Financial Crime World

Investigation into Trafficking of Stupefacients Reveals Weaknesses in Cape Verde’s Anti-Money Laundering Regime

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A recent investigation into the trafficking of stupefacients has uncovered significant weaknesses in Cape Verde’s anti-money laundering (AML) regime, according to a report by [reporting agency].

Investigation Reveals Gaps in AML Framework

The investigation, conducted by the country’s financial intelligence unit, SCITE, revealed that there are serious gaps in the country’s AML framework, particularly with regards to suspicious transaction reporting and customer due diligence.

Limited Investigative Powers

  • SCITE has limited powers to investigate money laundering offenses.
  • The unit does not have the resources or expertise to adequately perform its investigative functions.

Inadequate Regime for Preventive Measures

  • The country’s regime for preventive measures is based on its principal money laundering law and technical instructions issued by the Bank of Cape Verde (BCV).
  • The regime requires financial institutions to identify customers and verify their identity, but does not provide sufficient guidance on the types of documents that are acceptable.

Inadequate Framework for International Financial Institutions

  • The country’s framework for international financial institutions (IFIs) is inadequate, allowing institutions to operate without a substantive physical presence in Cape Verde.
  • This raises concerns about the effectiveness of the country’s AML regime and its ability to prevent money laundering and terrorist financing.

Other Weaknesses Identified

Obligation to Monitor Transactions

  • The obligation to monitor transactions is limited to those suspected of being linked to predicate offenses currently covered by the money laundering legislation.
  • Institutions appear unaware of the requirements for record retention under the law, and do not have well-documented policies in place.

Designated Non-Financial Businesses and Professions (DNFBPs)

  • There are no regulations or guidance issued by the Ministry of Finance and Public Administration to assist with the implementation of the principal money laundering law.
  • Many DNFBPs are unaware of their obligations under the AML law, and there is a lack of regulation in the real estate market.

Key Findings

  • SCITE has limited powers to investigate money laundering offenses
  • The regime for preventive measures lacks guidance on acceptable identity documents
  • International financial institutions can operate without a substantive physical presence in Cape Verde
  • The obligation to monitor transactions is limited to predicate offenses currently covered by the law
  • Institutions are unaware of record retention requirements and lack well-documented policies
  • DNFBPs lack regulation, particularly in the real estate market

Recommendations

  • Strengthen SCITE’s investigative powers
  • Provide guidance on acceptable identity documents for customer due diligence
  • Improve regulations for international financial institutions
  • Expand the obligation to monitor transactions to include all suspicious activity
  • Implement effective record retention policies
  • Regulate DNFBPs, particularly in the real estate market

Source

[reporting agency], “Investigation into Trafficking of Stupefacients Reveals Weaknesses in Cape Verde’s Anti-Money Laundering Regime”