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].

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The Future of Financial Stability and Cyber Risk

The Future of Financial Stability and Cyber Risk. Brookings Institution. Jason Healey et al. October 10, 2018

 The financial sector has long been at the forefront of cybersecurity and industry-wide information sharing and cooperation. Even so, cyber attacks on financial institutions and financial market infrastructures have become more frequent and sophisticated, prompting ever-larger security investments and increased focus on mitigating and managing cyber risk. Parallel to these efforts, the financial sector, regulators, and national governments have been working to improve overall resiliency and stability in the hopes of preventing a repeat of panics such as the financial crisis a decade ago.

This paper takes the critical next step: examining the intersection of these two efforts. How might cyber risks and financial risks interact to cause systemic crises? Is there anything fundamentally new or different about cyber risks? How should economists, regulators, policymakers, and central bankers focused on financial stability incorporate cyber risks into their models and thinking? [Note: contains copyrighted material].

 [PDF format, 18 pages].

Drinking Water State Revolving Fund (DWSRF): Overview, Issues, and Legislation

Drinking Water State Revolving Fund (DWSRF): Overview, Issues, and Legislation. Congressional Research Service, Library of Congress. Mary Tiemann. September 5, 2018

 The Safe Drinking Water Act (SDWA) is the federal authority for regulating contaminants in public water supplies. The act includes the Drinking Water State Revolving Fund (DWSRF) program, established in 1996 to help public water systems finance infrastructure projects needed to comply with federal drinking water regulations and to meet the act’s health protection objectives. Under this program, states receive annual capitalization grants from the U.S. Environmental Protection Agency (EPA) to provide financial assistance (primarily subsidized loans) to public water systems for drinking water projects and other specified activities. Through FY2018, Congress has appropriated a total of $20.41 billion for the program. From FY1997 through FY2017, states provided $35.38 billion in DWSRF assistance to water systems for 14,090 projects.

 [PDF format, 24 pages].

The Search for a Euro Area Safe Asset

The Search for a Euro Area Safe Asset. Peterson Institute for International Economics. Álvaro Leandro and Jeromin Zettelmeyer.  Working Paper 18-3. March 2018

 This paper evaluates four approaches to creating “safe assets” or asset portfolios for the euro area: (1) a diversified portfolio of senior tranches of sovereign debt (“national tranching”); (2) a senior security backed by a diversified pool of national sovereign debt (“ESBies”); (3) debt issued by a senior financial intermediary, backed by a diversified pool of national debt (“E-bonds”); and (4) debt issued by a euro area budget or a leveraged wealth fund, based on member state contributions or dedicated direct revenue sources. None of these approaches envisages explicit guarantees by member states, and all could potentially produce safe assets in sufficient quantities to replace euro area sovereign bond holdings in euro area banks. At the same time, the four approaches differ across several important dimensions. A euro area budget or wealth fund could create the largest volume of safe assets, followed by ESBies, E-bonds, and national tranching. A euro area budget or wealth fund is also likely to have the lowest impact on the structure and liquidity of national bond markets, while national tranching would have the largest impact. ESBies and E-bonds occupy an intermediate position. ESBies and potentially bonds issued by a euro area budget would offer their holders greater protection from deep national defaults than the other two proposals. Both ESBies and national tranching would avoid cross-country redistribution by construction, whereas E-bonds and a euro area budget could have significant distributional consequences, depending on their design. E-bonds are unique in that they would raise the marginal cost of sovereign debt issuance at higher levels of debt, thereby exerting fiscal discipline, without necessarily raising average debt costs for lower-rated borrowers. [Note: contains copyrighted material].

 [PDF format, 68 pages].

The Business of Planting Trees: A Growing Investment Opportunity

The Business of Planting Trees: A Growing Investment Opportunity. World Resources Institute. Sofia Faruqi et al. January 2018      

In recent years, hundreds of companies have entered the restoration industry. They represent a wide range of business models that deliver financial returns for investors while restoring forests and agricultural lands. This report profiles 14 businesses that are part of an emerging restoration economy. It highlights four promising investment themes in land restoration: technology, consumer products, project management, and commercial forestry. [Note: contains copyrighted material].

 [PDF format, 66 pages, 5.8 MB].

Financing Graduate and Professional Education: How Students Pay

Financing Graduate and Professional Education: How Students Pay. Urban Institute. Sandy Baum, Patricia Steele. January 4, 2018

 This brief examines how students finance their graduate and professional education. It summarizes the sources of funds used to cover the tuition and fees universities charge, as well as living expenses. Institutions set a “cost of attendance” (COA) for students, estimating the average budget for one academic year (fall through spring). COA includes tuition and fees, books and supplies, room and board, transportation, and other living expenses, and it establishes the maximum amount students can borrow in federal student loans to attend a particular school. These official budgets serve as the foundation for the discussion that follows about how graduate and professional degree students pay for their education. [Note: contains copyrighted material].

 [PDF format, 16 pages, 806.37 KB].

Roots of Prosperity: The Economics and Finance of Restoring Land

Roots of Prosperity: The Economics and Finance of Restoring Land.  World Resources Institute.  Helen Ding et al. December 2017

 This report provides a comprehensive analysis of the benefits and costs of restoring forests and landscapes in countries around the world, demonstrating how smart policies and innovative financing can help governments meet their restoration targets. The authors find that finance, both public and private, for restoration is inadequate for seven reasons, and offers solutions to these financial barriers.

The publication also outlines the main steps involved in carrying out economic analyses, bringing to light the full value of ecosystem services and social benefits as well as the costs of degradation. These insights can help governments to develop policy instruments and financing mechanisms that promote restoration on the ground. They can also help stakeholders incorporate environmental and social benefits into financing decisions. [Note: contains copyrighted material].

 [PDF format, 80 pages, 3.2 MB].