Financial Crime World

FSC Warns Financial Institutions: Failure to Comply with AML/CFT Regulations Can Lead to Licence Revocation

Introduction

The Financial Services Commission (FSC) has issued a stern warning to financial institutions in Mauritius, stating that failure to comply with Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) regulations can result in licence revocation.

Consequences of Non-Compliance

According to Section 32A of the Financial Institutions and Miscellaneous Provisions Act (FIAMLA) and Regulation 33 of the FIAML Regulations 2018, any contravention of these requirements can lead to serious consequences. The FSC has emphasized that failure to comply with the minimum requirements of the regulations may be regarded as an indication of conduct not in the best economic interests or which damages the reputation of Mauritius.

Licence Revocation

The level of compliance by financial institutions and their assessment of fitness and propriety will directly impact the status of their licence. This can result in regulatory action, sanctions, or even revocation of a licence if the breach is severe enough.

Establishing an AML/CFT Culture

In its guidelines, the FSC has highlighted the importance of a robust AML/CFT culture within financial institutions. The regulator expects all financial institutions to:

  • Establish an open and positive approach to compliance and AML/CFT issues among employees
  • Have senior management ensure that systems and controls are in place to reduce the risk of the business being used for money laundering or terrorist financing

Implementing Effective Controls

The FSC has also emphasized the need for financial institutions to adopt a hierarchical approach, recognizing that human element is crucial in implementing effective AML/CFT control. The regulator expects financial institutions to:

  • Establish documented systems and controls that include risk assessments, customer due diligence, and ongoing monitoring of business relationships and transactions
  • Have adequate resources and procedures in place to implement and monitor the effectiveness of their AML/CFT policies and procedures

FATF Recommendations

The FSC will use the FATF Recommendations, which are recognized as the global standards for AML/CFT, in assessing the level of compliance with the FIAMLA and FIAML Regulations 2018 during onsite visits.

Reviewing Policies and Procedures

Financial institutions are advised to review their policies and procedures to ensure that they meet the minimum requirements of the regulations. The FSC is committed to ensuring that financial institutions in Mauritius comply with international standards for AML/CFT, and will take firm action against any institution found to be non-compliant.

Conclusion

The FSC has warned financial institutions in Mauritius that failure to comply with AML/CFT regulations can result in licence revocation. Financial institutions must ensure that they have a robust AML/CFT culture, implement effective controls, and meet the minimum requirements of the regulations to avoid serious consequences.