed migration flows?

Answer: Congress has examined the role that gang-related violence has played in fueling mixed migration flows, which have included asylum seekers, by families and unaccompanied alien children (UAC) to the United States.

Scope of the Gang Problem in Central America

Congressional Interest and Appropriations

Question: How have Central American governments performed while trying to address the gang problem?

Answer: Central American governments have struggled to address the gang problem. From 2012 to 2014, the government of El Salvador facilitated a historic—and risky—truce involving the country's largest gangs.

Question: Why was this truce ineffective?

Answer: The truce contributed to a temporary reduction in homicides but strengthened the gangs.

Question: What has President Salvador Sanchez Cerén done since taking office?

Answer: Since taking office in June 2014, President Salvador Sanchez Cerén has adopted repression-oriented anti-gang policies similar those implemented in the mid-2000s, including relying on the military to support anti-gang efforts.

Question: How have Honduran governments suppressed gangs in the past?

Answer: Successive Honduran governments have generally relied on suppression-oriented policies toward the gangs as well, with some funding provided in recent years to support community-level prevention programs. The Guatemalan government has generally relied on periodic law-enforcement operations to round up suspected gang members.

Factors Exacerbating the Gang Problem in Central America

El Salvador's 2012 Gang Truce and Dissolution

Prospects for Country Prevention and Rehabilitation Efforts

Question: How have U.S. agencies been involved with Central American governments on gang issues?

Answer: U.S. agencies have engaged with Central American governments on gang issues for more than a decade. In July 2007, an interagency committee announced the U.S. Strategy to Combat Criminal Gangs from Central America and Mexico, which emphasized diplomacy, repatriation, law enforcement, capacity enhancement, and prevention.

Question: What has Congress done to combat gangs in Central America?

Answer: Between FY2008 and FY2013, Congress appropriated roughly $38 million in International Narcotics Control and Law Enforcement (INCLE) funds through a special line item for anti-gang efforts in Central America. Since FY2013, approximately $10 million in Central American Regional Security Initiative (CARSI) funding has been assigned to continue those anti-gang initiatives.

Question: What additional support has been provided for anti-gang initiatives?

Answer: Significant additional support has been provided through CARSI for violence-prevention efforts in communities affected by gang violence, as well as for vetted police units working on transnational gang cases with U.S. law enforcement.

Question: What has the U.S. done regarding MS-13?

Answer: Recently, U.S. and Salvadoran officials have also targeted the financing of MS-13, which the Treasury Department's Office of Foreign Assets Control (OFAC) designated as a Transnational Criminal Organization subject to U.S. sanctions in October 2012, pursuant to Executive Order (E.O.) 13581.

Evolution of U.S. International Anti-gang Efforts

Question: What is contained within the report?

Answer: This report describes the gang problem in Central America, discusses country approaches to deal with the gangs, and analyzes U.S. policy with respect to gangs in Central America.

Question: What does Congressional oversight focus on?

Answer: Congressional oversight may focus on the efficacy of anti-gang efforts in Central America; the interaction between U.S. domestic and international anti-gang policies, and the potential impact of U.S. sanctions on law-enforcement efforts.

Question: What supporting document expands on this information?

Answer: See also CRS Report R41731, Central America Regional Security Initiative: Background and Policy Issues for Congress, and CRS Report R43702, Unaccompanied Children from Central America: Foreign Policy Considerations.


TANF Electronic Benefit Cards: Some States Are Restricting Certain TANF Transactions, but Challenges Remain

The TANF block grant program provides federal grants to states for various benefits and activities, including cash welfare for needy families with children. TANF is overseen at the federal level by HHS, and administered by states. Most states disburse TANF cash assistance through electronic benefit cards, which can be used to withdraw money or make purchases. Media coverage highlighted cases of cardholders accessing benefits at casinos and other locations that were considered inconsistent with the purpose of TANF. In February 2012, Congress passed a law requiring states to prevent certain transactions at casinos, liquor stores, and adult-entertainment establishments. Within 2 years of enactment, the law also requires HHS to oversee states’ compliance with these requirements.

GAO was asked to review the ability of TANF recipients to withdraw TANF funds at certain locations inconsistent with the purpose of TANF, such as gambling or other establishments. To do so, GAO reviewed documentation and interviewed officials from HHS, key industry stakeholders, and the top 10 states in TANF basic block grant dollars. GAO also assessed the completeness and accuracy of EBT transaction data from federal fiscal year 2010 from 4 of the 10 states selected. GAO selected these 4 states on the basis of geographical diversity, and the results of this data analysis cannot be generalized to other states.

Six of the 10 states reviewed by GAO took steps aimed at preventing certain Temporary Assistance for Needy Families (TANF) transactions determined to be inconsistent with the purpose of TANF, despite no federal requirement to do so at the time. Restrictions are based on selected states’ laws, executive orders, and other regulations, and generally cover certain locations or certain types of purchases such as alcohol. In some cases, states’ restrictions are broader than the new federal requirements. These restrictions vary in their degree and means of implementation, including widespread disabling of Electronic Benefit Transfer (EBT) access at automated teller machines located at certain locations across a state, such as at casinos. The other 4 states had no restrictions because no laws, executive orders, or other regulations prohibited certain transactions based on the location of the transactions or the nature of the goods or services purchased. These states did not implement restrictions due to concerns about cost-effectiveness or technical limitations, according to state officials.

Challenges experienced by states in implementing their current restrictions could inhibit future restriction efforts, including those intended to address new federal requirements. These challenges included difficulties with identifying certain locations that could be prohibited and limitations in available data. For example, the transaction data states receive do not contain information that is accurate or detailed enough for them to identify locations that can potentially be prohibited or restricted. State officials suggested that improvements in the completeness and accuracy of transaction data might better enable them to prevent such transactions. In its assessment of the EBT transaction data from 4 states, GAO found that the data are insufficient for systematic monitoring. To effectively conduct systematic monitoring, including the identification of locations that could be blocked from TANF access, data should be complete and accurate. However, addressing the limitations that GAO found in the transaction data—such as requiring accurate merchant category codes for retailers—could involve significant resources. States that prohibit certain types of purchases generally do not have ways to track what items recipients buy with their cards, partially due to the lack of information in transaction data on specific goods or services purchased. States were also challenged in attempting to track the spending of cash withdrawn with cards. With no controls on how or where individuals spend withdrawn cash, a recipient could withdraw money at an authorized location and use it at certain locations or for certain purchases restricted by some states.

As of July 2012, the Department of Health and Human Services (HHS) was at the beginning of its rulemaking process and did not yet know what form its regulations would take. Until HHS issues regulations or provides further guidance as to what policies and practices are sufficient to comply with new federal requirements, it is unclear to what extent the various restrictions implemented by states would be in compliance. States’ restrictions could help inform HHS’s oversight efforts, especially any information on the cost-effectiveness and success rates for various state restrictions. Restriction methods that do not rely on flawed transaction data may be the most practical.

We provided HHS with a draft of our report for comment. HHS stated that our report’s findings and analysis will be helpful as it drafts implementing regulations, and it provided technical comments that we incorporated, as appropriate.

The Department of Health and Human Services (HHS) oversees states’  administration of the Temporary Assistance to Needy Families (TANF)  program to provide cash assistance, childcare, and other services to low- income families. Among the program’s goals are the promotion of job  preparation, employment, and marriage among parents of dependent  children. HHS oversees the program at the federal level and distributes  $16.5 billion in annual federal block grants to states to provide benefits  and services to recipients. As a federal block-grant program, TANF allows  states broad flexibility in designing and implementing their programs. To  purchase goods and services, TANF recipients receive cash assistance,  which in most states they can access at automated teller machines  (ATM), banks, or retailers, using Electronic Benefit Transfer (EBT) cards.  Cash assistance may be used for goods and services, and the amount of  cash assistance received can vary by state. The EBT cards are similar to  debit or stored-value cards, but do not carry a line of credit, and the  purchases or withdrawals made with these cards cannot exceed the  amount of recipients’ TANF benefits as determined by each state’s TANF  program.

Until February 2012, there were no nationwide federal requirements for  states to take steps aimed at preventing access to TANF cash assistance  at certain locations. However, media coverage in some states highlighted  cases of individuals accessing cash or conducting transactions at  gambling establishments, adult-entertainment establishments, and liquor  stores that could be considered inconsistent with the TANF program. In  response, some states took steps aimed at implementing certain  restrictions that would prevent such transactions. In February 2012,  Congress passed, as part of the Middle Class Tax Relief and Job  Creation Act of 2012, the Welfare Integrity and Data Improvement Act,  which requires all states to maintain policies and practices as necessary  to prevent TANF assistance from being used in any electronic benefit  transfer transaction in (1) liquor stores; (2) casinos, gambling casinos, or  gaming establishments; and (3) adult-oriented entertainment  establishments in which performers disrobe or perform in an unclothed  state for entertainment.taken to implement such policies and practices by February 22, 2014.

States must report to HHS the steps they have  In this context, you asked us to review the ability of TANF recipients to  withdraw TANF funds at certain locations inconsistent with the purpose of  TANF, such as gambling or other establishments. To understand this  ability better, we reviewed actions selected states have taken to prevent  unauthorized TANF transactions, and the challenges they can face in  taking such steps in compliance with new federal legislation.  To perform  our work, we reviewed TANF laws, regulations, and other documentation  and interviewed officials from HHS. We also reviewed documentation and  interviewed officials from the top 10 states in terms of TANF basic block- grant dollars—California, New York, Michigan, Ohio, Pennsylvania,  Illinois, Florida, Texas, Massachusetts, and Washington. These 10 states  received the greatest TANF basic block-grant dollars, and collectively  represent 66 percent of the TANF basic block grants funded in federal  fiscal year 2012. In addition, we interviewed and reviewed documentation  from key industry stakeholders, including EBT vendors, related to the  selected states’ efforts to prevent unauthorized TANF transactions.

For the purposes of this report, we consider “unauthorized” to mean all TANF  transactions that are prohibited under state laws, regulations, policies, or other actions. used a generalizable, random sample of each of the 4 selected states’  EBT transaction data and compared it to electronic geo-coding  information that pinpoints places and identifies locations. We also  assessed whether the data would allow the 4 selected states to identify  individual TANF transactions at certain types of locations by conducting  keyword searches of merchant names for terms associated with casinos,  liquor stores, and adult-entertainment establishments. We conducted  electronic data testing to determine the reliability of the California, Florida,  New York, and Texas EBT data. For all four states, we determined that  the EBT data are not sufficiently reliable for the purpose of performing  systematic monitoring of transactions in locations that are inconsistent  with the purposes of TANF. However, EBT transaction data are  sufficiently reliable for the purpose of identifying examples of transactions  with merchant names that contain words associated with casinos, liquor  stores, and adult-entertainment establishments. A more-detailed  description of our scope and methodology is provided in appendix I.

We conducted this performance audit from October 2011 to July 2012 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

The Personal Responsibility and Work Opportunity Reconciliation Act of  1996 (PRWORA) significantly changed federal welfare policy for low- income families with children, from a program that entitled eligible families  to monthly cash payments to a capped block grant that emphasizes  employment and work supports for most adult recipients. As part of  PRWORA, Congress created the TANF program, through which HHS  provides states about $16.5 billion each year in block grant funds to  implement the program. To receive the TANF block grant, each state  must also spend at least a specified level of its own funds, which is  referred to as state maintenance of effort (MOE).block grant, PRWORA defines four goals for the program:  1.  provide assistance so that children could be cared for in their own  homes or in the homes of relatives;  2.  end families’ dependence on government benefits by promoting job  preparation, work, and marriage;  3.  prevent and reduce the incidence of out-of-wedlock pregnancies; and  4.  encourage the formation and maintenance of two-parent families.

TANF is a flexible funding stream that states can use to provide cash  assistance and a wide range of services that are “reasonably calculated”  to further the program’s four goals. In federal fiscal year 2011, states  used about 29 percent of their TANF funds on basic assistance that  included cash assistance for needy families, and the remaining funds  were spent on other purposes, such as child care, employment programs,  and child welfare services. Due to the flexibility given to states, TANF  programs differ substantially by state. States are required to develop  plans that outline their intended use of funds and report data on families  receiving assistance. While the federal TANF statute does not define  “assistance,” HHS defines assistance in regulation as cash payments,  vouchers, and other forms of benefits designed to meet a family’s  “ongoing basic needs,” such as food, clothing, shelter, utilities, household  goods, personal-care items, and general incidental expenses.

TANF Cash Assistance Disbursement Methods

Traditionally, states disbursed cash assistance benefit payments by  means of paper check. The EBT program was devised in the 1980s  originally to meet the needs of the Department of Agriculture’s (USDA)  Food Stamp Program, in which federal benefits were electronically  disbursed to eligible recipients. These cards are not tied to a consumer  asset account, and generally the account structures and processing  requirements differ from other payment cards. EBT cards can be used to  deliver benefits to banked and unbanked recipients and can be used to  deliver multiple benefits using a single card. The cost savings in the Food  Stamp Program (now known as the Supplemental Nutrition Assistance  Program or SNAP) from using electronic payments to distribute benefits  prompted states to use EBT cards to also distribute TANF benefits  electronically, leveraging the existent EBT system designed for SNAP.  Electronic benefit distribution methods also include Electronic Payment  Cards (EPC). Some EPC cards are prepaid or debit cards that are  branded with a MasterCard, American Express, Discover, or Visa logo,  which allows cardholders to conduct signature-based transactions  anywhere that those brands are accepted as well as at ATM and point-of- sale (POS) machines.

Electronic benefit cards—both EBT and EPC—generally can be used like  traditional debit or credit cards, in that recipients can use them at ATMs to  withdraw cash, or at retailers’ POS terminals for purchases or to receive  cash by selecting a cash-back option. However, there are some key  differences between the electronic benefit card and commercial credit  cards. The main difference is that electronic benefit cards do not carry a  credit line, and the purchases or withdrawals made with these cards  cannot exceed the amount of recipients’ TANF benefits. With commercial  credit cards, cardholders borrow to make a purchase and then pay the  money back later. Electronic benefit cards are more like debit or stored- value cards and provide an alternative to cash—each time that a  cardholder uses his or her electronic benefit card, the money spent or  withdrawn is deducted from the cardholder’s TANF benefits account.

States consider various factors when implementing EBT or EPC  programs, including potential financial burden to recipients, such as  transaction fees at ATMs that charge a surcharge for each transaction;  recipient characteristics, such as disabilities; implementation costs; and  fraud and security risks. States also take into account how readily  recipients can access cash assistance. For example, in some rural areas  or low-income neighborhoods the only access point for cash assistance  benefits may be a location such as a grocery store, single depository  institution, or even a liquor store. Some of the benefits to recipients from  states choosing EBT or EPC programs include quicker disbursement of  benefits, the elimination of lost or undelivered paper checks, access to  benefits without an established bank account, and no need to locate  check-cashing venues in order to access benefits.

Prior to 2012, states were not required under federal law to take steps  aimed at preventing specific TANF transactions at certain locations.  However, the Welfare Integrity and Data Improvement Act, part of the  Middle Class Tax Relief and Job Creation Act of 2012, signed into law on  February 22, 2012, introduced several changes to TANF that can affect  recipients’ ability to access cash assistance at certain locations.  Specifically, the Act requires that each state receiving a TANF block grant   maintain policies and practices as necessary to prevent TANF assistance  from being used in any “electronic benefit transfer transaction” in any liquor store; any casino, gambling casino, or gaming establishment; or any retail establishment that provides adult-oriented entertainment in  which performers disrobe or perform in an unclothed state for  entertainment.

The Act calls for HHS to determine whether states have implemented and  maintained policies and practices to prevent such transactions, within 2  years of the Act’s enactment. If HHS determines that a state has not  implemented and maintained these policies and practices, or if a state  has not reported to HHS on its policies and practices, HHS may reduce  the state’s family assistance grant by an amount equal to 5 percent of the  state’s grant amount for the federal fiscal year following the 2-year period  after enactment and each succeeding federal fiscal year in which the  state does not demonstrate that it has implemented and maintained such  policies and practices. However, HHS may reduce the amount of this  penalty on the basis of the degree of noncompliance of the state in  question. In addition, the Act specifies that states are not responsible for  individuals who engage in fraudulent activity to circumvent the state’s  policies and practices, and will not face a reduction in their family  assistance grant amounts in such cases.

The Act defines liquor store as “any retail establishment which sells exclusively or  primarily intoxicating liquor. Such term does not include a grocery store which sells both  intoxicating liquor and groceries including staple foods (within the meaning of section 3(r)  of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(r))).” Id.

The Act also contains requirements for states related to maintaining  recipients’ access to TANF cash assistance. As part of the plan that each  state is required to submit to HHS, states must include policies and  procedures to ensure that recipients have adequate access to their cash  assistance. In addition, states must ensure that recipients have access to  using or withdrawing assistance with minimal fees or charges, including  an opportunity to access assistance with no fees or charges, and that  they are provided information on applicable fees and surcharges that  apply to electronic fund transactions involving the assistance, and that  such information is made publicly available.

HHS issued a request for public comment in April 2012, seeking  information by June 2012 on: how states deliver TANF assistance to  beneficiaries, whether states have implemented policies and practices to  prevent electronic benefit transfer transactions at the locations mentioned  above, states’ experiences with these policies and practices, and other  similar restrictions states place on TANF assistance usage. In its notice, HHS identified multiple questions for states to answer, including  questions on the methods states use to track the locations where  transactions occur, challenges states experienced when implementing  any restrictions on transactions at certain locations, the initial and ongoing  costs of restrictions, the effectiveness of restrictions and the factors  influencing the effectiveness, and any concerns that have been raised  about the restrictions, among other things. In addition, HHS requested  input from states’ EBT vendors on potential issues that states may face in  implementing restrictions, including technical issues, cost implications,  access implications, and mechanisms for addressing problems identified.

Some States Are Restricting Certain TANF Transactions, but Face Challenges Because of Data Limitations and Other Factors

Six of the 10 states we reviewed have taken steps to prevent certain  types of inappropriate TANF transactions—restrictions that in some cases  are broader than recent federal requirements that require states to take  steps aimed at preventing transactions in casinos, liquor stores, and  adult-entertainment establishments. These 6 states faced a variety of  challenges in identifying inappropriate locations and preventing  transactions at these locations. At the time these efforts were undertaken,  there were no federal requirements that required states to take steps  aimed at restricting such transactions. In addition, EBT transaction data  from federal fiscal year 2010 from 4 of the 10 selected states were  generally incomplete or unreliable, and were of limited use to the states  for systematically identifying or monitoring inappropriate locations. While  the federal requirements to restrict inappropriate transactions now exist,  data issues and other challenges, if unaddressed, may continue to affect  efforts to comply with these new requirements.

Some States Have Attempted to Restrict TANF Transactions

Six of the 10 states we selected and reviewed have taken steps to  prevent certain types of TANF transactions; these actions vary in their  degree and means of implementation, from widespread disabling of EBT  access at ATMs in certain locations across a state to, according to  officials from one state, passing a law without implementing steps for  enforcing it. The restrictions generally involve prohibiting the use of EBT  cards at certain locations or prohibiting purchases of certain goods or  services, or both, as shown in figure 1 below. In 4 of the 10 selected  states, there were no restrictions on TANF transactions, as no  transactions were unauthorized based on the location of the transactions  or the nature of the goods or services purchased. As mentioned above,  before the 2012 enactment of federal legislation, states were not required  by the federal government to maintain or implement policies and practices  aimed at preventing TANF transactions based on the location of the  transactions. Figure 1 below, an interactive map, provides rollover  information (see interactive instructions below) that describes the steps  that selected states have taken aimed at preventing the use of TANF  cash assistance for certain purchases or in certain locations. (See app. II  for the steps taken within each selected state.)

Some States Have Taken Steps Aimed at Preventing Unauthorized TANF Transactions

The purpose of TANF is to help needy families achieve self-sufficiency.  Providing TANF benefits by means of electronic benefit cards helps the  banked and unbanked TANF recipients, gives TANF recipients an  alternate to cash, and allows states to use existing infrastructures.  However, any misuse of TANF funds not only deprives low-income  families of needed assistance, but also diminishes public trust in both the  integrity of the program and the federal government. Before Congress  passed the Welfare Integrity and Data Improvement Act, as part of the  Middle Class Tax Relief and Job Creation Act of 2012, some states acted  independently to implement restrictions on certain TANF transactions. As  a result, their approach to enacting restrictions varies significantly.  However, until HHS issues regulations or provides further guidance as to  what policies and practices are sufficient to comply with the new federal  requirements, it is unclear to what extent the various restrictions  implemented by states would be in compliance. The experience of these  states—especially any information related to the cost-effectiveness and  success rates for various restrictions—could be beneficial for HHS to  consider as it works toward determining what policies and practices are  sufficient to comply with the new federal law. As we heard from officials in  multiple states, preventing unauthorized transactions can be time- intensive and is impaired by flaws in available transaction data and other  challenges. Addressing the limitations we found in transaction data that  impede the identification and monitoring of certain locations could require  significant resources. Therefore, restriction methods that do not rely on  flawed transaction data may be the most practical, such as Washington  state’s requirement for businesses to independently disable EBT access  or risk losing or not obtaining their state licenses to operate.

We provided a draft of this report to HHS for comment. In its written  comments, reproduced in appendix III, HHS noted that our report  highlights many of the challenges and issues states and others face in  issuing the TANF requirements that Congress enacted in February 2012.  In addition, HHS stated that our report’s findings and analysis will be  helpful as HHS drafts implementing regulations relevant to these TANF  requirements. HHS also provided technical comments that we  incorporated, as appropriate.

In May 2012, we also provided the 10 selected states with an opportunity  to comment on our draft findings relevant to their specific TANF  programs. In May 2012, 7 of the 10 selected states provided us with  technical comments by e-mail, and we incorporated their technical  comments as appropriate. Three states, Illinois, Massachusetts, and  Pennsylvania, had no comments.

As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 7 days from the  report date. At that time, we will send copies to other interested  congressional committees and the Secretary of Health and Human  Services. In addition, the report will be available at no charge on the GAO  website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-6722 or kutzg@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

Our objective was to determine the extent to which selected states have  taken action to prevent unauthorized Temporary Assistance for Needy  Families (TANF) transactions. To conduct our work, we reviewed TANF  laws, regulations, and other documentation—including the Welfare  Integrity and Data Improvement Act, part of the Middle Class Tax Relief  and Job Creation Act of 2012, which introduced new state requirements  for preventing certain TANF transactions—and interviewed officials from  Health and Human Services (HHS). From each selected state, we  reviewed information related to its laws, policies, practices, and other  factors affecting its TANF program. In addition, we interviewed and  reviewed documentation from several key industry stakeholders related to  states’ efforts to prevent unauthorized TANF transactions. We also  interviewed officials from the top 10 states in terms of TANF basic block- grant dollars—California, New York, Michigan, Ohio, Pennsylvania,  Illinois, Florida, Texas, Massachusetts, and Washington. Together, these  10 states represent a total of 66 percent of TANF basic block-grant  funds. The industry stakeholders included: JP Morgan Chase and  Affiliated Computer Services, the two largest vendors providing TANF  electronic benefit card services to the states; the Electronic Funds  Transfer Association, an industry trade association that conducts work  related to electronic benefit card services for government agencies at the  federal and state level; the National Conference of State Legislatures, a  bipartisan organization that provides research and other services to state  legislators and their staff; and the American Public Human Services  Association, a bipartisan, nonprofit organization representing appointed  state and local health and human-services agency commissioners. We  obtained electronic benefit card transaction data from 4 of the 10 selected  states—California, Florida, New York, and Texas—covering transactions  from federal fiscal year 2010. We selected these 4 states based on  geographical diversity. The results of our analysis of these 4 states’ data  cannot be generalized to other states. Using these data, we assessed  the extent to which the data would allow the 4 selected states to conduct  systematic monitoring of TANF transactions. Such monitoring might  include an assessment of the prevalence of transactions at certain  locations.

To do so, we used a generalizable, random sample of each of the 4  selected states’ Electronic Benefit Transfer (EBT) transaction data and  compared it to electronic geo-coding information that pinpoints places and   Subsequent visual inspection and manual cleaning of  identifies locations.obvious address errors in the EBT data only resulted in a small portion of  corrected location addresses. We also assessed whether the data would  allow states to identify individual TANF transactions at certain types of  locations. To do so, we conducted keyword searches of merchant names  for terms that are potentially associated with casinos, liquor stores, and  adult-entertainment establishments. We performed data checks to  determine the reliability of the California, Florida, New York, and Texas  EBT data for the purposes of our engagement. For all four states, we  determined that the EBT data are not sufficiently reliable for the purpose  of performing systematic monitoring, as the selected states’ data  contained incomplete or inaccurate information for the addresses of the  locations where the transactions occurred. Given the combination of both  completeness and accuracy issues in the 4 selected states, we also  determined most of the data in the 4 selected states could not match to  address location information that would allow for suitable comparisons to  other potential data sources. However, we determined that the  transaction data would support keyword searches of merchant names for  terms that are associated potentially with casinos, liquor stores, and  adult-entertainment establishments, for records that contain merchant  names. We conducted this performance audit from October 2012 to July  2012, in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

Appendix II: Print-Friendly Version of Figure 1

The table below includes figure 1’s (see above) rollover information and  describes the steps that 6 of the 10 states we reviewed have taken that  are aimed at preventing the use Temporary Assistance for Needy  Families (TANF) cash assistance for certain purchases or in certain  locations.

Appendix III: Comments from the Department of Health and Human Services

Appendix IV: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Cindy Brown Barnes, Assistant  Director; Erika Axelson, Assistant Director; Christopher W. Backley;  Melinda Cordero; Justin Fisher; Katherine Forsyth; Gale Harris; Olivia  Lopez; Grant Mallie; Flavio J. Martinez; Maria McMullen; James Murphy;  Anna Maria Ortiz; Robert C. Rodgers; Rebecca Shea; and Timothy  Walker made key contributions to this report.

Question: How did the states reviewed by GAO respond to their evaluation of TANF transactions?

Answer: Six of the 10 states reviewed by GAO took steps aimed at preventing certain Temporary Assistance for Needy Families (TANF) transactions determined to be inconsistent with the purpose of TANF, despite no federal requirement to do so at the time.

Question: What are state restrictions on TANF transactions?

Answer: Restrictions are based on selected states’ laws, executive orders, and other regulations, and generally cover certain locations or certain types of purchases such as alcohol. In some cases, states’ restrictions are broader than the new federal requirements. These restrictions vary in their degree and means of implementation, including widespread disabling of Electronic Benefit Transfer (EBT) access at automated teller machines located at certain locations across a state, such as at casinos.

Question: Of states who did not respond to GAO's review, what was their response?

Answer: The other 4 states had no restrictions because no laws, executive orders, or other regulations prohibited certain transactions based on the location of the transactions or the nature of the goods or services purchased.

Question: Why did these states not implement TANF restrictions?

Answer: These states did not implement restrictions due to concerns about cost-effectiveness or technical limitations, according to state officials.

Question: What challenges may inhibit future TANF restriction efforts?

Answer: Challenges experienced by states in implementing their current restrictions could inhibit future restriction efforts, including those intended to address new federal requirements. These challenges included difficulties with identifying certain locations that could be prohibited and limitations in available data. For example, the transaction data states receive do not contain information that is accurate or detailed enough for them to identify locations that can potentially be prohibited or restricted.

Question: What may be a possible solution to this future challenge?

Answer: State officials suggested that improvements in the completeness and accuracy of transaction data might better enable them to prevent such transactions.

Question: What was GAO's finding regarding transaction data?

Answer: In its assessment of the EBT transaction data from 4 states, GAO found that the data are insufficient for systematic monitoring.

Question: Why is transaction data important?

Answer: To effectively conduct systematic monitoring, including the identification of locations that could be blocked from TANF access, data should be complete and accurate.

Question: What may be a roadblock in improving collection of transaction data?

Answer: However, addressing the limitations that GAO found in the transaction data—such as requiring accurate merchant category codes for retailers—could involve significant resources. States that prohibit certain types of purchases generally do not have ways to track what items recipients buy with their cards, partially due to the lack of information in transaction data on specific goods or services purchased. States were also challenged in attempting to track the spending of cash withdrawn with cards. With no controls on how or where individuals spend withdrawn cash, a recipient could withdraw money at an authorized location and use it at certain locations or for certain purchases restricted by some states.

Background
Recent TANF Legislative Changes

Question: Why was HHS unable to identify regulations as of July 2012?

Answer: As of July 2012, the Department of Health and Human Services (HHS) was at the beginning of its rulemaking process and did not yet know what form its regulations would take.

Question: How does HHS's lack of guidance impact an understanding of state restrictions?

Answer: Until HHS issues regulations or provides further guidance as to what policies and practices are sufficient to comply with new federal requirements, it is unclear to what extent the various restrictions implemented by states would be in compliance.

Question: How might states' restrictions assist HHS?

Answer: States’ restrictions could help inform HHS’s oversight efforts, especially any information on the cost-effectiveness and success rates for various state restrictions.

Question: What restrictions would be most practical?

Answer: Restriction methods that do not rely on flawed transaction data may be the most practical.

Question: What is the TANF block grant program?

Answer: The TANF block grant program provides federal grants to states for various benefits and activities, including cash welfare for needy families with children.

Question: What is the oversight and administration structure of TANF?

Answer: TANF is overseen at the federal level by HHS, and administered by states.

Question: How do state disburse TANF assistance?

Answer: Most states disburse TANF cash assistance through electronic benefit cards, which can be used to withdraw money or make purchases.

Question: What have been perceived problems with TANF?

Answer: Media coverage highlighted cases of cardholders accessing benefits at casinos and other locations that were considered inconsistent with the purpose of TANF.

Question: How did Congress address these perceived problems?

Answer: In February 2012, Congress passed a law requiring states to prevent certain transactions at casinos, liquor stores, and adult-entertainment establishments. Within 2 years of enactment, the law also requires HHS to oversee states’ compliance with these requirements.

Background
TANF Funding and Program Goals

Question: What did GAO review in their investigation of TANF?

Answer: GAO was asked to review the ability of TANF recipients to withdraw TANF funds at certain locations inconsistent with the purpose of TANF, such as gambling or other establishments.

Question: How did GAO investigate TANF recipients' behavior?

Answer: To do so, GAO reviewed documentation and interviewed officials from HHS, key industry stakeholders, and the top 10 states in TANF basic block grant dollars. GAO also assessed the completeness and accuracy of EBT transaction data from federal fiscal year 2010 from 4 of the 10 states selected.

Question: How did GAO select its sample for the investigation?

Answer: GAO also assessed the completeness and accuracy of EBT transaction data from federal fiscal year 2010 from 4 of the 10 states selected. GAO selected these 4 states on the basis of geographical diversity, and the results of this data analysis cannot be generalized to other states.