Cabo Verde -- Sanctions Compliance Regulatory Overview

Cabo Verde, like many nations, primarily addresses cryptocurrency sanctions and restrictions through its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework, which incorporates international standards set by bodies like the Financial Action Task Force (FATF) and implements United Nations Security Council (UNSC) resolutions. While Cabo Verde does not have unique "crypto-specific" sanctions lists, its financial institutions, including Virtual Asset Service Providers (VASPs), are obligated to comply with a comprehensive sanctions regime.

Here's a breakdown of the requirements:

Cryptocurrency Sanctions and Restrictions in Cabo Verde

1. Overview of Cabo Verde's Regulatory Framework for VASPs

Cabo Verde has updated its legal framework to incorporate FATF recommendations, which explicitly include virtual assets and VASPs. The primary legislation governing AML/CFT, and by extension sanctions compliance, is:

• 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).

2. OFAC/EU/UN Sanctions Compliance Requirements for VASPs

Cabo Verdean VASPs are obligated to comply with international sanctions, primarily those issued by the United Nations, and implicitly need to consider EU and OFAC sanctions due to global financial interconnectedness.

• UN Sanctions Compliance:

  • 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
    • URL: https://www.un.org/securitycouncil/sanctions/information

• OFAC (U.S.) Sanctions Compliance:

  • 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)
    • URL: https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-information

• EU Sanctions Compliance:

  • 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 the EU Consolidated List of persons, groups and entities subject to EU financial sanctions.
  • Legal Reference (EU Sanctions): European Union Sanctions Map
    • URL: https://www.sanctionsmap.eu/

3. Sanctioned Entity Screening Obligations

Under Decree-Law No. 4/2020, VASPs in Cabo Verde are obliged to:

• 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).

4. Geographic Restrictions

Cabo Verde itself does not impose country-specific geographic restrictions on crypto beyond those mandated by international sanctions. However, VASPs operating in Cabo Verde must apply restrictions derived from the international sanctions regimes:

• 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
    • URL: https://www.fatf-gafi.org/countries/#high-risk

5. Penalties for Violations

Violations of AML/CFT obligations, including sanctions compliance, under Decree-Law No. 4/2020 can lead to severe penalties:

• 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.

6. Country-Specific Sanctions Lists that Apply to Crypto

Cabo Verde does not maintain its own crypto-specific sanctions list. Instead, its legal framework requires adherence to the general international sanctions lists which apply to all forms of financial transactions, including those involving virtual assets. The key lists to monitor are:

• 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.

The principle is that if an individual or entity is sanctioned, their assets, regardless of whether they are fiat currency or virtual assets, are subject to the freeze and restrictions.

Summary:

VASPs operating in Cabo Verde must meticulously comply with the country's AML/CFT Law (Decree-Law No. 4/2020), which explicitly extends to virtual assets. This law serves as the domestic mechanism for implementing international sanctions, particularly those of the UN. Furthermore, due to the global nature of finance and cryptocurrency, de facto compliance with OFAC and EU sanctions is crucial to avoid severe penalties and maintain access to the international financial system. Screening against consolidated lists from these major authorities is a fundamental requirement for any VASP in Cabo Verde.