The International Institute for Democracy and Electoral Assistance (International IDEA) and the United Nations Office on Drugs and Crime (UNODC) signed a memorandum of understanding to work closely together to address risks of new financial instruments such as cryptocurrencies in political finance.
The memorandum of understanding (MoU) was signed in June 2019 and further consolidates the commitment of International IDEA and UNODC to advance the political finance debates on challenges and solutions brought by new financial instruments. Blockchain, artificial intelligence and other new technologies are changing the way of political participation and representation across the world. While technologies such as digital reporting and disclosure platforms can be a major driver to increase transparency and accountability in political finance, new technologies can also pose a new regulatory challenge for anti-corruption. For example, the emerging popularity of cryptocurrencies raises concerns about their use to finance politics. Depending on the design, some cryptocurrencies could make it very difficult to trace the donor identity and destinations of their donations.
International IDEA and UNODC have already collaborated on several projects such as jointly drafting a discussion paper on cryptocurrencies in political finance and co-organising a panel on the implications of new financial instruments in political finance at this year’s OECD Global Anti-Corruption & Integrity Forum. One of the major lessons from these activities is that the political finance landscape is increasingly complex and continuously evolving. It may be too soon to draw any definitive conclusions on the impact of cryptocurrencies and other new financial instruments on politics, however it is clear that International IDEA and UNODC should jointly start initiating a debate now in order to consider various policy options to appropriately deal with them in the near future.
In the coming months, by raising awareness and through the sharing of knowledge and networks, International IDEA and UNODC will build on each other’s expertise to set the global agenda on anti-corruption and anti-money laundering, and particularly safeguard integrity of political finance systems against new forms of financial instruments.