FATF AML Deficiency List
Non - Compliance with FATF 40 + 9 Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Weakness in Government Legislation to combat Money Laundering
US Dept of State Money Laundering assessment
Angola is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies
Latest FATF Statement - 19 February 2016
The FATF welcomes Angola’s significant progress in improving its AML/CFT regime and notes that Angola has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in June 2010 and February 2013. Angola is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. Angola will work with ESAAMLG as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report.
Compliance with FATF Recommendations
The latest follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Angola was undertaken by the Financial Action Task Force (FATF) in 2017 (the original Mutual Evaluation was done in 2012). According to the follow-up Evaluation, Angola was deemed Compliant for 3 and Largely Compliant for 11 of the FATF 40 + 9 Recommendations.
US Department of State Money Laundering assessment (INCSR)
Angola was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Angola is not a regional financial center. It does not produce large quantities of narcotics but continues to be a transit point for drug trafficking, particularly for drugs from Brazil and other parts of South America destined for Europe. Increasingly, Angola is becoming a destination point as well, with a growing market for illicit drugs. Angola’s borders are porous and vulnerable to general smuggling and trafficking in small arms, diamonds, humans, fuel, and motor vehicles. Angola has a high rate of U.S. dollar cash flow, although the government has implemented new financial policies to decrease use of all currencies except the Angolan kwanza. According to the Angolan Central Bank approximately $17 billion has left the economy in the last five years alone, an amount significantly above foreign direct investment into the country. The origin of this money is unclear. Additional value is transferred out of the country through abusive trade mis-invoicing. Widespread corruption in government and commerce facilitates money laundering.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 27
World Governance Indicator – Control of Corruption 14
Corruption remains widespread in Angola due to a lack of checks and balances, insufficient institutional capacity and a culture of impunity. Practices of nepotism, cronyism and patronage pervade procurement rendering the procurement process opaque and corrupt. The oil and mining sector in Angola are considered especially high risk areas for corruption. Clientelistic networks generally govern the way business is conducted in Angola with many Angolan companies functioning as front organizations for government officials whose integrity and accountability are frequently questioned by observers. Active and passive bribery, illicit enrichment and conflict of interest are criminalized by the Probity Law, but offences are rarely prosecuted. Gifts and facilitation payments are a common part of doing business in Angola. For further information - GAN Integrity Business Anti-Corruption Portal
Angola's economy is overwhelmingly driven by its oil sector. Oil production and its supporting activities contribute about 50% of GDP, more than 70% of government revenue, and more than 90% of the country's exports. Diamonds contribute an additional 5% to exports. Subsistence agriculture provides the main livelihood for most of the people, but half of the country's food is still imported. Increased oil production supported growth averaging more than 17% per year from 2004 to 2008. A postwar reconstruction boom and resettlement of displaced persons has led to high rates of growth in construction and agriculture as well. Some of the country's infrastructure is still damaged or undeveloped from the 27-year-long civil war. However, the government since 2005 has used billions of dollars in credit lines from China, Brazil, Portugal, Germany, Spain, and the EU to help rebuild Angola's public infrastructure. Land mines left from the war still mar the countryside, and as a result, the national military, international partners, and private Angolan firms all continue to remove them. The global recession that started in 2008 stalled economic growth. In particular, lower prices for oil and diamonds during the global recession slowed GDP growth to 2.4% in 2009, and many construction projects stopped because Luanda accrued $9 billion in arrears to foreign construction companies when government revenue fell in 2008 and 2009. Angola formally abandoned its currency peg in 2009, and in November 2009 signed onto an IMF Stand-By Arrangement loan of $1.4 billion to rebuild international reserves. Consumer inflation declined from 325% in 2000 to less than 9% in 2014. Falling oil prices and slower than expected growth in non-oil GDP have reduced growth prospects for 2015. Angola has responded by reducing government subsidies and by proposing import quotas and a more restrictive licensing regime. Corruption, especially in the extractive sectors, is a major long-term challenge.
Investment Climate - US State Department
Angola is an upper middle income country located in southern Africa with a $102 billion GDP, $4,100 per capita income, and a population of 25 million, according to IMF data. As sub-Saharan Africa’s second highest oil producing country in 2015 behind Nigeria at 1.8 billion barrels per day, Angola is the United States’ fourth largest trading partner in Africa (down from third in 2014). Responding to significant revenue decreases given oil price declines, the Government of the Republic of Angola (GRA) is focusing on economic diversification to reduce its reliance on oil as a source of income as well as to reduce its dependence on imports. While Angola has prioritized the development of agriculture and agro-industry, fisheries, and manufacturing as part of its diversification strategy, it will take several years to see real results. The government’s strategy also focuses on encouraging small and medium enterprises (SMEs), increasing investments in infrastructure to reduce transaction costs, and improving the country’s economic competitiveness.
Angola is one of the United States’ three strategic partners in sub-Saharan Africa, together with Nigeria and South Africa. The bilateral strategic partnership dialogue has focused on eight key areas: political-social/regional stability, trade/economic growth, health, energy, agriculture, regional security cooperation (focused on maritime security and peacekeeping), education, and consular affairs. To strengthen the U.S. engagement on these issues, the Department of Commerce’s U.S. Commercial Service (CS) and the Department of Agriculture’s Foreign Agricultural Service (FAS) both opened offices in Angola in 2014.
In 2015 the GRA both enacted a new private investment law (no. 14/15) and created a National Agency for Promotion of Investment and Exportations of Angola (Agência para a Promoção de Investimento e Exportações de Angola - APIEX). The measures aim to stimulate economic growth, diversify the economy, expand the private sector, and foster greater private-sector participation in Angola’s economic development. The new law has received a mixed reaction across the business community however, as it raises taxes on early repatriation of profits and dividends, for the first time makes a clear distinction between foreign and domestic investors, and imposes local partnership requirements for foreign investment in key sectors that some fear could dissuade international investors (see section 1.5). The GRA also reduced corporate income tax from 35 to 30 percent.
Infrastructure is also a major government focus. The Ministry of Energy and Water estimates that the development and completion of several projects, such as the expansion of the Cambambe Dam and the construction of the Laúca Dam (slated for completion in 2017), will increase Angola’s electric power generation capacity five-fold. The investment in new infrastructures for the production of electric power was accompanied by the incorporation of new public companies operating in the electric energy sector: Rede Nacional de Transporte, E.P. (RNT), Empresa Pública de Producao de Electricidade, E.P. (PRODEL), and Empresa Nacional de Distribuicao de Electricidade (ENDE).
Angola’s real GDP declined 19 percent from $126 billion in 2014 to an estimated $102 billion in 2015 as a result of the decline in global oil prices and a significant devaluation in the local currency, the kwanza, and is forecast to decline by a further 20 percent in 2016.. Inflation spiked to 23 percent in the first quarter of 2016 from the 2015 annual rate of 14.3 percent,, due to the devaluation and the removal of government fuel subsidies in early 2016. Key issues to watch:
Angola’s investment climate offers significant opportunities, but it also encompasses substantial challenges and can be fraught with risks. The political environment is more stable than in many other countries in the region. Angola is rich in natural resources including oil, minerals, and land. There is an abundant supply of unskilled labor, particularly in the capital of Luanda. Skilled professionals are available, but often require additional training. While Portuguese is commonly spoken, English competency levels are relatively low. Under a newly adopted investment law, the Angolan government offers incentives to companies investing in the domestic economy. Real estate and living expenses can be prohibitively expensive. In 2015, Luanda was named the most expensive city in the world for expatriates for the third year in row by Mercer and the second most expensive by ECA International. Infrastructure is limited, roads are often in poor condition, power outages are common, and water availability can be unreliable. The investment climate is also hampered by rampant corruption, and a complex, opaque regulatory environment, as reflected by rankings from globally recognized entities as outlined in Table 1.
The oil crisis continues to impact the Angolan economy, creating drastic losses in export revenue and a severe limitation in foreign exchange, and forcing cuts in government spending. While the crisis has been difficult for the Angolan economy, there is hope that the acute economic stress will lead the GRA to implement much needed reforms.
FDI in Angola has steadily increased since the end of the civil war in 2002. The Banco Nacional de Angola (BNA) reported 16.5 billion USD of FDI in Angola in 2014, up from 14.3 billion USD in 2013, predominantly in the oil industry FDI data is unavailable for 2015, but the oil crisis has likely reversed this growth trend. Portfolio investment in Angola is negligible.
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