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

Introduction

The Financial Services Commission (FSC) has emphasized that financial institutions must comply with anti-money laundering and combating the financing of terrorism (AML/CFT) regulations, failure to which may lead to regulatory action.

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, financial institutions that fail to comply with AML/CFT requirements may be subject to:

Fines
Penalties
Revocation of licenses

Indicators of Non-Compliance

The FSC has identified several indicators of non-compliance, including:

Conduct not in the best economic interests of Mauritius
Lack of fitness and propriety
Failure to establish a robust AML/CFT culture within financial institutions

Establishing an Effective AML/CFT Culture

The FSC emphasized the importance of establishing open and positive approaches to compliance and AML/CFT issues among all employees. Senior management must ensure that systems and controls are designed and implemented to reduce the risk of money laundering and terrorist financing.

Key Principles for Effective AML/CFT Policies and Procedures

The guidelines outlined 10 key principles, including:

Conducting risk assessments
Verifying customer identities
Monitoring transactions
Reporting suspicious activities
Adopting a hierarchical approach within organizations, recognizing the importance of human element in ensuring effective AML/CFT control

FSC Guidelines as Reference

The FSC will use these guidelines as a reference when assessing compliance with AML/CFT regulations during onsite visits. Failure to comply may result in regulatory action and even license revocation.

The Financial Action Task Force (FATF) has reiterated its recommendations for effective AML/CFT policies and procedures. The FATF is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing, and the proliferation of weapons of mass destruction.

Accessing FSC AML/CFT Handbook

The FSC AML/CFT Handbook can be accessed on the commission’s website, along with information on the FATF Recommendations 2012.