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AML/CFT

MAURITIUS’S COMMITMENT IN THE COMBAT AGAINST MONEY LAUNDERING AND THE FINANCING OF TERRORISM AND PROLIFERATION

Mauritius has, through numerous initiatives, demonstrated its unflinching commitment to combat money laundering and terrorist and proliferation financing. To this effect, Mauritius has ratified and acceded to numerous international conventions, protocols and treaties to express its commitment towards the international community to combat this scourge, amongst others, the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, commonly known as the Vienna Convention and the United Nations Convention against Transnational Organised Crime, also known as the Palermo Convention.

Mauritius has further committed itself to the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation issued, in February 2012, by the Financial Action Task Force[1] (the ‘FATF Forty Recommendations’)[2] and to its Mutual Evaluation procedure. 

Mauritius, being a founder member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)[3], which is an associate member of the FATF, participates in a self-assessment process to assess its progress in implementing the FATF Forty Recommendations.

Mauritius underwent a second round of going a mutual evaluation of its Anti Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework under the 2013 Assessment Methodology of the FATF.

On 21 September 2018, the ESAAMLG published the Mutual Evaluation Report[4] (MER) on its assessment of Mauritius’s level of compliance with the FATF Forty recommendations and the level of effectiveness of its AML/CFT system.

Mauritius brought numerous amendments to its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework and a new set of Regulations, namely the Financial Intelligence and Anti Money Laundering Regulations 2018, was promulgated effective as from 01 October 2018, to address the FATF requirements regarding Customer Due Diligence, Politically Exposed Persons, Correspondent Banking, Money or Value Transfer Services, New Technologies, Wire Transfers, Reliance on Third Parties, and Internal Control, Foreign Branches and Subsidiaries, amongst others.

Mauritius has, as at November 2019, submitted two follow up reports as well as 2 applications for technical compliance rerating to the ESAAMLG, which were considered at its April 2019 and September 2019 meetings.

In April 2019, Mauritius was successful in obtaining technical compliance re-rating on 11 Recommendations and at the ESAAMLG Council of Ministers Meeting held in September 2019, Mauritius was successful in obtaining technical compliance re-rating on 19 Recommendations.  In the light of these two re-rating exercises, Mauritius will be rated Compliant or Largely Compliant on 35 of the 40 FATF Recommendations.  The consolidated technical compliance ratings may be summarised as follows :

Recommendation

Consolidated rating

following the first and Second technical compliance Re-ratings

R.1

Assessing Risks and applying a Risk-Based Approach

C

R.2

National Cooperation and Coordination

C

R.3

Money laundering offence

C

R.4

Confiscation and provisional measures

C

R.5

Terrorist financing offence

C

R.6

Targeted financial sanctions related to terrorism and terrorist financing

C

R.7

Targeted financial sanctions related to proliferation

C

R.8

Non-profit organisations

NC

R.9

Financial institution secrecy laws

C

R.10

Customer due diligence

C

R.11

Record-keeping

LC

R.12

Politically exposed persons

C

R.13

Correspondent banking

C

R.14

Money or value transfer services

C

R.15

New technologies

C

R.16

Wire transfers

C

R.17

Reliance on third parties

C

R.18

Internal controls and foreign branches and subsidiaries

C

R.19

Higher-risk countries

C

R.20

Reporting of suspicious transaction

C

R.21

Tipping-off and confidentiality

C

R.22

DNFBPs: Customer due diligence

C

R.23

DNFBPs: Other measures

C

R.24

Transparency and beneficial ownership of legal persons

PC

R.25

Transparency and beneficial ownership of legal arrangements

LC

R.26

Regulation and supervision of financial institutions

PC

R.27

Powers of supervisors

C

R.28

Regulation and supervision of DNFBPs

LC

R.29

Financial intelligence units

C

R.30

Responsibilities of law enforcement and investigative authorities

C

R.31

Powers of law enforcement and investigative authorities

C

R.32

Cash Couriers

PC

R.33

Statistics

PC

R.34

Guidance and feedback

LC

R.35

Sanctions

C

R.36

International instruments

LC

R.37

Mutual legal assistance

LC

R.38

Mutual legal assistance : freezing and confiscation

LC

R.39

Extradition

LC

R.40

Other forms of international cooperation

LC

 

Appropriate actions at the level of the relevant Ministries and authorities are continuing with a view to addressing the technical compliance deficiencies in the remaining 5 Recommendations rated Partially Compliant (4 Recommendations) and Non Compliant (1 Recommendation).

With a view to enhancing the effectiveness of the AML/CFT measures, several working groups have been constituted at national level to work on enhancing Mauritius’ effectiveness to the 11 Immediate Outcomes of the FATF, namely :

IO.1

Risk, policy and coordination

IO.2

International cooperation

IO.3

Supervision

IO.4

Preventive measures

IO.5

Legal persons and arrangements

IO.6

Financial Intelligence

IO.7

ML investigation & prosecution

IO.8

Confiscation

IO.9

TF investigation & prosecution

IO.10

TF preventive measures & financial sanctions

IO.11

PF financial sanctions

 

Additionally, the Bank of Mauritius as the AML/CFT supervisor for the Banking Sector, has taken numerous initiatives to enhance the effectiveness of the AML/CFT measures applicable to its licensees.  Amongst others, revising its Guideline on Licensing; setting up of a dedicated AML/CFT Unit within the Supervision Department, developing a Risk Based methodology for the supervision of AML/CFT risks, enhancing cooperation at domestic, regional and international level, conducting regular training for staff and outreach for the industry.

NATIONAL MONEY LAUNDERING AND TERRORIST FINANCING 
RISK ASSESSMENT OF MAURITIUS

 

A key element of the FATF’s revised 2012 Recommendations is the application of a risk based approach.

Recommendation 1 of the FATF Recommendations calls upon countries to identify, assess and understand their money laundering and terrorist financing risks and take action, including designating an authority or mechanism to coordinate actions to assess risks, and apply resources aimed at ensuring the risks are mitigated effectively.

In compliance with the first Recommendation of the FATF, Mauritius issued its first National Money Laundering and Counter Terrorism Financing Risk Assessment (NRA) on 29 August 2019. 

The National Risk Assessment (NRA) was launched in January 2017 with the aim to identify, understand and assess the money laundering and terrorist financing risks faced by Mauritius. It paves the way to the implementation of a risk-based approach to combatting money laundering and terrorism financing activities, thus making relevant stakeholders more effective in their efforts. The NRA results provides valuable guidance to articulate policies and strategies to address the risks identified and to allocate our resources to areas that have the greatest impact in the fight against financial crime.

The NRA exercise for Mauritius was carried out using the National Money Laundering and Terrorism Financing Risk Assessment Tool developed and provided by the World Bank.

The main objective of the assessment was to devise an effective risk-based AML/CFT regime through an efficient allocation of resources and the adoption of measures which will prevent or mitigate ML and TF on the basis of identified risks. For that purpose, the following factors were assessed:

a)         the scale and characteristics of the proceeds of criminal activities from both internal and external sources;

b)         the scale and characteristics of terrorism financing in Mauritius;

c)         the weaknesses or gaps in Mauritius’s ability to combat ML and TF; and

d)         the ML weaknesses or gaps arising from the financial services sector as well as designated non-financial businesses and professions (DNFBPs) in the country.

A snapshot of the overall ML and TF vulnerability, threat and risks ratings in the NRA Report is outlined below:

NATIONAL STRATEGY FOR COMBATTING MONEY LAUNDERING AND 
THE FINANCING OF TERRORISM AND PROLIFERATION 2019- 2022
 

The National Strategy 2019-2022 sets out the approach which Mauritius will adopt to tackle money laundering (ML), terrorist financing (TF) and proliferation financing (PF) threats over the next three years. In addition, it describes the priorities and objectives in addressing financial crime, and assists Mauritius in meeting international obligations set by the Financial Action Task Force.

The Strategy is based on the findings of the National Risk Assessment (NRA) and the gaps identified in the AML/CFT Mutual Evaluation Report (MER) of Mauritius, which was published in September 2018.

The National AML/CFT Strategy comprises eight core themes that enhances the ability of Mauritius to prevent, detect and deter money laundering and the financing of terrorism and proliferation.  The eight core strategic themes and their objectives are set out hereinafter.




[1] The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions.  The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

[2] The FATF has developed a series of Recommendations that are recognised as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction.  They form the basis for a co-ordinated response to these threats to the integrity of the financial system and help ensure a level playing field.  They are intended to be of universal application.

[3] The Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), which comprises 18 countries in the eastern and southern African region, is a Regional Body subscribing to global standards to combat money laundering and financing of terrorism and proliferation.  Its main are to (a) adopt and implement the 40 Recommendations of the FATF; (b) apply anti-money laundering measures to all serious crime; (c) implement measures to combat the financing of terrorism and (d) implement any other measures contained in the multilateral agreements and initiatives relevant to prevention and control of laundering of proceeds of all serious crimes and the financing of terrorism and proliferation of weapons of mass destruction.

[4] A mutual evaluation report provides an in-depth description and analysis of a country’s system for preventing criminal abuse of the financial system as well as focused recommendations to the country to further strengthen its system.