Cape Verde’s Weak Anti-Money Laundering Framework Leaves Country Vulnerable to Trafficking
A recent assessment has revealed significant weaknesses in Cape Verde’s anti-money laundering (AML) framework, leaving the country vulnerable to trafficking and other financial crimes.
Lack of Operational Independence
The Special Unit for Trafficking of Stupefacients (SCITE), responsible for investigating suspicious transactions reports (STRs), lacks operational independence and autonomy. While SCITE can inform the Public Ministry (PM) of potential criminal activity, it does not have the resources or expertise to thoroughly investigate money laundering offenses.
Inadequate Customs Department
The assessment highlighted concerns over the country’s customs department’s inability to stop or restrain currency or bearer instruments suspected of being linked to money laundering or financing of terrorism. The department is responsible for ensuring compliance with regulations requiring individuals entering the country to declare foreign currencies or bearer securities in excess of EUR 9,090, but it lacks the power to take enforcement action.
Regime for Preventive Measures
Cape Verde’s regime for preventive measures relies on technical instructions issued by the Bank of Cape Verde (BCV). While these instructions require financial institutions to verify customer identities and monitor transactions above a certain threshold, there is uncertainty over the types of identity documents that are considered acceptable. Additionally, the framework does not adequately address the risks posed by higher-risk customers such as politically-exposed persons.
International Financial Institution Sector
The assessment also raised concerns about the country’s international financial institution (IFI) sector, which operates with less rigorous regulatory arrangements than domestic institutions. This lack of oversight leaves IFIs vulnerable to money laundering and other financial crimes.
Fundamental Weaknesses
The report identified several fundamental weaknesses in Cape Verde’s AML framework, including:
- Inadequate record retention policies
- Lack of clear guidance on monitoring transactions
- Unclear supervisory strategy
- Insufficient training for staff
Designated Non-Financial Businesses and Professions (DNFBPs)
The assessment found that many sectors, including lawyers, notaries, accountants, and trust and company service providers, are not covered by the legal framework. While some DNFBPs, such as real estate agents and dealers in motor vehicles, conduct significant volumes of business, they lack awareness of their AML obligations.
Ministry of Finance and Public Administration
The ministry responsible for regulating DNFBPs has failed to issue guidance or regulations to assist with implementation of the AML law. The report highlights the need for Cape Verde to strengthen its AML framework to prevent trafficking and other financial crimes.
In conclusion, the assessment reveals significant weaknesses in Cape Verde’s AML framework, leaving the country vulnerable to trafficking and other financial crimes. It is essential that the government takes immediate action to address these weaknesses and strengthen its AML framework to protect its citizens and economy from financial criminals.