Institutional Instability, Regulatory Fragmentation, and the Status of Contested Comorian Offshore Financial Licenses

This article reframes the controversy over offshore financial licenses attributed to the Anjouan Offshore Finance Authority (AOFA) and the Mwali International Services Authority (MISA) as a political-economy problem of institutional building in a developing state. Working through institutional analysis, supported by documentary legal analysis, it separates current Union/BCC prudential recognition from the historical and institutional classification of island-attributed instruments. The 2001 settlement gave the islands wide-ranging but ill-defined powers, including financial autonomy, and repeated attempts to operationalize power sharing were contested. IMF evidence further records that the Anjouan executive supported the offshore sector until 2008 and that Union authorities supported it until 2005. Later organic legislation, banking law, constitutional reform, and strengthened BCC statutes recentralized prudential authority, while the BCC now rejects AOFA and MISA as competent financial regulators. Yet both island-based frameworks continue to maintain registries and recognize licenses under competing interpretations of island authority. The status of banking licenses issued by the island authorities of Anjouan and Mwali therefore cannot be adequately captured by a simple valid-or-invalid binary. More precisely, their status is contested or disputed: the Union of the Comoros/BCC and the issuing island authorities (AOFA/MISA) continue to advance mutually incompatible legal positions concerning the allocation of financial-regulatory authority. Since the 2001 power-sharing settlement, this conflict has never been authoritatively resolved, and each side grounds its position in its own legal and institutional framework. The paper distinguishes fraudulent documents from two non-fraudulent classes within this unresolved conflict. Category B comprises licenses issued through an identifiable island public framework before the BCC had publicly disputed the islands' financial competence; those licenses were only later rejected or treated as displaced under the Union/BCC framework, while the issuing island continued to recognize them. Category C comprises licenses issued after the BCC had already rejected island financial-licensing competence and was warning against such licenses, while AOFA/MISA continued issuance under the islands' competing interpretation of constitutional autonomy. Qualifying instruments in Categories B and C should not be treated as fake merely because the BCC does not recognize them; their legal and institutional status remains contested or disputed unless and until an authoritative Union-islands harmonization or adjudication resolves the competence conflict.

Political economy, Institutional competence; Regulatory fragmentation; Offshore financial licensing; Central banking; Comoros

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