Angola’s Banking Sector Exposed as Hub for Fraudulent Schemes
The financial sector of Angola has been revealed to be a hotbed for fraudulent activities, with new statistics showing that the country has become a prime destination for money laundering and other illicit financial transactions.
Corruption and Money Laundering in Angola
According to Transparency International’s Corruption Perceptions Index, Angola ranked 165 out of 180 countries in terms of perceived corruption, making it one of the most corrupt countries in the world. Additionally, the Basel Institute on Governance ranks Angola as one of the top 25 riskiest countries for money laundering.
A Network of Corruption
The statistics are alarming, with five out of the past ten years seeing Angola listed as having “strategic deficiencies” by the Financial Action Task Force (FATF), an international standard setter for anti-money-laundering policy. Despite this, a network of corruption and hidden wealth centered around Angolan President José Eduardo dos Santos’ family was able to operate undetected for years.
An International Scheme
A recent investigation into the dos Santos network found that 41 countries were involved in the scheme, with many of them having strong anti-money laundering (AML) institutions designed to prevent, identify, and root out dirty money. However, it appears that banks in these jurisdictions either did not know who they were dealing with or failed to ask the right questions about the origin of the funds.
The Relationship Between AML Effectiveness and Illicit Activity
Using data from the International Consortium of Investigative Journalists (ICIJ), researchers analyzed the location of shell companies controlled by dos Santos and his husband Sindika Dokolo. They found an intriguing relationship between the effectiveness of a country’s AML policies and its likelihood of hosting companies linked to dos Santos.
- Jurisdictions that scored high on FATF’s effectiveness evaluations were more likely to host dos Santos-linked companies, with a one-standard-deviation improvement in a country’s effectiveness score associated with a 16 percentage point increase in the chance it hosted such a company.
- Few of the jurisdictions involved in the scheme were ever placed on FATF’s watch list.
The Paradox of Money Laundering
The study also found that countries in the dos Santos network had lower levels of financial secrecy and corruption, as measured by the Tax Justice Network and Transparency International respectively. These results echo those from an investigation into the Kremlin-linked money laundering scheme known as the Troika Laundromat, which also largely operated within countries with robust institutions.
The Challenges Ahead
The findings highlight a paradox in money laundering: that places with strong anti-money laundering policies are often precisely where criminals want to hide their illicit wealth. These jurisdictions offer a veneer of legitimacy and respectability, making it difficult for authorities to detect and prosecute illegal activities.
- Regulators must re-examine their assumptions about the effectiveness of AML institutions in rich, large economies.
- The recent scandals involving the Panama Papers, Danske Bank, and the dos Santos scheme demonstrate that even seemingly robust financial systems can be vulnerable to illicit activity.
Conclusion
The research suggests that policymakers must recognize the challenges ahead and work towards creating a more level playing field. Developing nations are often punished for not meeting AML standards, while richer countries continue to struggle with their own financial system vulnerabilities. As the global fight against money laundering continues, it is crucial that policymakers address these issues and ensure that all jurisdictions have robust systems in place to prevent and detect illicit activity.