06 June 2016
Policymakers have to address fraud, says José Pedro de Morais Júnior
No one can predict where the economy will be in 12 months, but we do know that we are looking at a ‘new normal’ of low oil prices, reduced demand for commodities and a continuing threat from sophisticated terrorism. It is in this context that policymakers in Africa have to address the pervasive issue of money laundering and fraud in its financial systems – yet doing so is easier said than done.
The harsh reality is that Africa has faced many challenges when confronting these types of issues. It is also a region of multiple languages, currencies and financial systems. This means that in the past it was easy for criminals to carry out cross-border money laundering.
African governments need to be serious about fighting terrorism and money laundering. Each nation has to get its own house in order from a governance and compliance perspective and then the continent needs to build a regional consensus to work together, share information and adopt international anti-money laundering policies.
In Angola, the journey towards good governance and compliance has been ongoing since peacetime in 2002. There has been a huge inflow of cash and a booming economy, which has transformed the country.
The banking sector has been liberalised during the past decade, the market has opened its doors to global trade and a lot of people have done extremely well. In recent years, however, many banks have uncovered money laundering on a global scale – much like those in the developed world. Angola must therefore accept that its growth is unlikely to have happened in a squeaky clean environment.
This is why, in Angola, the war against money laundering has gathered pace. New laws were introduced in 2010 and 2011, which mandated that a wide range of organisations and professionals adhere to new obligations, including record keeping, refusal, cooperation, secrecy and training. The laws apply to credit institutions, financial companies, insurance companies, pension fund managers, accountants, lawyers, public notaries and many others.
National banks in Angola are now legally mandated to inform the other banks they transact with of their own global regulatory requirements – it is simply unacceptable for any banking institution to plead ignorance that their banking partners were not compliant.
In 2015, the Banco Nacional de Angola (BNA) issued a new compliance guide which reflects the standards issued by the Basel Committee on banking supervision. All banks in Angola must submit an independently audited report that sets out their actions on implementing FATF and Basel standards.
Building on these foundations, in 2016 the Bank will focus on reviewing and verifying audit reports from BNA-regulated institutions. The Bank will also announce a new policy framework on any additional recommendations from FATF. Other bodies, such as the Capital Markets Commission, Insurance Companies Regulatory Associations, Customs and the Gambling and Casino Institute, continue to monitor their respective industries.
A modern economy must accept the need for stronger governance and compliance foundations. So, in 2016, the BNA will place emphasis on its on-going financial literacy training program for several target groups.
The Bank is also launching training schemes for bank managers and young graduates in order to increase cooperation with other institutions. The objective is to raise awareness about anti-money laundering and terrorism financing measures, thus ensuring stability within the Angolan financial system and greater customer protection.
Cultural change towards honesty and transparency will not happen overnight but every African nation has a moral responsibility to make this change happen.
The adoption of FATF regulations and policy recommendations is critical for the banking sector in Angola and for the region’s reputation. Africa needs to do the right thing and be seen to do so – it is important to build trust internationally as Angola looks to adopt even more stringent standards of transparency and governance.
The Angolan economy will continue to grow if global banking organisations, central banks and investors maintain trust in its systems and processes.
However, Angola cannot make the kind of progress it needs to if Africa does not work together as one continent. Shell companies, cross-border transactions and the movement of goods need to be regulated with transparent cooperation between governments. Online activities, airport customs and border controls can benefit from regional cooperation. Each domestic economy will benefit and the region will be much better equipped to prosper during difficult economic times.
Today’s lower oil prices bring the issue of money laundering sharply into focus. African economies can no longer rely purely on extractives, so the economies must be diversified – this is not lost on Angolan policy makers. Domestic innovation and entrepreneurs must be supported to create an enterprise economy. That cannot be done without mature and responsible capital markets.
To meet this objective, the Angolan government has introduced many initiatives – such as state-backed VC funds – and the BNA is doing its part by using the economic levers it has at its disposal to provide support for businesses, including SMEs in high-growth sectors. Stable rates of inflation and competitive interest rates are crucial for growth and stability.
The BNA fully understands the national importance of adopting international regulations in relation to the nation’s financial sector and wider economy – not to mention the obvious moral dimension.
As a central bank, it is the BNA’s job to continue to meet internationally accepted standards and to create a well-governed financial system that provides access to capital for businesses. Achieving this goes hand-in-hand with the fight against the world’s most insidious crimes and this has to be the responsibility of every central bank on the continent.