Compliance Regulations for Banks in Cape Verde Take Effect
A significant milestone has been reached in Cape Verde’s efforts to digitalize its financial system with the introduction of a new law regulating the provision of services with virtual assets and the establishment of digital banks. Law 30/X/2023, published on June 21, 2023, took effect on June 22, 2023.
Definition of Virtual Assets
The law defines virtual assets as any digital representation of value that is not necessarily linked to a legally established currency and does not have the legal status of fiat money but is accepted by natural or legal persons as a means of exchange or investment and can be transferred, stored, and traded electronically.
Compliance Requirements
Entities intending to carry out activities with virtual assets in Cape Verde’s national territory must comply with the duties and obligations aimed at preventing and repressing money laundering and terrorism financing. The Banco de Cabo Verde has been designated as the competent authority responsible for verifying compliance with these preventive duties and obligations by entities subject to its supervision.
Prior registration with the bank is now required for entities that intend to carry out activities on a professional basis in the national territory.
Regulation of Digital Banks
Law 30/X/2023 also regulates the establishment of digital banks in Cape Verde, which are expected to provide mostly retail banking services through internet or other electronic channels. The law applies the same requirements for acquiring the quality of a financial institution and necessary elements for the instruction of the application for authorization that conventional banks must meet.
Key Requirements for Digital Banks
- Same duties as traditional banks
- Same capital requirements, risk management, and controls
- Same legal obligations
However, the Banco de Cabo Verde may establish specific market access conditions for digital banks and adjust certain requirements based on a risk assessment.
Impact on Cape Verde’s Financial System
The new law is seen as a further step towards the digitalization of Cape Verde’s financial system, which aims to increase efficiency and competitiveness in the country’s financial sector. This development is expected to have a positive impact on the economy and provide greater opportunities for businesses and individuals alike.