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Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) in Cabo Verde

AML & KYC Obligations in Cabo Verde: A Compliance Guide for Investors

Cabo Verde has undergone a significant transformation in its financial regulatory environment. Following international scrutiny and a strategic shift toward global transparency standards, the country has tightened its Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) frameworks. For investors, this means operating in a jurisdiction that prioritizes strict due diligence and has eliminated opaque "offshore" structures.

1. The Regulatory Authority

The Banco de Cabo Verde (BCV) serves as the central monetary authority and the primary supervisor for financial institutions.

  • Supervision: The BCV is responsible for regulation, prudential supervision, and market conduct supervision of the entire national financial system, including banks, insurance companies, and securities markets.
  • Dedicated Units: The BCV has established specific units to monitor AML/CFT risks. Recent initiatives include creating a specialized AML/CFT team within the Microprudential Supervision Department and proposals to create an independent Financial Intelligence Unit.

2. Key Compliance Obligations

Investors and financial institutions operating in Cabo Verde must follow strict procedural rules designed to align with international standards (such as those of the FATF/GAFI).

A. Know Your Customer (KYC) & Due Diligence

Financial institutions are required to implement robust Customer Due Diligence (CDD) procedures.

  • Strict Compliance: Authorities strictly enforce compliance with the 40 Recommendations of the Financial Action Task Force (FATF), particularly regarding CDD and KYC protocols.
  • Risk Assessments: Supervision is increasingly risk-based. The BCV conducts inspections to assess the quality of banks' risk management systems, specifically targeting the prevention of money laundering and terrorist financing.
  • Compliance Officers: Financial institutions must appoint compliance officers who participate in quarterly meetings with the regulator and the Working Group against Economic and Financial Crimes (GTCF).

B. Reporting Requirements

Transparency in capital flows is a major regulatory focus.

  • Foreign Transactions: While Cabo Verde has moved toward liberalizing foreign exchange transactions, strict reporting remains mandatory. Under Notices No. 6/2018 and 7/2018, entities must report foreign transactions and foreign currency operations to the Central Bank for statistical and supervisory purposes.
  • Suspicious Activities: Institutions are required to monitor and report suspicious activities. The BCV publishes lists of specific financial sanctions recommended by the FATF to guide institutions in screening.

C. Beneficial Ownership

To tackle illegal financial flows and tax evasion, there's a strong push to subject licensing processes—particularly in sectors like natural resources—to beneficial ownership standards. This aligns with the Extractive Industries Transparency Initiative (EITI) to prevent the use of opaque corporate structures.

3. The End of "Offshore" Banking

A critical development for investors to note is the elimination of the restricted-license banking sector (often referred to as "offshore" banking).

  • Legislative Reform: Following the "Luanda Leaks" investigation, which exposed reputational risks, the Cabo Verdean government passed laws in 2020 to terminate the "restricted authorization" banking regime.
  • Impact: Banks that previously served only non-residents were required to obtain standard licenses to serve local residents or face closure. This measure prevents the use of Cabo Verde as a platform for shell banks and capital flight, integrating all financial institutions into the standard, supervised national economy.

4. Emerging Technologies: Fintech and Crypto

As Cabo Verde positions itself as a digital hub, regulations are evolving to cover digital assets.

  • Virtual Assets: Reforms are currently underway to supervise Virtual Asset Service Providers (VASPs). The government is updating legal frameworks to include supervision of crypto-assets and related services to mitigate AML/CFT risks.
  • Digital Financial Services (DFS): The government is working to align legal frameworks for digital finance with regional and international standards (e.g., G-20 High-Level Principles), specifically regarding cybersecurity, interoperability, and the prevention of financial crimes.

5. National Strategy and International Alignment

Cabo Verde's AML framework is driven by its National Strategy for Preventing and Combating Money Laundering, Financing of Terrorism and Proliferation of Weapons of Mass Destruction (ENCAVE), approved in April 2023.

  • International Cooperation: The country actively participates in mutual evaluations by GIABA (Intergovernmental Action Group against Money Laundering in West Africa) and coordinates with the OECD to meet tax transparency standards.
  • EU Compliance: Significant efforts have been made to implement measures ensuring Cabo Verde remains off the European Union's "gray list" of non-cooperative tax jurisdictions.

Summary Checklist for Investors

  • Bank Accounts: Expect rigorous KYC checks when opening accounts; "offshore-only" accounts are no longer available.
  • Transfers: You must report cross-border capital flows to the Central Bank (usually handled through your commercial bank).
  • Digital Assets: Be aware that regulations for crypto-assets are currently being formalized to ensure AML compliance.
  • Corporate Structure: Be prepared to disclose ultimate beneficial ownership for licensing and banking purposes.

Cabo Verde Investing Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT)

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Cabo Verde Investing Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT)

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Cabo Verde Investing Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT)

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Cabo Verde Investing Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT)

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