Cabo Verde

The Inter-Governmental Action Group against Money Laundering (GIABA) is a specialized institution of ECOWAS and a FATF Style Regional Body that promotes policies to protect member States financial system against money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction. The FATF Recommendations are recognised as the global anti-money laundering (AML) and counter terrorist financing (CTF) standard.

This report provides a summary of the AML/CFT measures in place in Cabo Verde as at the date of the on-site visit (27 November, 2017 to 13 December, 2017). It analyses the level of compliance with the FATF 40 Recommendations, the level of effectiveness of its AML/CFT system and makes recommendations on how the system could be strengthened.

This document and/or any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city, or area.

Key Findings

• Cabo Verde concluded its National Assessment (NRA) in early November 2017. The NRA reflects the main money laundering and terrorist financing (ML/TF) risks the country is facing and identified the main vulnerabilities related to ML/TF.
• Despite the significant efforts made in the identification and shared understanding of risks by all stakeholders at the national level, the methodology and approach adopted for the assessment of certain sectors, notably Designated Non-Financial Businesses and Professions (DNFBPs), especially real estate, dealers in precious metals and stones and other high value good, and non-profit organisations (NPOs), is inadequate.
• Understanding of ML/TF risks is very low among operators in the entire DNFBP sector, including those sectors with the highest risk. Supervisors are yet to have the necessary mechanisms to develop supervisory activities in to prevent and combat ML/TF on a risk-sensitive basis. The supervisory activity based on compliance with legal requirements by the entities supervised for AML/CFT (rules-based approach) is either very limited or non-existent in the sectors of higher risk (e.g., real estate and NPOs).
• Cabo Verde did not conduct an in-depth assessment of the risk of terrorist financing of the country, nor give relevance to the risk of collecting resources within the country to finance terrorist activities, considering that the country is not very attractive for these purposes.
• Those who participated in the NRA process do not have the same level of information and a uniform commitment to AML/CFT risks.
• The NRA identified legal persons as high risk, however, there are no mitigating measures in place to address this risk.
• Although Cabo Verde referred to a National Program for Internal Security and Citizenship targeted at TF, the country does not have a National Strategy document for preventing and combating ML/TF and financing of proliferation.
• Financial institutions (FIs) have limited knowledge of the UN Sanctions Lists, and in the case of DNFBPs this knowledge is virtually non-existent.
• The legal and regulatory frameworks governing AML/CFT supervision are acceptable and have a wide range of administrative, pecuniary and criminal sanctions as well as remedial actions in case of non-compliance with AML/CFT requirements. The lack of AML/CFT supervision for the DNFBPs is major gap in the supervisory framework in Cabo Verde.
• The prevalence of cash transactions impedes the ability to track financial information transmitted to the investigating and prosecuting authorities as well as the FIU. This limits the use of such information to establish evidence of ML/TF offences.
• There appears to be limited cooperation between the FIU and supervisory and regulatory authorities. The FIU's ability to collect financial information is also limited by the fact that most DNFBPs do not have internal AML/CFT mechanisms. The FIU does not have the established practice of providing feedback to reporting entities that submit suspicious transaction reports (STRs);
• The NGO Platform is the supervising authority for the NPOs sector.  The total number of NPOs established or carrying out their activity in the national country is not known. This impedes any risk analysis for the sector, regardless of the score obtained in the NRA. Despite compliance with reporting requirements at the NPO level, the functioning of the AML/CFT mechanism remains deficient due to lack of supervision and insufficient awareness among NPOs. To date, the NGO Platform has not provided any information to the FIU due to lack of resources that will enable it to perform its supervisory functions.
• Most DNFBPs, with the exception of some institutions that are affiliated to international groups that apply the FATF standards and procedures in the jurisdiction of the parent institutions, do not understand their AML/CFT obligations. Even those affiliated to foreign groups have not submitted STRs to the FIU. Identifying beneficial owners is a major challenge for all DNFBPs. Therefore, the implementation of preventive measures remains weak among DNFBPs and has a negative impact on the effectiveness of the implementation of preventive measures in the Cabo Verdean AML/CFT regime in general.

This assessment was adopted by GIABA at its May 2019 Plenary meeting.