Financial Crime World

Mauritius Financial Institutions Must Prioritize Independent Compliance Audits

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As part of their anti-money laundering (AML) and combating the financing of terrorism (CFT) functions, financial institutions in Mauritius must conduct independent audits to ensure compliance with regulatory requirements. The Financial Intelligence & Anti-Money Laundering Regulations 2018 mandate that every financial institution establish an audit function to evaluate its AML/CFT programme and assess whether policies, procedures, systems, and controls are adapted to identified money laundering and terrorism financing risks.

Objectives of Independent Audits

The objective of these independent audits is to form a view on the overall integrity and effectiveness of the AML/CFT programme. Conducting successful audits enables financial institutions to ensure their policies, procedures, and controls remain up-to-date, identify deficiencies in their regulatory compliance system, and develop strategies for compliance with prevailing legislation.

Benefits of Independent Audits

  • Ensure policies, procedures, and controls are updated
  • Identify deficiencies in the regulatory compliance system
  • Develop strategies for compliance with prevailing legislation

Scope and Frequency of Independent Audits

The scope and frequency of these independent audits should be risk-based and cover areas such as:

  • AML/CFT policies and procedures
  • Internal risk assessments
  • Risk assessment on the use of third-party service providers
  • Compliance officer function and effectiveness
  • Money laundering reporting officer function and effectiveness
  • Implementation and effectiveness of mitigating controls
  • Suspicious transaction monitoring and reporting

Considerations for Automated Systems or Manual Processes

  • Reliability of automated systems or manual processes during the audit process
  • Frequency and extent of the review should be commensurate with the size, nature, context, complexity, and internal risk assessment of the financial institution

Regulation Requirements

While financial institutions are not required to file an independent audit report with the Mauritius Financial Services Commission (FSC), all independent audit documentation must be properly documented and made available to the FSC upon request.

Regulation 22(1)(d) of the FIAML Regulations 2018

  • Requires that the audit process be carried out independently, separate from the operational and executive team dealing with AML/CFT processes.
  • The person or firm conducting the audit should not have previously been involved in developing the financial institution’s AML/CFT risk assessment or establishing, implementing, or maintaining its AML/CFT programme.

Sovereign Consulting Limited

Sovereign Consulting Limited, a leading provider of compliance support services and consultancy services to licensed firms in Mauritius, offers expertise in assisting financial institutions with their mandatory independent AML/CFT audit requirements. Our team of experienced professionals can assist clients with:

  • Conducting verification and screening as part of standard customer due diligence
  • Providing enhanced due diligence reports
  • Implementing and reviewing data protection policies

Additional Services

  • Customized training to compliance officers, MLROs, directors, and other employees
  • Assistance with regulatory inspections from the FSC or Financial Intelligence Unit (FIU)

Conclusion

By implementing best practices, financial institutions can protect their business, investors, staff, customers, and reputation. Our team at Sovereign Consulting Limited is committed to helping clients meet their mandatory independent AML/CFT audit requirements and adopt a more effective, risk-based approach to AML/CFT.