Financial Institutions Face Severe Consequences for AML/CFT Non-Compliance
Warning Issued by the Financial Services Commission
Port Louis, Mauritius - The Financial Services Commission (FSC) has issued a stern warning to financial institutions in Mauritius regarding the importance of complying with anti-money laundering and combating the financing of terrorism (AML/CFT) regulations.
Consequences of Non-Compliance
According to Section 32A of the Financial Intelligence and Anti-Money Laundering Act (FIAMLA) and Regulation 33 of the FIAML Regulations 2018, failure to comply with the minimum requirements can result in:
- Regulatory action
- Fines
- Penalties
- Revocation of a business license
Compliance is Crucial for Maintaining a Healthy Financial System
The FSC has emphasized that compliance is not only mandatory but also crucial for maintaining a healthy financial system. The commission will take into account the level of compliance when assessing the fitness and propriety of controllers and beneficial owners or other key persons within financial institutions.
Framework for AML/CFT Compliance
The Financial Action Task Force (FATF) Recommendations, recognized as the global standards in AML/CFT, provide the framework for the FSC’s guidelines. The 2012 FATF 40 Recommendations serve as the basis for this guidance.
Key Requirements for Financial Institutions
To ensure effective AML/CFT compliance, financial institutions must:
- Conduct risk assessments of their business and customers
- Determine the true identity of customers and beneficial owners
- Establish documented systems and controls for monitoring transactions
- Ensure adequate resources are given to compliance officers
- Maintain records for prescribed periods of time
Importance of Human Element in AML/CFT Compliance
The FSC has warned against a hierarchical approach within businesses, which can hinder effective AML/CFT control. The human element is particularly important, as policies and procedures only work if they are understood, followed, and enforced by those required to comply with them.
Adopting a Robust Approach to AML/CFT Compliance
Financial institutions must adopt a robust approach to AML/CFT compliance and not refrain from asking customers non-customary questions in circumstances of unusual activity. Any reluctance or failure by the customer to provide credible and verifiable answers should lead the financial institution to investigate the reason for this reluctance, establish any case for suspicion, and follow up with appropriate action.
Compliance is Not Optional
The FSC has made it clear that compliance with AML/CFT regulations is not optional and will be strictly enforced. Financial institutions that fail to comply may face severe consequences, including regulatory action, fines, and even revocation of their license.