The Mismatch Between State Power and State Capacity in Transnational Law Enforcement
50 Pages Posted: 5 Dec 2003 Last revised: 23 Jan 2018
Date Written: November 1, 2003
While nation-states often possess substantial legal powers to punish transnational crimes such as money laundering, terrorism, drug trafficking, and international corruption, they frequently lack the capacity to focus such powers on the most serious offenders and threats. In this context, “power” is associated with a nation-state's legal authority and potential to coerce individuals or organizations in an attempt to achieve some desired objective. The hallmarks of power are expansively-worded criminal statutes that can be applied domestically or extraterritorially, and extensive regulatory powers imposed with minimal judicial intervention to detain people, effect forfeitures, freeze assets or impose civil penalties. “Capacity,” meanwhile, is determined by the nation-state's capability to sift through information and detect individuals or organizations associated with particularly serious risks or offenses.
This article uses global efforts involving the use criminal, regulatory, and intelligence authorities to disrupt criminal financial activity to highlight some of the agency problems created by the separation between power and capacity in transnational law enforcement. In many respects, advanced industrialized countries’ coordinated attack on criminal finance is the most ambitious legal response to transnational crime. The conduct targeted in this attack includes both willful and also merely negligent conduct, the tools used to wage the attack include criminal penalties as well as regulation, and the predicate offenses range from drug trafficking to public corruption to terrorism.
While there are principled reasons to pursue a global attack on criminal finance, in practice the attack often reflects the agency problems and organizational limitations arising from a separation between power and capacity. The offenses most likely to be punished may often be the ones that can be most easily detected, which are rarely "serious" in any defensible sense. Interest groups may oppose regulatory policies designed to enhance detection capacity. Given their incentives, policymakers in developing countries may adopt new laws and regulations without changing underlying patterns of non-enforcement against criminal financial activity. Moreover, certain kinds of criminal financial activity - whether impelled by intrinsic objectives or a craving for profits - will remain extraordinarily difficult to deter, because of offenders' motivations and their ability to substitute among different types of transactions. Meanwhile, executive officials often lack incentives to make the investment in capacity.
I explore how the gap between capacity and power can be narrowed in certain circumstances - as when swing voters are disproportionately sophisticated, or when exogenous shocks dramatically improve the efficiency of investigative methods and technologies. Without such circumstances, the prospects for augmented capacity will frequently remain on the horizon, tantalizingly close - all too often just out of reach.
Keywords: Transnational law enforcement, terrorism, political economy,regulatory policy, international crime, law and the political process.
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