Cape Verde’s Efforts to Combat Money Laundering and Terrorist Financing Face Criticism
Investigation Reveals Significant Weaknesses
A recent investigation by the Cape Verdean authorities has uncovered significant weaknesses in the country’s efforts to combat money laundering and terrorist financing. The investigation, led by the Unit for Investigation of Trafficking of Stupefacients (SCITE), found that the country’s financial institutions are not adequately equipped to detect and prevent suspicious transactions.
Lack of Resources and Expertise
According to sources close to the investigation, SCITE receives reports of suspicious transactions (STRs) from financial institutions but lacks the resources and expertise to thoroughly investigate them. The Public Ministry (PM) has a significant amount of autonomy in pursuing these cases, but the lack of resources and expertise is hindering effective investigations.
Inadequate Law Enforcement
The investigation also found that Cape Verde’s money laundering law requires individuals entering the country with foreign currencies or bearer securities exceeding €9,090 to make a declaration to customs. However, customs officials do not have the power to stop or restrain currency or bearer instruments suspected of being related to money laundering or terrorist financing.
Weak Preventive Measures
In terms of preventive measures, financial institutions in Cape Verde are required to conduct customer due diligence (CDD) and report suspicious transactions. However, the CDD regime does not adequately address the risks posed by certain types of higher-risk customers, such as:
- Politically-exposed persons
- Those associated with correspondent banking relationships
Concerns about International Financial Institutions
The investigation also raised concerns about the operation of international financial institutions in Cape Verde, which may fall outside of acceptable arrangements for global consolidated supervision and operate without a substantive physical presence in the country.
Inadequate Record Keeping
Additionally, there are significant weaknesses in relation to the obligation to monitor transactions, which impacts on the obligation to report suspicious transactions. The legal framework requires records to be maintained for a certain period, but institutions appear unaware of these requirements and do not have well-documented record retention policies.
Regulation of Designated Non-Financial Businesses and Professions
The investigation also highlighted concerns about the regulation of designated non-financial businesses and professions (DNFBPs) in Cape Verde. While some DNFBPs are covered by anti-money laundering (AML) obligations, others, such as:
- Lawyers
- Notaries
- Accountants
- Trust and company service providers
are not.
The ministry of finance and public administration is responsible for regulating DNFBPs, but has not issued any regulations or guidance to assist with the implementation of the AML law. As a result, many individuals and businesses in these sectors are unaware of their obligations under the AML law.
Conclusion
In conclusion, while Cape Verde has made efforts to combat money laundering and terrorist financing, significant weaknesses remain. The country’s authorities must take immediate action to address these concerns and strengthen its anti-money laundering framework to prevent financial crime and protect its citizens.