The Rule of Law: A Critical Building Block for Good Governance and Economic Growth

The Rule of Law: A Critical Building Block for Good Governance and Economic Growth. Center for Strategic & International Studies. Conor M. Savoy. June 18, 2019

This report seeks to provide a brief overview of how donors have traditionally approached the rule of law, what the problem is from an investment climate perspective, an overview of U.S. support for rule of law, and, finally, recommendations going forward. [Note: contains copyrighted material].

[PDF format, 23 pages].

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SBA Office of the National Ombudsman: Overview, History, and Current Issues

SBA Office of the National Ombudsman: Overview, History, and Current Issues. Congressional Research Service.  Robert Jay Dilger. Updated April 4, 2019

The Office of the National Ombudsman was created in 1996 as part of P.L. 104-121, the Contract with America Advancement Act of 1996 (Title II, the Small Business Regulatory Enforcement Fairness Act of 1996 [SBREFA]). Housed within the U.S. Small Business Administration (SBA), the office’s primary purpose is to provide small businesses, small government entities (those serving populations of less than 50,000), and small nonprofit organizations that believe they have experienced unfair or excessive regulatory compliance or enforcement actions (such as repetitive audits or investigations, excessive fines, and retaliation by federal agencies) a means to comment about such actions.

[PDF format, 19 pages].

Free Speech and the Regulation of Social Media Content

Free Speech and the Regulation of Social Media Content.  Congressional Research Service.  Valerie C. Brannon. March 27, 2019

As the Supreme Court has recognized, social media sites like Facebook and Twitter have become important venues for users to exercise free speech rights protected under the First Amendment. Commentators and legislators, however, have questioned whether these social media platforms are living up to their reputation as digital public forums. Some have expressed concern that these sites are not doing enough to counter violent or false speech. At the same time, many argue that the platforms are unfairly banning and restricting access to potentially valuable speech.

[PDF format, 46 pages].

Business Bribery Risk Assessment

Business Bribery Risk Assessment. RAND Corporation. Karlyn D. Stanley et al. May 13, 2019

Report introduces a new index, the TRACE Matrix, for business bribery risk assessment. The index provides a quick and useful guide for businesses operating overseas based on a conceptual model of bribery risk and supported by data specific to firms. [Note: contains copyrighted material].

[PDF format, 75 pages].

Virtual Currencies and Money Laundering: Legal Background, Enforcement Actions, and Legislative Proposals

Virtual Currencies and Money Laundering: Legal Background, Enforcement Actions, and Legislative Proposals. Congressional Research Service.  Jay B. Sykes, Nicole Vanatko. April 3, 2019

Law enforcement officials have described money laundering—the process of making illegally obtained proceeds appear legitimate—as the “lifeblood” of organized crime. Recently, money launderers have increasingly turned to a new technology to conceal the origins of illegally obtained proceeds: virtual currency. Virtual currencies like Bitcoin, Ether, and Ripple are digital representations of value that, like ordinary currency, function as media of exchange, units of account, and stores of value. However, unlike ordinary currencies, virtual currencies are not legal tender, meaning they cannot be used to pay taxes and creditors need not accept them as payments for debt. While virtual currency enthusiasts tout their technological promise, a number of commentators have contended that the anonymity offered by these new financial instruments makes them an attractive vehicle for money laundering. Law enforcement officials, regulators, and courts have accordingly grappled with how virtual currencies fit into a federal anti-money laundering (AML) regime designed principally for traditional financial institutions.

[PDF format, 17 pages].

Artificial Intelligence Primer: What is Needed to Maximize AI’s Economic, Social, and Trade Opportunities

Artificial Intelligence Primer: What is Needed to Maximize AI’s Economic, Social, and Trade Opportunities. Brookings Institution. Joshua P. Meltzer. May 13, 2019

Artificial intelligence (AI) has the potential to transform economic growth, commerce, and trade, affecting the types of jobs that are available and skills that are needed. The United States, China, Japan, Germany, the United Kingdom, France, and others have recognized the opportunity and are supporting AI research and development as well as preparing their workforce.

For AI to develop also requires an enabling environment that includes new regulation in areas such as AI ethics and data access and revisiting existing laws and regulation in areas such as privacy and intellectual property (IP) rights to ensure that they work for AI. In addition, AI development requires an international agenda to avoid unnecessary regulatory heterogeneity that creates barriers to data access and use and impedes the global diffusion of AI products. [Note: contains copyrighted material].

[PDF format, 26 pages].

Dealing with the Offshore Economy

Dealing with the Offshore Economy. Atlantic Council.  Alan Riley. April 2, 2019

Given that offshore tax havens are largely located in small, independent states or self-governing territories, it could be assumed that they have little connection to OECD states and major financial centers such as London and New York. This is not the case. The so-called tax havens are in fact part of a much larger network of financial and corporate services that depends on lawyers, accountants, and bankers located in major Western cities. Only one part of the havens’ business actually involves providing lower tax rates to individual foreign account holders.

These techniques originally developed to assist American executives and Belgian dentists, and later multinational corporations, to limit their exposure— sometimes lawfully, sometimes unlawfully—to their respective tax authorities. Today, they’re increasingly deployed to flows of tainted capital from developing countries, helping those funds transit from their home jurisdictions and ultimately to the West.

There are more capital flows into the offshore world from OECD states than from developing countries. The argument of this paper, however, is that while OECD origin capital flows erode the tax base and some of the flows amount to illegal tax evasion, the overall effect of the money coming from developing countries, especially the tainted flows, is more damaging from both an economic and a security perspective.

In other words, the West, with its rule of law and creation of the Western-governed offshore economy, has given corrupt elites in developing countries the tools and capacity to avoid ever establishing the rule of law in their own countries. They are the beneficiaries of the West’s firmly-established rule of law and can leverage that advantage against their own people to ensure that they never benefit from the rule of law themselves. This is the rule of law paradox. [Note: contains copyrighted material].

[PDF format, 24 pages].