Title: Cape Verde’s New Law: Regulating Virtual Assets and Digital Banks to Combat Financial Crime
Cape Verde has made a bold move towards modernizing its financial sector and enhancing anti-money laundering (AML) and counter-terrorism financing (CTF) efforts with the enactment of Law 30/X/2023. This law, published on June 21, 2023, and effective as of June 22, regulates the provision of services with virtual assets and the establishment of digital banks in the country.
Virtual Assets: A New Trend in Finance
Virtual assets, defined as digital representations of value not directly linked to a legal currency but accepted as a means of exchange or investment and transactable electronically, have become increasingly popular worldwide. To regulate activities within its borders, Cape Verde’s new law targets those seeking to conduct professional virtual asset-related services.
Registration Requirements for Virtual Asset Service Providers: Adhering to Preventive Duties
Entities wanting to operate with virtual assets in Cape Verde are subject to Law 30/X/2023. These entities include, but are not limited to: exchange platforms, wallet providers, custodian wallet providers, and virtual asset wallet providers. They must register with the Banco de Cabo Verde (BCV), the national competent authority. This registration process aims to ensure that these entities:
- Adhere to preventive duties and obligations,
- Fulfill AML and CTF measures, and
- Operate within the legal framework to combat money laundering and terrorism financing.
BCV’s role is to verify the compliance of entities under its supervision.
Authorization of Digital Banks: Meeting Stringent Requirements
Law 30/X/2023 also allows for the establishment of digital banks in Cape Verde, primarily offering retail banking services via the internet or other digital channels. To obtain authorization, these digital banks must meet the following requirements:
- Obtain the status of a financial institution,
- Submit necessary application elements, and
- Adhere to the same legal obligations as conventional banks, such as duties, capital requirements, risk management, and controls.
BCV has the power to establish specific market access conditions for digital banks and adjust requirements based on risk assessments.
A Leap Forward in Digitalization: Implementing Strict Measures
Law 30/X/2023 represents a significant step forward in the digitalization of Cape Verde’s financial system. This law establishes a legal framework for the provision of virtual asset services and the launch of digital banks, enabling the country to combat financial crime through stringent registration, AML, and CTF measures. By doing so, Cape Verde paves the way for a future-ready economic landscape that fosters confidence in its financial sector.