Financial Crime World

Cape Verde Struggles to Combat Money Laundering and Terrorism Financing

Praia, Cape Verde - A recent report has highlighted several weaknesses in Cape Verde’s legal framework and institutional measures to combat money laundering and terrorism financing.

According to the report, Cape Verde’s criminal code does not fully comply with international standards on money laundering. The country has only criminalized money laundering related to drug trafficking, whereas other predicate offenses are missing from its list of crimes. Moreover, there have been no convictions for money laundering so far.

Institutional Weaknesses

The report also highlighted concerns about the lack of resources and expertise within the judiciary police (JP) to adequately investigate money laundering cases. The JP’s internal unit responsible for receiving suspicious transaction reports (STRs) lacks autonomy to decide what information can be disseminated, which may hinder effective investigations.

  • Lack of resources and expertise
  • Limited autonomy in investigating STRs

Preventive Measures

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

  • The lack of clarity on customer due diligence requirements for transactions below a certain threshold
  • Reliance on foreign institutions to verify customer information without adequate oversight

International Financial Institutions

The report also expressed concerns about the operation of international financial institutions in Cape Verde, noting that some institutions may be operating outside of acceptable arrangements for global consolidated supervision and without a substantive physical presence in the country.

Record Retention and Transaction Monitoring

Experts have identified significant weaknesses in relation to:

  • The obligation to monitor transactions, which may impact the ability to report suspicious transactions
  • Many financial institutions lack well-documented record retention policies

Designated Non-Financial Businesses and Professions (DNFBPs)

The report highlighted concerns about the regulatory framework for DNFBPs, including real estate agents and dealers in motor vehicles, which are the only covered activities in this sector that conduct significant volumes of business.

Government Response

In response to these findings, the Cape Verde authorities have announced plans to strengthen their legal framework and institutional measures to combat money laundering and terrorism financing. The country has committed to implementing a more robust system for monitoring transactions and reporting suspicious activity.

Recommendations

The report’s authors have called on the Cape Verde government to take immediate action to address these weaknesses and ensure that its financial sector is better equipped to prevent and detect criminal activities.