Financial Institutions Face Severe Consequences for Failure to Comply with AML/CFT Regulations

Warning Issued to Financial Institutions

Port Louis, Mauritius - The Financial Services Commission (FSC) has warned financial institutions in Mauritius that failure to comply with the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations may result in severe consequences.

Consequences of Non-Compliance

Regulatory action, including revocation of a business license
Level of compliance taken into account during onsite visits

Section 32A of the FIAMLA Act and Regulation 33 of the FIAML Regulations 2018 outline the offences related to contravention of the requirements. Failure to comply may lead to regulatory action, including sanctions.

Importance of a Strong Compliance Culture

The FSC emphasizes the importance of a strong compliance culture within financial institutions. The board and senior management are responsible for ensuring that systems and controls are designed and implemented to reduce the risk of the business being used in connection with money laundering or terrorist financing.

Key Requirements for AML/CFT Compliance

Undertake risk assessments of the business and customers
Determine the true identity of customers and beneficial owners
Monitor transactions on an ongoing basis
Establish procedures for reporting suspicious transactions
Maintain records for prescribed periods of time

Recommendations from the FATF

The Financial Action Task Force (FATF) has issued recommendations to protect the global financial system against money laundering, terrorist financing, and the financing of weapons of mass destruction. The FSC is requiring financial institutions to adopt a robust approach to AML/CFT compliance.

Human Element in AML/CFT Control

The handbook highlights the importance of the human element in AML/CFT control, emphasizing that policies and procedures only work if they are understood, followed, and enforced by employees. Financial institutions must recognize and address hierarchical barriers that may hinder effective systems of AML/CFT control.

Establishing a Strong Compliance Culture

Financial institutions must establish a strong compliance culture within their organizations and ensure that systems and controls are designed and implemented to reduce the risk of the business being used in connection with money laundering or terrorist financing.

Conclusion

The FSC has urged financial institutions in Mauritius to take AML/CFT compliance seriously. Failure to comply with the minimum requirements of the FIAMLA and FIAML Regulations 2018 may result in severe consequences, including regulatory action and revocation of a business license.