Financial Crime World

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CABO VERDE FAILS TO MEET ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING STANDARDS

Cabo Verde, a West African country, has been rated as partially compliant with international anti-money laundering and counter-terrorism financing (AML/CFT) standards by the Financial Action Task Force (FATF).

FATF Report Criticism

The FATF criticized Cabo Verde for failing to make sufficient progress in addressing technical compliance deficiencies. The country was re-rated on two recommendations:

  • Recommendation 7, which deals with targeted financial sanctions
  • Recommendation 21, which relates to information sharing between financial institutions

Deficiencies Identified

According to the report, Cabo Verde has not revised its framework or issued guidelines on specific restrictions for Iran under the Joint Comprehensive Plan of Action (JCPOA. The country was also found to lack a legal requirement for reporting entities to identify and assess money laundering and terrorist financing risks related to new products and business practices.

Additionally, Cabo Verde failed to provide information on measures taken to comply with Recommendation 15, which requires countries to assess the risk of money laundering and terrorist financing in the development of new products and business practices. The country was also criticized for lacking a requirement for information sharing policies and procedures applicable at group level under Recommendation 18.

Consequences

The FATF report noted that Cabo Verde has not made sufficient progress in addressing these deficiencies, which are critical to preventing the misuse of financial systems by terrorists and organized crime groups. As a result, Cabo Verde will remain on the Enhanced Follow-up process and is expected to report back to the GIABA Plenary in May 2021.

UNSCR 2231 (2015) AND CFT ACT

The FATF report also highlights the importance of Cabo Verde implementing UN Security Council Resolution 2231 (2015), which calls on countries to prevent the transfer of funds, goods, and services that could contribute to Iran’s nuclear or ballistic missile programs.

Under the US Comprehensive Iran Sanctions Accountability and Divestment Act (CFT Act), designated persons or entities related to proliferation finance refer to those designated under resolutions 1718 and successor resolutions in respect of North Korea. However, Cabo Verde has not revised its framework nor issued guidelines on specific restrictions for Iran under the JCPOA.

FATF Recommendations

The FATF recommendations are a set of international standards aimed at preventing money laundering and terrorist financing. These recommendations include:

  • Recommendation 7: Targeted financial sanctions
  • Recommendation 15: Assessing risk in new products and business practices
  • Recommendation 18: Information sharing between financial institutions
  • Recommendation 21: Tipping-off requirements

Conclusion

Cabo Verde’s failure to meet international AML/CFT standards is a serious concern for the global financial community. The country must take immediate action to address these deficiencies and implement the necessary reforms to prevent the misuse of its financial system by terrorists and organized crime groups.