Cape Verde Struggles to Combat Money Laundering and Terror Financing
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Assessment Highlights Significant Weaknesses
A recent assessment by international experts has identified significant weaknesses in Cape Verde’s legal framework and institutional measures to combat money laundering and terror financing. The report highlights that despite being one of the first countries in Africa to criminalize money laundering, its legislation falls short of meeting international standards.
Legal Framework Shortcomings
Criminalization of Money Laundering
Cape Verde has yet to convict anyone for money laundering, despite having a comprehensive framework that addresses the freezing, seizing, and confiscation of proceeds and instrumentalities of crimes. This raises concerns about the effectiveness of the country’s legal framework in combating money laundering.
Financial Institutions’ Obligations
Suspicious Transaction Reports
Financial institutions have an obligation to file suspicious transaction reports with the judiciary police, but the office does not perform all the functions of a financial intelligence unit. The Central Section for the Investigation of Trafficking of Stupefacients, which receives these reports, lacks autonomy and resources to adequately investigate and analyze them.
Preventive Measures
Customer Due Diligence Requirements
Cape Verde’s regime for preventive measures, including its customer due diligence requirements, does not adequately address risks posed by certain types of customers. The country’s framework for international financial institutions also raises significant concerns, as some institutions may operate without a substantive physical presence in the country.
Record-Keeping and Retention Policies
Inadequate Training
The assessment also identified weaknesses in record-keeping and retention policies, as well as inadequate training for bank supervision staff. This raises concerns about the ability of financial institutions to effectively monitor and report suspicious transactions.
Designated Non-Financial Businesses and Professions
Lack of Regulation
Designated non-financial businesses and professions, such as lawyers and notaries, are not covered by the legal framework, leaving them vulnerable to money laundering and terror financing risks. Cape Verde’s Ministry of Finance and Public Administration is responsible for regulating these entities, but it has failed to issue any regulations or guidance to assist with the implementation of the principal money laundering law.
Recommendations
The report recommends that Cape Verde strengthen its legal framework and institutional measures to combat money laundering and terror financing. Specifically:
- Strengthen the country’s legal framework to meet international standards on money laundering and terror financing.
- Improve the effectiveness of the judiciary police in investigating and analyzing suspicious transactions.
- Enhance customer due diligence requirements to address risks posed by certain types of customers.
- Implement a comprehensive supervisory strategy for financial institutions, including training for bank supervision staff.
- Regulate designated non-financial businesses and professions to ensure they comply with AML/CFT requirements.
Conclusion
Cape Verde’s efforts to combat money laundering and terror financing are hindered by significant weaknesses in its legal framework and institutional measures. Addressing these concerns is crucial to protecting the country’s financial system from illicit activities and maintaining international credibility.