Money Laundering: What’s at Stake for Mauritius
The European Union (EU) has taken a significant step in identifying Mauritius as a jurisdiction with strategic Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) deficiencies. This decision comes after the Financial Action Task Force (FATF), an international standard-setter, identified Mauritius as a risk to the global financial system.
Shortcomings in AML/CFT Framework
According to the EU’s classification, Mauritius has several AML/CFT shortcomings, including:
- Failure to demonstrate effective supervision of its global business sector and designated non-financial businesses and professions.
- Lack of access to accurate basic and beneficial ownership information, making it difficult for competent authorities to conduct investigations in a timely manner.
Additionally, Mauritius has failed to implement a risk-based approach for supervising its non-profit organization sector to prevent abuse for terrorist financing purposes. Moreover, the country’s law enforcement authorities lack capacity to conduct complex money laundering investigations.
Consequences of Listing
The EU views these deficiencies as a call to action to achieve a new comprehensive framework to fight money laundering and terrorist financing. The listing by the EU will have far-reaching consequences for operators in the financial services and global business sectors, including:
- Correspondent banking
- Prospective trade and investments with the EU
Obliged entities in all EU Member States will need to apply enhanced due diligence measures when dealing with countries listed as high-risk, including Mauritius. Financial rules prohibit persons and entities implementing EU funds or budgetary guarantees from entering into new or renewed operations with entities incorporated or established in Mauritius unless certain conditions are met.
Action Plan and Timeline
The EC has called for an expeditious implementation of Mauritius’ action plan to remedy the identified deficiencies within proposed timeframes. The FATF will closely monitor the country’s progress, and failure to comply may lead to the listing of Mauritius as a high-risk jurisdiction. Given the deadline set by the EU, the spectre of Mauritius being listed looms large.
Conclusion
The consequences of not addressing AML/CFT deficiencies can be severe for Mauritius, including potential listing as a high-risk jurisdiction by the EU. It is essential that the country implements its action plan expeditiously to address these shortcomings and maintain its reputation as a reliable financial hub in the region.