Is Crypto Legal in Cabo Verde?

Decree-Law No. 4/2020 of January 27, 2020 (Lei n.º 4/2020 de 27 de Janeiro) – Regime de Prevenção e Combate ao Branqueamento de Capitais e ao Financiamento do Terrorismo (AML/CFT Law).

This law defines "virtual assets" and "Virtual Asset Service Providers (VASPs)" and subjects them to the same AML/CFT obligations as traditional financial institutions.

It mandates customer due diligence (CDD), suspicious transaction reporting (STR), record-keeping, and compliance with international sanctions.

Legal Reference: While a direct public URL for the Boletim Oficial can be challenging for older decrees, the law is officially published in Boletim Oficial n.º 4, I Série, de 27 de janeiro de 2020. The Banco de Cabo Verde (BCV) is the primary regulator and refers to this law.

Reference Point (BCV Legal Framework): Banco de Cabo Verde – Quadro Legal (Portuguese).

URL: https://www.bcv.cv/pt/publicacoes/Pages/quadro-legal.aspx (This page lists relevant legislation, including the AML/CFT law).

Cabo Verde, as a member state of the United Nations, is legally bound to implement the sanctions regimes adopted by the UN Security Council (UNSC).

Decree-Law No. 4/2020 obligates reporting entities (including VASPs) to comply with international obligations to combat terrorist financing, which includes implementing UNSC resolutions on asset freezes and prohibitions against designated individuals and entities.

VASPs must screen their customers and transactions against the UN Security Council Consolidated List (individuals and entities subject to asset freeze, travel ban, and arms embargoes).

Legal Reference (UN Sanctions): United Nations Security Council Sanctions Committees

While OFAC sanctions are not directly Cabo Verdean law, any VASP (regardless of location) that engages in transactions involving U.S. persons, U.S. dollar denominated transactions, or that has a U.S. nexus (e.g., using U.S.-based blockchain analytics tools, or U.S. payment rails) falls under OFAC's jurisdiction.

Cabo Verdean VASPs dealing with international partners or using widely adopted stablecoins (like USDT, USDC, which are USD-pegged) must de facto implement OFAC compliance measures to avoid secondary sanctions or being cut off from crucial financial infrastructure.

This requires screening against the OFAC Specially Designated Nationals (SDN) and Blocked Persons List and other OFAC sanctions lists.

Legal Reference (OFAC): U.S. Department of the Treasury – Office of Foreign Assets Control (OFAC)

Similar to OFAC, EU sanctions are not directly Cabo Verdean law. However, due to close ties with Europe, and if a VASP has any nexus to the EU (e.g., EU-based customers, partners, or operations), it would be subject to EU sanctions extraterritorial reach.

Compliance involves screening against multiple international sanctions lists, including the EU Consolidated List, OFAC, and UN sanctions lists.

Legal Reference (EU Sanctions): European Union Sanctions Map

Conduct Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD): This includes identifying and verifying customers' identities and beneficial owners.

Screen against Sanctions Lists: Regularly screen all customers, beneficial owners, and transactional parties against relevant national and international sanctions lists (UN, OFAC, EU). This must be done at onboarding and on an ongoing basis.

Identify Politically Exposed Persons (PEPs): Apply enhanced scrutiny to transactions involving PEPs, as they carry higher corruption and illicit finance risks.

Monitor Transactions: Implement systems to monitor transactions for suspicious activity, including attempts to circumvent sanctions.

Report Suspicious Transactions: Immediately report any transactions involving sanctioned individuals or entities, or any attempt to evade sanctions, to the Unidade de Informação Financeira (UIF) – Cabo Verde's Financial Intelligence Unit.

Legal Reference (UIF): Unidade de Informação Financeira (UIF)

URL: https://www.uif.cv/ (Their website details their role and reporting obligations).

Restricted Jurisdictions: Transactions involving individuals or entities located in, or associated with, countries subject to comprehensive UN, OFAC, or EU sanctions (e.g., Iran, North Korea, Syria, Cuba, certain regions of Ukraine/Russia) would typically be prohibited or severely restricted.

High-Risk Jurisdictions: While not outright prohibited, transactions with jurisdictions identified by the FATF or other international bodies as high-risk for AML/CFT deficiencies may require enhanced due diligence.

Legal Reference (FATF High-Risk Jurisdictions): FATF - High-Risk Jurisdictions subject to a Call for Action

Administrative Fines: Significant monetary penalties can be imposed by the Banco de Cabo Verde or the UIF.

Criminal Sanctions: Individuals involved in money laundering or terrorist financing, or serious breaches of AML/CFT laws, can face imprisonment.

License Revocation: VASPs failing to comply may have their licenses or authorizations revoked by the regulatory authorities.

Reputational Damage: Non-compliance can lead to severe reputational harm, loss of business, and difficulties in accessing banking and other financial services.

Extraterritorial Penalties: For breaches of OFAC or EU sanctions, relevant entities or individuals could face penalties directly from U.S. or EU authorities, even if not physically located in those jurisdictions, if there's sufficient nexus.

UN Security Council Consolidated List: This is the primary list that Cabo Verdean law directly mandates compliance with for asset freezes related to terrorism and proliferation.

OFAC SDN List and other OFAC lists: Essential for any VASP dealing in USD or with a U.S. nexus.

EU Consolidated List: Important for VASPs with an EU nexus.

Primary Regulator: The Banco de Cabo Verde (BCV) is the central bank and the main authority responsible for overseeing financial institutions and monetary policy. It is also the most likely body to address issues related to virtual assets and cryptocurrencies from a financial stability and consumer protection perspective.

Regulator: Banco de Cabo Verde (BCV)

Entity Targeted: General public, financial institutions. Violation Type: Prevention of illegal financial activities, consumer protection against risks associated with unregulated virtual assets, general warnings against the use of cryptocurrencies due to their volatility, lack of regulation, and potential for fraud/money laundering. Penalty Amount: Not applicable, as these are warnings, not specific enforcement actions against an entity.

Date: Multiple instances, typically over the past few years. A significant warning was issued in late 2021/early 2022 and reiterated since.

Outcome: Increased public awareness, deterring regulated financial institutions from dealing directly with unregulated crypto assets. The BCV has consistently advised caution.

A common approach from central banks in developing economies is to issue warnings via local press. For example, local news outlets often report on BCV warnings:

Issuing warnings to the public about the risks of unregulated virtual assets.

Developing a regulatory framework for virtual assets, which is a process that typically precedes widespread enforcement.

Any cases of fraud involving cryptocurrencies would likely be handled under general criminal law by the police and judicial system, rather than specific crypto-related enforcement by a financial regulator, especially if dedicated virtual asset laws are still nascent. These types of criminal cases are often not widely reported internationally with the specific details requested.