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Regulatory Requirements for Financial Institutions in Cape Verde Take Effect
In a move aimed at strengthening the country’s financial sector, Cape Verde has introduced new regulations governing the provision of services with virtual assets and the establishment of digital banks. Law 30/X/2023 was published in the Official Bulletin on June 21, 2023, and came into force just a day later.
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 are now required to comply with the country’s anti-money laundering and terrorism financing regulations. 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.
Registration Requirements
Prior registration with the bank is now mandatory for entities intending to operate in Cape Verde on a professional basis.
Regulation of Digital Banks
Law 30/X/2023 has also regulated the establishment of digital banks that provide retail banking services primarily through online channels. The law requires digital banks to meet the same standards as traditional banks, including:
- Capital requirements
- Risk management and controls
- Other legal obligations
However, Banco de Cabo Verde may establish specific market access conditions for digital banks and adjust certain requirements based on a risk assessment.
Conclusion
The new regulations are seen as an important step towards the digitalization of Cape Verde’s financial system. The changes aim to strengthen the country’s financial sector by ensuring compliance with anti-money laundering and terrorism financing regulations, while also promoting the growth of digital banking services.