Cape Verde Shuts Down “Offshore” Banks Following Luanda Leaks Revelations

Finance Minister Pledges to Close Four Banks Serving Foreign Customers

Cape Verde’s Finance Minister Olavo Correia has vowed to close four banks that serve only foreign customers, including one partly owned by Angolan billionaire Isabel dos Santos. This decision comes in the wake of the Luanda Leaks investigation, which revealed how dos Santos amassed her fortune through shell companies and insider deals.

New Law Aims to Increase Transparency

The country’s parliament unanimously approved a new law on February 21, requiring these “offshore” banks to start serving local residents within the next year or face closure. The law is expected to affect Banco Bic Cabo Verde, which has dos Santos as its largest shareholder with a 42.5% stake.

Luanda Leaks Investigation Sparks Change

According to Correia, the Luanda Leaks investigation helped build support for the new laws, broadening consensus in society and facilitating the approval process. “Luanda Leaks made the measure more understandable, broadened the consensus in society and facilitated the approval process unanimously and without any social noise,” he said.

The Investigation’s Findings

The International Consortium of Investigative Journalists (ICIJ) led the investigation, which revealed how dos Santos used her bank to funnel millions of dollars from Angola through a complex web of companies and shell accounts. The investigation also showed that dos Santos’ co-investors pressured local regulators in 2013 to waive a requirement for offshore banks to be owned by at least 15% by a bank within the Organization of Economic Cooperation and Development.

Strengthening Anti-Money Laundering Laws

In response to the findings, Cape Verde has taken steps to strengthen its anti-money laundering laws. In May 2019, an international review found “insufficient application” of these laws and a “total lack of supervision” in certain high-risk sectors. The country subsequently closed certain loopholes and was removed from a blacklist of tax havens by the European Union finance ministers in February.

Challenges Ahead

Experts warn that implementing new legislation is just the first step towards combating money laundering and corruption. “Passing legislation is one thing,” said Thierry Vircoulon, a researcher at the French Institute of International Relations who studies money laundering in Cape Verde. “Implementing it is another.”

A Significant Step Towards Transparency

The move by Cape Verde to shutter its “offshore” banks is seen as a significant step towards increasing transparency and combating financial corruption in the country. The African Platform to Protect Whistleblowers has hailed the decision, saying it demonstrates the government’s commitment to fighting corruption and protecting whistleblowers.

Next Steps

While implementing new legislation is crucial, experts agree that it is just the beginning of the process. Cape Verde must now focus on ensuring the effective implementation of these laws to combat money laundering and corruption.