Financial Crime World

Risk-Based Approach to Anti-Money Laundering Takes Center Stage in Cape Verde

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Cape Verde is taking a proactive step towards strengthening its anti-money laundering and combating the financing of terrorism (AML/CFT) regime by embracing a risk-based approach. This shift in strategy requires the country, state authorities, and private sector entities to understand the money laundering and terrorist financing risks they are exposed to and apply AML/CFT measures proportionately to mitigate these threats.

Importance of Risk-Based Approach

The Financial Action Task Force (FATF), an international organization that sets global standards for AML/CFT, has emphasized the importance of a risk-based approach in its 2003 and revised 2012 recommendations. The approach is no longer optional but rather a prerequisite for compliance with all other requirements.

Implementation of Risk-Based Approach

Cape Verde’s implementation of this strategy will involve:

  • Identifying, assessing, and understanding risks before applying AML/CFT measures that are commensurate to these threats.
  • Conducting a comprehensive risk assessment on the national level to understand the full scope of money laundering and terrorist financing risks within its jurisdiction.
  • Sharing the outcomes of the risk assessment among state authorities and the private sector to ensure a coordinated effort in mitigating risks.
  • Supervisory authorities developing their strategies, focusing on key areas that require attention.

Private Sector Responsibilities

Private sector entities are expected to:

  • Develop an understanding of the specific risks associated with their business, clients, and products.
  • Apply AML/CFT measures accordingly.
  • The FATF has published guidance papers to assist countries in implementing this approach and developing their own guidelines for the private sector.

Benefits of Risk-Based Approach

By adopting a risk-based approach, Cape Verde is taking a proactive step towards strengthening its AML/CFT regime and enhancing international cooperation. This will help to:

  • Reduce the risks associated with money laundering and terrorist financing.
  • Contribute to a safer and more secure financial system.

In summary, Cape Verde’s shift towards a risk-based approach to AML/CFT demonstrates its commitment to strengthening its anti-money laundering and combating the financing of terrorism regime, ultimately contributing to a safer and more secure financial system.