Angola’s Money Laundering Web: A Study on Anti-Money Laundering Software

Angola, notorious for its high levels of corruption and money laundering, has once again made headlines with the recent exposé of Isabel dos Santos’ network of shell companies. This network, spanning 41 countries, managed to evade detection for so long, highlighting the need for effective anti-money laundering (AML) policies.

The Paradoxical Results

Our analysis reveals an interesting paradox: jurisdictions that score high on FATF effectiveness were more likely to host companies linked to dos Santos. This suggests that countries with robust AML institutions may actually provide a safe haven for illicit wealth.

Lower Levels of Financial Secrecy and Corruption

We found that countries in the dos Santos network had lower levels of financial secrecy and corruption, as measured by reputable indices such as the Tax Justice Network and Transparency International’s Corruption Perceptions Index. These findings are not unique to the Angolan scandal; a similar pattern was observed in a massive Kremlin-linked money laundering scheme known as the Troika Laundromat.

Rethinking AML Approaches

The results highlight the need for regulators to rethink their approach to AML. It appears that countries with strong AML institutions may be inadvertently enabling money laundering by providing a veneer of legitimacy and respectability.

The EU’s Difficulty in Opening Bank Accounts

An interview with Sindika Dokolo highlights this issue: he routed his finances through offshore jurisdictions because it was difficult to open a bank account directly in the EU due to his association with Angola and the Democratic Republic of Congo.

Far-Reaching Implications

The implications of these findings are far-reaching. They suggest that even relatively rich and large economies may not be as effective at policing their financial systems as they claim. The recent scandals, including the Panama Papers, Danske Bank scandal, and now the dos Santos scheme, highlight the need for continued improvement in AML regimes.

Negative Externality

Moreover, these findings underscore the negative externality imposed by the ability to stash money in advanced economies and tax havens on developing countries. Developing countries are more likely to be punished for not meeting AML standards, while richer countries continue to struggle with their own financial systems.

Conclusion

Understanding how well our AML institutions work is crucial for effective regulation. By analyzing data from various sources, we can begin to identify where our policies are working and where they need improvement.

The Need for Continuous Improvement

The recent scandals serve as a reminder that there is still much work to be done in the fight against money laundering. It is essential that regulators and policymakers continue to prioritize AML efforts and address the weaknesses identified in this study.