FSC Warns Financial Institutions: Failure to Comply with AML/CFT Regulations May Result in License Revocation

Port Louis, Mauritius

The Financial Services Commission (FSC) has issued a stern warning to financial institutions operating in the country, emphasizing the importance of complying with Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations.

Consequences of Non-Compliance

According to the FSC’s AML/CFT Handbook, failure to comply with the minimum requirements of the Financial Intelligence and Anti-Money Laundering Act (FIAMLA) and the Financial Intelligence and Anti-Money Laundering Regulations 2018 may result in regulatory action, including license revocation. The handbook highlights that the level of compliance by financial institutions will directly impact on the status of their licenses.

Key Requirements

The FSC expects all financial institutions to:

Conduct risk assessments of their business and customers
Determine the true identity of customers
Monitor transactions on an ongoing basis
Maintain records for prescribed periods of time
Disclose suspicious transactions to the Financial Intelligence Unit (FIU)

Establishing Effective Systems and Controls

The FSC emphasizes the importance of establishing effective systems and controls to reduce the risk of being used for money laundering or terrorist financing. The handbook sets out a range of requirements for financial institutions, including:

Not refraining from asking non-customary questions in circumstances of unusual activity
Investigating the reason for any reluctance or failure by customers to provide credible and verifiable answers

Employee Responsibilities

The FSC also highlights the importance of a robust approach to AML/CFT controls among employees. Financial institutions are expected to:

Establish an open and positive approach to compliance among employees
Understand, follow, and enforce policies and procedures among employees

Warning Against Hierarchical Approach

The FSC warns against a hierarchical approach within businesses that may hinder effective AML/CFT control. The Commission emphasizes the importance of understanding, following, and enforcing policies and procedures among employees.

By failing to comply with these requirements, financial institutions risk having their licenses revoked. Therefore, it is essential for them to take AML/CFT compliance seriously and ensure that they have effective systems and controls in place.