UNCLASSIFIED   PRAIA   00000262 
VZCZCXRO9724
RR RUEHPA
DE RUEHPA #0262/01 3411841
ZNR UUUUU ZZH
R 071841Z DEC 09
FM AMEMBASSY PRAIA
TO RUEHC/SECSTATE WASHDC 1890
INFO RUEHDK/AMEMBASSY DAKAR 0646
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RUEHPA/AMEMBASSY PRAIA 2804

UNCLAS SECTION 01 OF 05 PRAIA 000262 
 
SIPDIS 
 
INL,SCT, EEB, JUSTICE FOR AFMLS, OIA, OPDAT, TREASURY FOR FINCEN 
 
E.O. 12958: N/A 
TAGS: KCRM EFIN PTER SNAR ECON
SUBJECT: CAPE VERDE 2009-2010 INTERNATIONAL NARCOTICS CONTROL 
STRATEGY REPORT  (INCSR PART II) 
 
REF: STATE 114960 
 
The following is the draft submission for Cape Verde in the 2009 
International Narcotics Control Strategy Report (INCSR PART II). 
This message answers questions 18-69 per reftel.  Please direct 
additional questions to DCM Dana Brown at browndml@state.gov 
 
----------------- 
GENERAL QUESTIONS 
----------------- 
 
¶18. Cape Verde is not considered an important regional financial 
center.  It is not significant in terms of money laundering. 
 
¶19. Money laundering in Cape Verde is primarily related to the 
proceeds from illegal narcotics trafficking, especially cocaine, 
and the narcotraffickers themselves use the laundered money. 
Public corruption is very limited and does not contribute to 
money laundering/terrorist financing in Cape Verde. 
 
¶20. There is no significant black market for smuggled goods. 
Contraband smuggling is not a significant problem. 
 
¶21. The formal financial sector may be involved in money 
laundering, but there is no evidence that it finances terrorism. 
 There has been no significant increase in financial crimes in 
Cape Verde. 
 
¶22. To the best of our knowledge, Cape Verde's financial 
institutions do not engage in currency transactions involving 
international narcotics trafficking proceeds that (1) include 
significant amounts of U.S. currency; (2) currency derived from 
illegal drug sales in the United States or; (3) otherwise 
significantly affect the United States. 
 
¶23. There is trade-based money laundering activity in Cape Verde 
(example: Last seizures in October included a boutique, and 
commercial buildings in Praia.) 
 
-------------------------- 
OFFSHORE FINANCIAL CENTERS 
-------------------------- 
 
¶24. Cape Verde is not considered an offshore financial center. 
 
¶25. Offshore banks, international business companies, other 
forms of exempt and trusts are permitted.  Shell companies are 
not permitted. 
 
a. The country licenses offshore banks and businesses and 
adequately performs background checks on applicants for banking 
and business licenses in its offshore sector.  Physical presence 
is required. 
 
b. There are ten offshore banks; and two insurance companies 
 
c. Anonymous nominee directors and/or trustees are not allowed. 
 
¶26.  There are no casinos in the country.  If a casino wanted to 
open, the government would license and regulate the operation. 
 
¶27. The offshore financial sector is regulated by the onshore 
regulator. Regulations governing offshore banks and businesses 
do not differ in any key respect from regulations governing 
domestic banks and businesses. Both offshore and onshore 
financial institutions are required to perform due diligence on 
customers and to file suspicious activity reports. 
 
----------------------- 
FREE TRADE ZONES (FTZs) 
----------------------- 
 
¶28. Currently there are no free trade zones operating in the 
jurisdiction. 
 
¶29.  N/A 
 
¶30. N/A 
 
------------------------------- 
LEGAL FOUNDATION OF AML REGIME 
------------------------------- 
 
¶31. Money laundering is a criminal offense in Cape Verde. The 
law, enacted in 2002, was amended in April 2009.  It 
criminalizes (1) converting or transferring proceeds from 
criminal activity, with the intent of hiding their illegal 
origin or of hindering their confiscation; (2) hiding the 
nature, location, or origin of the proceeds of criminal 
activity; (3) receiving proceeds of criminal activity.  The law 
applies with equal force regardless of whether the underlying 
criminal activity giving rise to the laundered proceeds was 
committed in Cape Verde or abroad.  The law punishes the above 
acts with 4 to 12 years' imprisonment.  Those aiding and 
abetting such crimes are subject to the same penalties.  The 
minimum and maximum sentences are increased by 50%, however, in 
cases involving organized crime, narcotrafficking, terrorism, 
and/or trafficking in persons, weapons, or explosives. 
 
¶32.  Cape Verde has not enacted secrecy laws that prohibit 
disclosure of client and ownership information by domestic and 
offshore financial services companies to bank supervisors and 
law enforcement authorities. 
 
----------------- 
FINANCIAL SECTOR 
----------------- 
¶33.  Bearer securities are not permitted for banks and/or for 
companies. 
 
¶34. The Central Bank supervises and examines financial 
institutions for compliance with AML/CFT laws and regulations. 
The institution regularly trains its staff. 
 
¶35. Banks and other financial institutions are required to 
determine, record, and report the identity of customers engaging 
in significant financial transactions, including the recording 
of large currency transactions at thresholds appropriate to the 
country's economic situation.  Passengers entering or exiting 
the country may carry up to one million Cape Verde Escudos (CVE) 
(approximately equivalent to 13,900 USD) without declaring the 
currency to customs. 
 
¶36. Banks and other financial institutions are required to 
maintain records necessary to reconstruct significant 
transactions through financial institutions for a five-year 
period following the relevant transaction(s). 
 
¶37. Financial institutions are required to report all suspicious 
transactions. 
 
¶38. The law also extends the safeguards of Cape Verde's witness 
protection law to individuals filing reports of suspicious 
transactions with respect to their cooperation with law 
enforcement entities. 
 
--------------------------------------------- -------- 
INFORMAL FINANCIAL SECTOR AND NONFINANCIAL BUSINESSES AND 
PROFESSIONS 
--------------------------------------------- -------- 
 
¶39.  The AML/CFT controls are applied to non-bank financial 
institutions (NBFIs) and to designated non-financial businesses 
and professions (DNFBPs) (such as exchange houses, stock 
brokerages, cash couriers, casinos, dealers in jewels and 
precious metals, insurance companies, pawn shops, realtors, 
high-worth dealers in art and vehicles), and to intermediaries, 
(such as lawyers, accountants, notaries, or broker/dealers). All 
of the above are required to report suspicious and/or large 
financial transactions. Nonetheless, to date only banks and 
exchange houses have reported suspicious transactions. 
 
--------------------------------------------- --- 
FINANCIAL INTELLIGENCE UNIT (FIU)/INVESTIGATIONS 
--------------------------------------------- --- 
 
¶40.  Cape Verdean law number 1/08 of January 14, 2008 provides 
for the establishment and funding of a financial intelligence 
unit (FIU). 
 
¶41. The country created FIU in January 14, 2008, and it started 
to function in February 2009.  It is operational, but still not 
adequately staffed.  Although the law provides for its budgetary 
and operational independence, in practice it is dependent from 
the Central Bank.  It is housed within the Central Bank's 
headquarters. 
 
¶42. FIU was created as an administrative body with the function 
of collecting, centralizing, treating and analyzing information 
related to money laundering.  It is composed of one element from 
each of the following entities:  the Central Bank (coordinator), 
the Ministry of Justice, the Ministry of Internal 
Administration, the Attorney General's Office, and the Judiciary 
Police.  The FIU performs analytical duties, and has no criminal 
investigative and/or regulatory responsibilities. 
 
¶43. The FIU has access to the records or databases of other 
government entities and financial institutions. It has formal 
mechanisms in place to share information domestically and 
internationally. 
 
¶44. There have been 21 suspicious transaction reports (STRs) as 
of December 1, 2009.  Only three out of 21 were the subject of 
investigation, but all three resulted in referrals to State 
Prosecutor for action. 
 
¶45. The Judiciary Police are responsible for investigating 
financial crimes, including money laundering and terrorist 
financing.  As of December 2009, they are staffing and training 
additional personnel. 
 
---------------------------------------- 
ASSET FORFEITURE AND SEIZURE LEGISLATION 
---------------------------------------- 
 
¶46. In October 2009, five persons were convicted and sentenced 
to 23 to 25 years of imprisonment for drug trafficking, 
organized crime, and money laundering activities.  During the 
first semester of 2009, Cape Verdean authorities seized 407.8 
million CVE, equivalent to 5.6 million dollars worth of assets 
in connection with these convictions. Final statistics for 2009 
are not yet available. 
 
 
 
¶47. The money laundering law enacted in 2002, as amended in 
2009, establishes systems for the identification, freezing, and 
seizure of narcotics-related assets. 
 
¶48.  The problems are related to financial constraint of the 
country due to budgetary limitations. 
 
¶49. The 2002 money laundering legislation, as amended in April 
2009, broadens the scope of assets subject to seizure to include 
all assets that authorities reasonably believe have derived from 
money laundering activities.  Authorities may only seize such 
assets, however, if they can prove a relationship between the 
assets and a specific crime.  Legitimate businesses can also be 
seized if they are being used to launder drug money, support 
terrorist activity, or are otherwise related to criminal 
activity. 
 
¶50. The Judiciary Police and courts are responsible for tracing, 
seizing, and freezing assets.  Authorities may only freeze 
assets for five months, although the Judiciary Police has the 
power to confiscate such assets while frozen.. There is no asset 
forfeiture fund in Cape Verde.  The law designates the Treasury 
as the recipient of the proceeds from asset seizures and 
forfeitures.  The government has the responsibility of managing 
the seized assets. 
 
¶51. The banking community cooperates with law enforcement 
efforts to trace funds and to seize/freeze bank accounts. 
 
¶52. The law allows for civil as well as criminal forfeiture. 
 
¶53. The government enforces existing asset seizure and 
forfeiture laws.  The country is in the process of upgrading its 
police powers and resources to trace, seize, and freeze assets. 
 
¶54. The government does not have an independent national system 
and mechanism for freezing terrorist assets. 
 
55 During the first semester of 2009, Cape Verdean authorities 
seized 407.8 million CVE, equivalent to 5.6 million dollars 
worth of assets in connection with these convictions. Last year 
total year amount reported was 1.3 million dollars. Final 
statistics for 2009 are not yet available. 
 
¶56. The 2002 money laundering law, as amended, allows the 
government to share seized assets with other governments. Cape 
Verde is engaged in bilateral and multilateral negotiations with 
US, Spain, Portugal, France, the Netherlands, and Brazil-among 
others-to enhance asset tracing, freezing, and seizure. 
 
------------------- 
TERRORIST FINANCING 
------------------- 
 
¶57. Cape Verde has criminalized the financing of terrorism as 
required by the UN International Convention for the Suppression 
of the Financing of Terrorism and UN Security Council Resolution 
1373 thru Law number 39/VII/2009 of April 2009, article 25. 
 
¶58. Cape Verde has circulated to its financial institutions the 
list of individuals and entities that have been included on the 
UN 1267 sanctions committee's consolidated list as being linked 
to Usama bin Ladin, members of the Al Qa'ida organization, or 
the Taliban.  It has also circulated the list of terrorist 
organizations/financiers that the USG and the European Union 
(EU) have designated under relevant authorities. No 
terrorist-financed activities were ever identified in Cape Verde. 
 
¶59. Cape Verde acknowledges the existence and use of value 
transfer systems outside the formal financial system. No actions 
have been taken regarding the informal sector. 
 
¶60. N/A.  See answer 58. 
 
--------------------------------------------- --------- 
CROSS-BORDER TRANSPORTATION OF CURRENCY AND NEGOTIABLE 
INSTRUMENTS 
--------------------------------------------- --------- 
 
¶61. There are statutory requirements for limiting or monitoring 
the cross-border transportation of currency and monetary 
instruments.  Under law number 39/VII/2009 of April 2009, 
article, cross-border currency reporting requirements for both 
inbound and outbound currency are limited to amounts exceeding 
one million CVE (approximately equivalent to 13,900 USD).  There 
are no mandatory declaration forms used at border crossings. 
 
¶62.  Cash declaration or smuggling reports are entered into a 
database.  Data is shared between Customs and the FIU. 
 
------------------------- 
INTERNATIONAL COOPERATION 
------------------------- 
¶63. Cape Verde has adopted laws or regulations that allow for 
the exchange of records with other countries on investigations 
and proceedings related to narcotics, all-source money 
laundering, terrorism, and terrorist financing.  No agreement 
exists with the United States authorities on a mechanism for 
exchange of records in connection with such investigations and 
proceedings. Cape Verde is open to negotiating in good faith 
with the United States to establish such an exchange mechanism. 
 
¶64. The country has entered bilateral judicial agreement to 
cover all areas of cooperation in criminal areas with Spain, 
Portugal, Senegal, and Guinea Bissau. See also 67. 
No specific agreements on money laundering were signed. 
 
¶65. Cape Verde has always cooperated with requests from 
appropriate USG law enforcement agencies and other governments 
investigating financial crimes related to narcotics, and other 
crimes financial crimes.  The Judiciary Police has exchanged 
information with the FBI regarding deportees involved in drug 
trafficking and money laundering. 
 
 
¶66. No instances of refusals to cooperate with foreign 
governments have ever occurred. 
 
¶67. Cape Verde is a party to the UN International Convention 
against Illicit Traffic in Narcotic Drugs and Psychotropic 
Substances (Vienna Convention), the UN Convention Against 
Transnational Organized Crime (Palermo Convention), the UN 
Convention Against Corruption, and the UN International 
Convention for the Suppression of the Financing of Terrorism. 
 
¶68. Cape Verde has adhered to the recommendations of the 
Financial Action Task Force (FATF). It is a member of GIABA 
(Intergovernmental Anti-Money Laundering Group in Africa). 
MYLES