Financial Crime World

Headline: Cabo Verde’s Strides and Challenges in Combating Money Laundering and Terrorist Financing

Background

The West African nation of Cabo Verde has made noteworthy strides in enhancing its financial crime prevention measures since its first Mutual Evaluation Report (MER) in 2011. However, a recent report by the Inter-Governmental Action Group against Money Laundering (GIABA) reveals that the country still faces significant challenges in tackling money laundering (ML) and terrorist financing (TF) risks.

Strengths and Challenges

Cabo Verde, an archipelago consisting of ten islands off the west coast of Africa, has made important progress in addressing ML/TF risks. However, its susceptibility to ML and TF activities due to its role as a transit country for drugs, people, goods, and resources necessitates a robust financial watchdog system.

Key Statistics

  • Approximately 11.5% of Cabo Verde’s Gross Domestic Product (GDP) comes from immigrant remittances.

GIABA’s Assessment and Key Findings

GIABA, a regional affiliate of the anti-money laundering and counter-terrorist financing (AML/CFT) watchdog Financial Action Task Force (FATF), conducted an assessment (MER) of Cabo Verde’s AML/CFT framework in May 2019. The results of this evaluation reveal a moderately effective system for addressing ML/TF risks, but several deficiencies remain.

Key Findings

  1. Underdeveloped risk assessment
  2. Weak supervision of Designated Non-Financial Businesses and Professions (DNFBPs)
  3. Lack of transparency in legal persons
  4. Limited understanding of ML/TF risks
  5. Technical deficiencies

Priority Actions

The report underscores several priority actions to address these findings, including:

  1. Improving sectoral risk assessments
  2. Enhancing supervision
  3. Increasing transparency of legal persons
  4. Upgrading various technical deficiencies in the legal and regulatory frameworks

Conclusion

Despite improvements in implementing AML/CFT measures, Cabo Verde’s MER underlines the importance of addressing the challenges outlined in the report. The nation can enhance its effectiveness in combating ML/TF risks and protect its financial system by implementing these priority actions. The support of international partners and the ongoing commitment of domestic stakeholders will be crucial in the continuing efforts to strengthen Cabo Verde’s AML/CFT framework.