Cape Verde Fails to Effectively Combat Money Laundering and Terrorist Financing

A recent assessment by the International Cooperation Review Group (ICRG) has revealed significant weaknesses in Cape Verde’s efforts to combat money laundering and terrorist financing. The report highlights a lack of resources, expertise, and autonomy within the country’s financial institutions and regulatory bodies.

Investigating Suspicious Transactions

The report notes that the Unit for the Investigation of Trafficking of Stupefacients (SCITE) is responsible for investigating suspicious transaction reports (STRs), but it has limited analysis capabilities and relies heavily on the Public Ministry to take further action. The Joint Prosecutor’s Office (JP) has significant autonomy in pursuing matters related to STRs, but lacks resources and expertise to effectively investigate money laundering offenses.

Preventive Measures

The report criticizes Cape Verde’s regime for preventive measures, which is built on its principal money laundering law and technical instructions issued by the Bank of Cape Verde (BCV). The law requires financial institutions to identify customers when transactions exceed €9,090, but there is less certainty about acceptable identity documents for transactions below this threshold.

International Financial Institutions

The report highlights concerns over Cape Verde’s framework for international financial institutions (IFIs), which allows them to operate without a substantive physical presence in the country. Regulatory arrangements for these institutions are also less rigorous than those for domestic institutions.

Transaction Monitoring and Reporting

The report identifies several fundamental weaknesses in relation to transaction monitoring and reporting suspicious transactions. While the legal framework meets requirements for record retention, institutions are unaware of the requirements and do not have well-documented policies.

Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

The report criticizes the lack of clear guidelines on AML and CFT supervision by the Bank Supervision Department, which has not defined a clear supervisory strategy or assessed the varying levels of risk across different financial institutions.

Designated Non-Financial Businesses and Professions

The report also highlights concerns over Cape Verde’s failure to extend AML obligations to designated non-financial businesses and professions (DNFBPs), including lawyers, notaries, accountants, and trust and company service providers. The authorities have not issued regulations or guidance to assist with the implementation of the principal money laundering law in respect of DNFBPs.

Conclusion

The report concludes that Cape Verde’s framework for combating money laundering and terrorist financing is inadequate and requires significant improvements to effectively combat these threats.