If you are a firm looking to conduct business in a foreign country, you must be sure about the reliability of the jurisdiction in which you are operating. This is because this would guarantee that your operations are being conducted smoothly in a trusted environment.
It is also important that you work in a country that is constantly trying to improve itself as a site where businesses operate. One such example is Mauritius. For instance, it is strengthening its AML regulations and introducing new security measures protecting businesses. Just recently, on the 21st of October the Financial Action Task Force (FATF) held its Planetary meeting, during which it announced that Mauritius is no longer part of its ‘grey list’. This is a list of jurisdictions that have strategic deficiencies in their approach to anti-money laundering and combatting terrorism financing (AML/CFT). Therefore, they have to introduce more ways to monitor firms with suspicious transactions.
What measures did Mauritius take to get out of the list?
In February 2020, Mauritius was first placed on the ‘grey list’, a decision by the EU that became applicable on the 1st of October 2020. The country, being dedicated to constantly improving itself and to becoming a fintech of excellence in the Indian Ocean, did not take things lightly. Following this listing, it made a high-level political commitment to the FATF to address the strategic deficiencies identified. To do so, a committee was created. It was headed by the Prime Minister and its aim was to accelerate implementation of its FATF Action Plan so that the country is no longer part of the list by the next year. Several measures were introduced. As the FATF advanced, certain key reforms played a huge role. These are:
- Conducting outreach to promote understanding of Money Laundering and Terrorism financing risks and obligations,
- Developing risk-based supervision plans effectively for the Financial Services Commission,
- Ensuring access to accurate basic and beneficial ownership information by competent authorities in a timely manner, and
- Providing training for law enforcement authorities to ensure that they have the capability to conduct money laundering investigations.
Moreover, Mauritius is constantly collaborating with Eastern & Southern Africa Anti-Money Laundering Group to strengthen its AML/CFT regime. More recently, it has circulated a draft Virtual Assets Business Bill for consultation to obtain feedback and comments from stakeholders.
How did FATF make its decision?
These measures have been enforced all throughout the year. This year, from the 13th till the 15th of September ATF’s Africa/Middle East Joint Group (AME JG) conducted an onsite assessment of Mauritius’s AML-CFT Framework. This was to verify that implementation of the AML/CFT reforms had begun and was being sustained in the island. It also ensured that the necessary political commitment remained in place to sustain implementation in the future.
To take a decision, a delegation from the FAFT held different meetings with relevant ministries and authorities. They also visited several institutions to oversee first-hand the way operations are being carried out. It was found out that the country had substantially completed its action plan. Moreover, it was commended to for its considerable progress in addressing the strategic deficiencies identified, especially since the coronavirus pandemic has disrupted several economies.
Following the assessment and in light of the efforts being made by the country, the FAFT decided to remove Mauritius from its grey list. Its president, Dr. Marcus Pleyer advanced, “Mauritius has strengthened the effectiveness of its AML/CFT regime and addressed related technical deficiencies to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in February 2020. Mauritius is therefore no longer subject to the FATF’s increased monitoring process”.
The European Commission will review the information by the FAFT and will remove Mauritius from the blacklist at the earliest opportunity. This removal shows that Mauritius is a trusted jurisdiction of substance.
Mauritius, ‘compliant’ or ‘largely compliant’ with FAFT recommendations
The FAFT recommendations are global standards against money laundering and terrorist financing that allow countries to successfully take actions against any form of fraud or illegal operations carried out within their financial sector. To put things in perspective, they set out a comprehensive and consistent framework of measures that countries have to adhere to combat money laundering and terrorist financing. They set an international standard.
While introducing measures to address the deficiencies, Mauritius applied for an upgrading against FATF Recommendations 8, 24 and 33. There were reviewed at the 21st Council of Ministers Meeting and 42nd Task Force of Senior Officials’ Meeting of the Eastern & Southern Africa Anti-Money Laundering Group and it led to the country obtaining another rating. It became:
- ‘largely compliant’ for Recommendation 8- which is related to Non-Profit Organisations,
- ‘Largely Compliant’ for Recommendation 24 (Transparency and Beneficial Ownership of Legal Persons)
- Compliant’ for Recommendation 33 (Statistics).
These changes imply that Mauritius is now ‘Compliant’ or ‘Largely Compliant’ with 39 out of the 40 FATF Recommendations. It is only lacking when it comes to Recommendation 15 (New Technologies), for which it is rated as ‘Partially Compliant”. A leading investment destination, the island is perfect for structuring cross border investment into Africa and Asia.
