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Money laundering: changes in the Mauritian legislation to combat this?

Money laundering is a serious issue in several countries across the globe. Whether it is big companies or SMEs, none are safe from this problem. In fact, the problem is not just at company-level, even if this plays a great role. A determining factor also lies in the jurisdiction in which a firm operates. Indeed, a company must operate in a country having strong laws and legislation so that it is well-regulated. The Anti-Money Laundering and Combatting the Financing of Terrorism Act 2020 Mauritius, a country that recognises the severity of this problem for both businesses and its clients, has been working towards making its jurisdiction safer for companies and investors. It has been introducing several changes to enhance the reliability of the jurisdiction. One of them involves the The Anti-Money Laundering and Combatting the Financing of Terrorism Act 2020. This has been enacted in July 2020 and it was to ensure “closer compliance with the recommended international best practices of the Financial Action Task Force” and was published in the Government Gazette a couple of days later. The reforms have been introduced to strengthen the legal and regulatory framework with regards to the fight against money laundering and financing of terrorism. Banking Act 2004 (THE “BA”) Section 64B – Consumer due diligence information Previously, the fine which the Bank of Mauritius had the right to impose to financial institutions and holders of licence not complying with money laundering or terrorism financing guidelines, directives or instructions issued by the Bank of Mauritius was one million rupees. This has been increased to an amount not exceeding ten million rupees. Section 64C – Examination of financial institutions or holders of licence First of all, this section of the BA has been changed to address the frequency and intensity of the examinations of the operations and affairs of financial institutions or holders of licence carried out by the Bank of Mauritius. The tests depend on several factors. The money laundering or terrorism financing risks and the policies, internal controls and procedures associated with the financial institution or holder of a licence or its group, as identified by the Bank of Mauritius’ assessment of the institution’s or group’s risk profiles. the money laundering or terrorism financing risks present in Mauritius; and the characteristics of the financial institution or holder of a licence or its group, in particular the diversity and number of financial institutions or holder of a licence and the degree of discretion allowed to them under the risk-based approach implemented by the Bank of Mauritius. Moreover, now, the Bank of Mauritius will periodically review the assessment of money laundering or terrorism financing risk profile and risks of non-compliance of a financial institution, licence holder or group if there are major events or developments in the management and operations of said financial institution or holder of licence. Companies Act (CA) The changes brought about focus on beneficial ownership information. The provisions have been expanded so that now it is mandatory for companies to obtain, record and disclose information about beneficial ownership as appropriate. Moreover, a new definition of beneficial owner has been introduced. A “beneficial owner” or “ultimate beneficial owner” is “any natural person who ultimately owns or controls a company or the natural person on whose behalf a transaction or activity is being conducted in relation to a company”. After the amendment, any declaration regarding beneficial ownership information shall be made upfront at the time of making an application for incorporation in order to identify any nominee arrangement. Along the same lines, after an entry or alteration in the share register, the Registrar of Companies has to be notified within 14 days. Moreover, the Registrar has been given the power to remove a company from the register of companies if that company fails to comply with filing of the beneficial ownership information as has been prescribed. The requirements are also applicable to foreign companies registered under the CA and companies registered by way of continuation in Mauritius. Financial Intelligence and Anti Money Laundering Act (the “FIAMLA”) The Financial Intelligence Unit (the “FIU”) will now disseminate disclosure of information to the Counterterrorism Unit and will inform, advise and cooperate with the latter. Additionally, one of the functions of the FIU has been amended to include issuing guidelines to auditors, reporting persons and internal controllers of credit unions with to the manner in which a report under section 14 shall be made. Upon suspicious transactions, additional information may be supplied to FIU. If there are reasons to suspect money laundering, predicate offences or terrorism financing, the Director of the FIU shall disseminate information and the results of the analysis of the FIU to the Counterterrorism Unit. A reporting person or auditor, or any director, employee, agent or legal representative of a reporting person or auditor who does not supply any information as may be requested by the FIU under section 13(2), (3) or (6) by the date specified in the request, or who falsifies, conceals, destroys or otherwise disposes of, or causes or permits the falsification, concealment, destruction or disposal of, any information, document or material which is, or is likely, to be relevant to a request under section 13(2), (3) or (6) will commit an offence and will be liable to a fine not exceeding one million rupees and to imprisonment for a term not exceeding 5 years. Financial Services Act (The “FSA”) Scope of on-site inspectionPreviously, these inspections to verify the compliance with applicable laws and whether the licensee still satisfies the relevant criteria were restricted to the business premises of licensees. Now, it can be done at such other place and at such time as the FSC may determine. Now, there are more factors that determine the frequency of the on-site inspections. These include: the money laundering or terrorism financing risks and policies, internal controls and procedures associated with a licensee, as assessed by the FSC;  the money laundering or terrorism financing risks present in Mauritius; and  the characteristics of

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