Financial Crime World

Cape Verde Fails to Meet International Standards on Money Laundering Prevention

Praia, Cape Verde - A scathing report by international experts has criticized Cape Verde’s efforts to prevent money laundering, citing significant weaknesses in its legal framework and lack of effective implementation.

The report highlights that Cape Verde first criminalized money laundering in 1993, but the law falls short of international standards set by the Palermo Convention. Moreover, there have been no convictions for money laundering since the law was enacted.

  • The law does not align with international standards set by the Palermo Convention.
  • No convictions for money laundering have been recorded since the law was enacted in 1993.

Financial Intelligence Unit (FIU) Shortcomings

The country’s financial intelligence unit (FIU) is also criticized for not performing its functions adequately. Reports are received and analyzed in a limited manner, and the FIU does not have operational independence or autonomy to decide what information can be disseminated.

  • The FIU does not analyze reports received in an effective manner.
  • The FIU lacks operational independence and autonomy to decide on information dissemination.

International Financial Institutions

The report highlights concerns over Cape Verde’s framework for international financial institutions, stating that it is possible for these institutions to operate without a substantive physical presence in the country.

  • International financial institutions can operate without a physical presence in the country.
  • This raises concerns about the effectiveness of money laundering prevention measures.

Higher-Risk Customers

The legal framework also fails to address risks posed by certain types of higher-risk customers, such as politically-exposed persons (PEPs), and those associated with correspondent banking relationships and regimes for introduced business.

  • The law does not adequately address risks posed by higher-risk customers.
  • This increases the risk of money laundering and terrorist financing.

Transaction Monitoring

The report notes that there are significant weaknesses in relation to the obligation to monitor transactions, which impacts on the obligation to report suspicious transactions. Additionally, institutions appear unaware of the requirements of the money laundering law regarding record retention policies.

  • There are significant weaknesses in transaction monitoring.
  • Institutions lack awareness of record retention policy requirements.

Regulatory Body

Cape Verde’s regulator, the Bank of Cape Verde (BCV), is also criticized for not having a clear AML/ CFT supervisory strategy and not providing adequate training to its staff.

  • The BCV lacks a clear AML/CFT supervisory strategy.
  • Staff at the BCV have inadequate training on anti-money laundering measures.

Recommendations

To strengthen Cape Verde’s anti-money laundering measures, the report recommends:

  • Strengthening the country’s AML/ CFT framework to align with international standards.
  • Enhancing the FIU’s operational independence and autonomy.
  • Developing a clear AML/CFT supervisory strategy for the BCV.
  • Providing adequate training to staff at the BCV.
  • Increasing public awareness of the importance of preventing money laundering.

The report is expected to be discussed by Cape Verde’s authorities in the coming weeks, with a view to implementing recommendations and strengthening the country’s anti-money laundering measures.