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Compliance Regulations for Banks in Cape Verde Take Effect
A new law has come into force in Cape Verde, regulating the provision of services involving virtual assets and the incorporation of digital banks. Law no. 30/X/2023, which came into effect on June 22nd, aims to ensure that entities engaging in activities with virtual assets comply with anti-money laundering and terrorist financing regulations.
The Need for Regulation
The rapid growth of technology has transformed various aspects of society, including the financial sector. However, this progress has also led to new risks emerging, particularly with regards to money laundering and terrorist financing. Until now, entities operating in Cape Verde have not been subject to regulation or supervision by any national financial authority.
The New Law
The new law seeks to address these concerns by making entities that engage in activities involving virtual assets subject to legislation aimed at preventing and combating money laundering and terrorist financing. Additionally, a competent authority has been designated to regulate and supervise compliance with these duties.
- Entities engaging in business activities with virtual assets will now be required to register prior with Banco de Cabo Verde, which is the national authority responsible for ensuring compliance with anti-money laundering and terrorist financing regulations.
- Digital banks will initially be subject to the same authorization and operating framework as conventional banks, but Banco de Cabo Verde may regulate market access conditions by notice.
Regulation of Digital Banks
Digital banking has been hailed as a potential solution for increasing competition in the system, improving access to financing for small and medium-sized companies, and reducing interest rates applicable to credit operations. The new law regulates digital banks, which are financial institutions that provide most of their products and services online.
- Banco de Cabo Verde will continuously monitor and evaluate this digital business model, issuing standards specific to the business model when necessary.
- Digital banks will initially be subject to the same authorization and operating framework as conventional banks, but Banco de Cabo Verde may regulate market access conditions by notice.
Conclusion
The new law is seen as a significant step forward in ensuring the integrity of Cape Verde’s financial system, while also promoting technological innovation. By regulating virtual assets and digital banking, the country aims to provide a safe and secure environment for financial transactions, while also encouraging economic growth and development.