Cape Verde’s Struggle to Combat Money Laundering and Terrorism Financing

Luanda, Angola - Cape Verde has been criticized for its lack of progress in combating money laundering and terrorism financing. Despite ratifying the UN Convention for the Suppression of the Financing of Terrorism, the country has yet to criminalize the financing of terrorism in its domestic legal system.

Shortcomings in Legal Framework

According to a recent report by [insert organization], Cape Verde’s legal framework falls short of international standards in several areas. The country’s money laundering law, enacted in 2002, is limited in scope and does not cover all predicate offenses required by the Palermo Convention.

The law lacks provisions for criminalizing the financing of terrorism.
It does not cover all predicate offenses required by the Palermo Convention.
There are concerns about the country’s financial intelligence unit (FIU), which is responsible for analyzing suspicious transaction reports (STRs).

Concerns with Financial Intelligence Unit

The report highlights concerns about the FIU, including:

Lack of autonomy to decide what information can be disseminated.
Inadequate resources and expertise to perform its investigative functions effectively.

Regime for Preventive Measures

Cape Verde’s regime for preventive measures is built on a principal money laundering law and technical instructions issued by the Bank of Cape Verde. However, there are concerns about:

Uncertainty about the types of identity documents that are considered acceptable.
Lack of clear regulatory arrangements for international financial institutions (IFIs) operating in the sector.

Framework for International Financial Institutions

The report also raises concerns about the country’s framework for IFIs, including:

Lack of clear regulatory arrangements for IFIs operating in the sector.
Some institutions may be operating without a substantive physical presence in Cape Verde.

Obligation to Monitor Transactions

There are fundamental weaknesses in relation to the obligation to monitor transactions, which impacts on the obligation to report suspicious transactions. The country’s legal framework requires financial institutions to maintain records for a certain period of time, but:

Institutions appear unaware of these requirements.
They do not have well-documented record retention policies.

Recommendations

To address its weaknesses in combating money laundering and terrorism financing, Cape Verde should:

Strengthen the legal framework: criminalize the financing of terrorism and broaden the scope of the money laundering law to cover all predicate offenses.
Improve the effectiveness of the financial intelligence unit: provide it with adequate resources and expertise, as well as increasing its autonomy to decide what information can be disseminated.
Enhance regulatory oversight over international financial institutions: establish clear regulatory arrangements and ensure they operate in compliance with international standards.
Improve the regime for preventive measures: clarify the types of identity documents that are considered acceptable and enhance customer due diligence requirements.
Strengthen record-keeping requirements: ensure financial institutions have well-documented record retention policies.

Conclusion

Cape Verde’s struggle to combat money laundering and terrorism financing is a serious concern. The country must take immediate action to address its weaknesses and improve its legal framework, regulatory oversight, and preventive measures. Failure to do so may result in the country being listed as a non-cooperative jurisdiction by international organizations.