On 9 July 2020, the Government of Mauritius strengthened its framework against money laundering and the financing of terrorism by passing the Anti-Money Laundering and Combatting the Financing of Terrorism (Miscellaneous Provisions) Act (the “AML-CFT Act”), which amends 19 existing pieces of legislation. The Act aims to align Mauritius with the recommendations of the Financial Action Task Force and the EU Commission. Highlighted below are a few considerations that companies and individuals should be aware of.
The AML-CFT Act states that the Beneficial Ownership Information (“BO information”) of companies (including branches), limited liability partnerships, limited partnerships and foundations, shall be provided to the Registrar of Companies upon the incorporation and registration of any such entity, and, later on, at the time of making certain mandatory filings. This disclosure exercise also applies to existing entities that shall be obliged to provide their BO information when requested by a “competent authority”. These measures will give the enforcement authorities prompt access to up-to-date BO information on the entities in Mauritius. This is a key measure in the fight for AML-CFT.
Stringent reporting standards on suspicious transactions have been imposed across multiple sectors, including governmental agencies and parastatal organisations. A reporting person now has only five days from the discovery of a suspicious transaction, or from the reasonable belief that a suspicious transaction has been made, to file a Suspicious Transaction Report to the Financial Intelligence Unit (“FIU”).
The regulators of all banking and non-banking financial institutions will now possess enhanced supervisory and investigatory powers. Within the purview of AML-CFT, the regulators are also mandated to adhere to stricter risk-based control and oversight. For instance, the Bank of Mauritius (“BOM”), has been given greater and broader powers to supervise and examine the operations and affairs of its licensees, to ensure compliance with the various AML-CFT guidelines, directives and instructions (“Rules”) issued by it. The BOM has recently sanctioned three major banks in Mauritius after the findings of a Special Monitoring Team established by the BOM revealed that the said banks had been involved in suspicious transactions. In the same vein, the Registrar of Companies and the Financial Services Commission have already increased the frequency of their inspections of registered entities and/or licensees’ books and records.
Penalties for non-compliance
The following fines may be imposed following non-compliance and breaches of AML-CFT laws and Rules:
- The Banking Act: A fine of MUR10-million (increased from MUR1-million)
- The Financial Intelligence and Anti-Money Laundering Act: A fine up to MUR10-million and a sentence of imprisonment of up to 5 years for non-compliance with specific guidelines, and a fine of up to MUR1-million and imprisonment of up to 5 years for failure to report suspicious transactions to the FIU in the time prescribed;
- The Financial Reporting Act: A fine of up to MUR5-million (increased from MUR1-million) may be imposed upon a public interest entity that has failed to restate its financial statement within 30 days of receiving a notice to do so;
- The Prevention of Corruption Act: A fine of up to MUR10-million may be imposed upon an entity found to have committed a corruption offence.
The penalties listed above may incite regulated entities to apply enhanced vigilance and to comply with and perform any duties arising from any AML-CFT laws and/or Rules.
The enactment of the AML-CFT Act shows the adoption of a firm approach against money laundering and terrorism financing and addresses the deficiencies observed by the FATF in the AML-CFT system of Mauritius. Coupled with measures already taken by various institutions regarding their internal policies, Mauritius is well on the way to achieve a strong legal and regulatory framework on AML-CFT by August 2020, as set forth in the Prime Minister Office’s Communique dated 2 June 2020.