Here is the converted article in Markdown format:
Cape Verde’s Anti-Money Laundering Efforts Under Scrutiny
A recent investigation into Cape Verde’s anti-money laundering efforts has raised concerns about the country’s ability to effectively combat financial crimes. The report, conducted by an independent unit, highlights several weaknesses in the country’s regulatory framework and implementation of anti-money laundering measures.
Limited Autonomy for Investigative Unit
The SCITE (Investigation of Trafficking of Stupefacients) unit is responsible for investigating suspicious transaction reports (STRs), but it does not have operational independence or autonomy to decide what information can be disseminated. While the Public Ministry (PM) has a significant amount of discretion in pursuing matters related to STRs, the SCITE unit’s limited powers hinder its ability to effectively investigate money laundering offenses.
Insufficient Resources and Expertise
The JP (Judicial Police) has general powers to obtain information during investigations, but it lacks the resources and expertise to adequately perform its investigative functions related to money laundering offenses. This lack of capacity makes it challenging for the JP to effectively identify and prosecute money laundering cases.
Weaknesses in Preventive Measures
Cape Verde’s regime for preventive measures is based on its principal money laundering law and technical instructions issued by the Bank of Cape Verde (BCV). However, there are concerns about the effectiveness of these measures. For instance:
- The customer due diligence (CDD) regime allows financial institutions to base customer identification on verifications provided by foreign institutions without establishing a framework to ensure that only well-supervised institutions are used.
- There is no requirement for financial institutions to apply Cape Verde requirements to foreign branches and subsidiaries.
Lack of Regulation for Higher-Risk Customers
The country’s framework does not adequately address the risks posed by certain types of higher-risk customers, such as:
- Politically-exposed persons (PEPs)
- Those associated with correspondent banking relationships
- Regimes for introduced business
Additionally, there is no requirement for financial institutions to apply Cape Verde requirements to foreign branches and subsidiaries.
Weaknesses in Record Retention
While the legal framework meets the requirements for record retention periods, institutions are not aware of these requirements, and most do not have well-documented record retention policies.
Regulatory Body Lacks Clarity on Risk Assessment
The Bank Supervision Department has issued anti-money laundering (AML) regulations and conducted AML inspections of domestic banks. However, it does not have a clear supervisory strategy or perspective on the varying levels of risk across different financial institutions and their lines of business.
Designated Non-Financial Businesses and Professions Lacking Regulation
The legal framework extends AML obligations to individuals or corporations engaged in certain activities, such as:
- Gaming establishments
- Real estate
- Property brokerage
However, lawyers, notaries, accountants, and trust and company service providers are not covered by the legal framework.
Lack of Regulation for Designated Non-Financial Businesses and Professions
The Ministry of Finance and Public Administration is designated as the regulator for designated non-financial businesses and professions (DNFBPs), but it has not issued any regulations or guidance to assist with the implementation of the principal money laundering law in respect of these covered activities.
Conclusion
Cape Verde’s anti-money laundering efforts face several challenges, including limited autonomy for investigative units, insufficient resources and expertise, weaknesses in preventive measures, and lack of regulation for higher-risk customers. Addressing these concerns is crucial to ensuring the country’s financial system remains robust and secure against money laundering and other financial crimes.