Financial Crime World

FSC Cracks Down on Financial Institutions’ AML/CFT Compliance

Port Louis, Mauritius

The Financial Services Commission (FSC) has taken a tough stance on financial institutions that fail to comply with Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations.

Consequences for Non-Compliance

According to Section 32A of the FIAMLA Act and Regulation 33 of the FIAML Regulations 2018, failure to comply with AML/CFT requirements can result in:

  • Regulatory action
  • Revocation of business license

The FSC has identified several key areas where financial institutions may be failing to meet their AML/CFT obligations, including:

  • Lack of transparency in customer due diligence
  • Inadequate risk assessments
  • Failure to report suspicious transactions

Expectations for Financial Institutions

“We expect all financial institutions to establish an open and positive approach to compliance and AML/CFT issues among their employees,” said a spokesperson for the FSC. “The board and senior management must 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.”

International Standards

In addition to complying with local regulations, financial institutions must also adhere to international standards set by the Financial Action Task Force (FATF). The FATF’s 2012 Recommendations are widely recognized as the global standard for AML/CFT.

Robust Approach Required

The FSC has emphasized the importance of a robust approach to AML/CFT, including:

  • Regular risk assessments
  • Effective customer due diligence
  • Reporting of suspicious transactions

Financial institutions have been urged to adopt a “hierarchical approach” within their businesses, recognizing that policies and procedures only work if they are understood, followed, and enforced by all employees.

Warning Against Hierarchical Structures

The commission has also warned against the dangers of a hierarchical structure within financial institutions, where:

  • Senior management may be unwilling to lead on the importance of corporate ethics
  • Junior employees may assume that their concerns are not significant

Conclusion

In conclusion, the FSC is sending a clear message to financial institutions: comply with AML/CFT regulations or face the consequences.