Financial Crime World

Cape Verde’s Anti-Money Laundering Efforts Under Scrutiny

A recent investigation by SCITE (Investigation of Trafficking of Stupefacients) has revealed significant weaknesses in Cape Verde’s efforts to combat money laundering and terrorist financing.

Investigation Highlights

  • Limited Analysis: SCITE’s limited analysis of reports hinders its ability to effectively investigate suspicious transactions.
  • Lack of Operational Independence: The unit lacks the necessary resources and expertise to tackle money laundering offenses.
  • Insufficient Customs Department Powers: Cape Verde’s customs department lacks the power to stop or restrain currency or bearer instruments suspected of being linked to money laundering or terrorist financing.

Preventive Measures

  • Customer Due Diligence (CDD) Procedures: Financial institutions are required to implement CDD procedures, but there is a lack of clarity on the types of identity documents required for transactions above a certain threshold.
  • International Financial Institutions (IFIs): The framework for IFIs allows them to operate without a substantive physical presence in Cape Verde, leading to concerns about supervision and monitoring.

Additional Concerns

  • Transaction Monitoring: The obligation to monitor transactions is limited only to those suspected of being linked to predicate offenses currently covered by the money laundering legislation.
  • Record Retention and Policies: Many financial institutions appear unaware of record retention requirements and do not have well-documented policies in place.

Designated Non-Financial Businesses and Professions (DNFBPs)

  • Lack of Awareness: Many DNFBPs are not aware of their obligations under the anti-money laundering law.
  • Limited Regulation: Only a few activities, such as real estate agents and dealers in motor vehicles, conduct significant volumes of business, but even these are subject to limited regulation.

Regulatory Challenges

  • Ministry of Finance and Public Administration: The Ministry is designated as the regulator for DNFBPs, but has not issued any regulations or guidance to assist with the implementation of the principal money laundering law.

Conclusion

The investigation highlights the need for Cape Verde to strengthen its anti-money laundering regime and address the significant weaknesses identified. Failure to do so may lead to a higher risk of money laundering and terrorist financing activities in the country.