Cape Verde’s Anti-Money Laundering Framework Faces Significant Challenges
International experts have identified numerous weaknesses in Cape Verde’s anti-money laundering (AML) framework, leaving the financial system vulnerable to money laundering and terrorist financing.
Limited Criminalization of Money Laundering
Cape Verde first criminalized money laundering in 1993, but the offense was limited to proceeds obtained through illicit drug trafficking. It wasn’t until 2002 that the country expanded the list of predicate offenses and criminalized money laundering consistent with international standards. However, the range of predicate offenses still falls short of international requirements.
Insufficient Financial Intelligence Unit
Cape Verde’s judiciary police (JP) is responsible for receiving and analyzing suspicious transaction reports (STRs), but it lacks the autonomy to disseminate information and perform adequate analysis. The JP also lacks resources and expertise to investigate money laundering offenses effectively.
Inadequate Regulation of Financial Institutions
Financial institutions in Cape Verde are required to implement customer due diligence measures, but there is limited guidance on what constitutes acceptable identity documents for customers. Additionally, the country’s framework does not adequately address the risks posed by certain high-risk customers, such as politically-exposed persons (PEPs).
Weaknesses in Record Keeping and Monitoring
Financial institutions in Cape Verde are required to maintain records for a specific period, but many institutions are unaware of these requirements and lack well-documented record retention policies. The obligation to monitor transactions is also limited to those suspected of being linked to predicate offenses.
Regulatory Gaps in Designated Non-Financial Businesses and Professions
Cape Verde’s AML obligations do not extend to lawyers, notaries, accountants, or trust and company service providers. Additionally, there are no regulations or guidance for designated non-financial businesses and professions (DNFBPs), such as real estate agents and dealers in motor vehicles.
Recommendations for Improvement
To address these weaknesses, Cape Verde is recommended to strengthen its AML framework by:
- Expanding the list of predicate offenses consistent with international standards
- Improving the financial intelligence unit’s autonomy and analytical capabilities
- Providing clear guidance on customer due diligence measures and acceptable identity documents
- Enhancing record keeping and monitoring requirements for financial institutions
- Regulating DNFBPs and providing guidance for implementation of AML obligations
The assessment highlights the need for Cape Verde to address these significant challenges in its AML framework to protect the integrity of its financial system and prevent the misuse of its financial infrastructure.