Financial Crime World

RED FLAGS FOR PROLIFERATION FINANCING IN MAURITIUS

Combating the Menace of Proliferation Financing

In an effort to combat the menace of proliferation financing, the Financial Services Commission (FSC) in Mauritius has issued guidelines outlining red flags that financial institutions should be aware of when dealing with customers or counterparties.

Red Flags for Customer Information

The FSC’s guidelines identify several indicators that can signal potential proliferation financing activities. These include:

  • Similar addresses to those found on publicly available sanctions lists
  • Research bodies connected to higher-risk jurisdictions involved in transactions
  • Inconsistent business profiles provided by customers

Red Flags for Customer Behavior

Additionally, the FSC has identified red flag indicators related to customer behavior, including:

  • Vagueness about ultimate beneficiaries and resistance to requests for additional information
  • Complex structures used to conceal connections with goods imported/exported
  • Freight forwarding/customs clearing firms listed as final destinations in trade documents

Red Flags for Transactional Patterns

The FSC has also identified red flag indicators related to transactional patterns, including:

  • Project financing and complex loans involving unidentified end-users
  • Transactions involving individuals or entities from countries of proliferation concern
  • Dual-use, proliferation-sensitive, or military goods, whether licensed or not
  • Inconsistent trade patterns

Reporting Obligations

The FSC has emphasized the importance of reporting obligations under the United Nations Security Council Resolution (UNSCR) lists. Financial institutions must:

  • Freeze assets of individuals and entities designated on UNSCR lists
  • Report any matches to the National Sanctions Secretariat

Risk Management and Compliance

To combat sanctions evasion, the FSC recommends that financial institutions:

  • Conduct regular risk assessments
  • Take enhanced measures to manage and mitigate products, services, customers, and locations prone to proliferation financing
  • Implement robust know-your-customer (KYC) procedures
  • Assess clients for proliferation financing risks

Consequences of Non-Compliance

Failure to comply with reporting obligations under the UNSA 2019 can result in:

  • Offense fines not exceeding MUR 5 million
  • Imprisonment not exceeding 10 years

Conclusion

Financial institutions operating in Mauritius must be vigilant in detecting and reporting suspicious transactions related to proliferation financing. By implementing robust risk management procedures and staying aware of red flags, institutions can play a critical role in combating this serious threat to global security.