Spain Tackles Corruption With Blockchain

Spain Tackles Corruption With Blockchain

No system is free from corruption. While this is true, the moral conscience in humans has always tried to destroy the dishonest authority and stabilize the system with the help of law, logic and most importantly, science and technology. Look at Spain for example! Transparency International has been assessing Spain for a consistent period of 11 years, from 2001 to 2012. The country was recently pushed down to the 42nd position in the list of least corrupt countries. It received an average rating of 66.7 points. The criminal code is already tightening its rules and thanks to the latest innovation, the country is actively rectifying the social tumult, using blockchain and artificial intelligence (AI) solutions as their new trump card.

According to Angel Gurría, the secretary general of the Organization for Economic Co-operation and Development (OECD) “Integrity, transparency and the fight against corruption have to be part of the culture. They have to be taught as fundamental values.”

Now that the Spanish administration has an approval from the OECD, their work pressure has increased tremendously. The Spanish government now has to clean up those murky case files in a speedy fashion. Between the period of July 2015 and September 2016, 1,378 officials were prosecuted for corruption and an additional 29 were convicted in the Gürtel corruption scandal by Spain’s high court on May 24. — This scandal has turned into the most expensive corruption scandal ever found in the country’s history.

Almost half of the businesses believe that Spain’s public procurement sector has hindered their chances of winning a public tender in the past three years. In a 1687-page opinion, the court declared Popular Party (PP) politicians participated in “an authentic and efficient system of institutional corruption via mechanisms to manipulate public tenders at the national, regional and local level,” while Mariano Rajoy himself held crucial positions in both the government and the party.

In short, the convicted were sentenced to a total of 351 years in prison for various charges. Prime Minister Mariano Rajoy of PP stepped down from office and other kingpins of large-scale corruptions were arrested. Most importantly, Mr. Iñaki Urdangarin, the brother-in-law of King Felipe VI of Spain was sentenced to serve five years and 10 months in prison, signaling a revolution against corruption.

Spain’s Anti-bribery laws in accordance with the OECD standards:

This starts from the year 1977 when the first transnational anti-bribery legislation for the criminalization of bribery was passed in the United States with the Foreign Corrupt Practices Act (FCPA). Afterward, the same act was re-established by the International Anti-Bribery and Fair Competition Act of 1998 to maintain congruence with the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions. Spain, among other countries, joined the worldwide network and took an oath to prevent, detect and investigate foreign bribery, impose civil and criminal penalties on violators and ban tax deductibility of bribes.

This, however, has a minute but an impactful exception. Bribes paid in cryptoassets do not fall under the Spanish Tax law. They were treated as an electronic payment and lacked existence under the Form 720 ‘Declaration of Foreign Asset’ reporting requirements.

In accordance with the same law, taxpayers were exempted from documenting their offline cryptoasset wallet. Recently, the American Institute of Certified Public Accountants (AICPA) has come up with an idea that the Internal Revenue Service (IRS) adopt a reporting requirement for disclosing wallets holding cryptoassets for tax purposes in the U.S.

Similarly, Selva Ozelli of Cointelegraph mentioned: “the non-disclosure of foreign- or wallet-held cryptoassets for Spanish tax purposes could facilitate FCPA tax evasion, as well as money laundering violations, which are major public policy concerns addressed in the EU’s TAX3 Investigation.”

Blockchain and AI technologies in combating corruption:

In a bid to reduce corruption in the public tender businesses, the European Union has already invested 80 million euros in blockchain and Artificial Intelligence-related projects. The blockchain technology in the future will address problems related to awarding official tenders, quality management of public services and harbor a competitive private sector. Spain’s commitment to European Blockchain partnership makes it responsible for accomplishing an EU-wide blockchain and AI application based monitoring system that can successfully fight against the odds and corruption again digital money regulation protocols.

These applications offer immense benefits both from a technological and a social perspective. Taking support from the European Regional Development Fund, a Spanish blockchain company is developing an Ethereum-based blockchain system that allows one to legally transfer ownership of cryptoassets to the other party. The primary work of the system includes limiting the chances of manipulation and fraud and strengthening verifiability of digital transactions. It aims to make digital transactions easily auditable as well. These applications would enable transparent tracking of information related to digitized assets without any third party involvement.

This system is has a vulnerable to cross-border digitized assets transfer.Researchers from the University of Valladolid have developed an AI-based tool using a neural networks model that estimates the chances of corruption in Spanish provinces along with favoring conditions for the specific corruptions. The detection part is the most important part since prevention is always better than cure. The system learns from various sources including official files of real estate price increases, taxes, economic growth, the growing number of deposit institutions and non-financial firms, and the same political party remaining in power for long periods. This warning measure helps Spanish authority to take control of the country’s corruption.

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