Financial Crime World

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Mauritius Adopts Stringent AML/CFT Regulations

Port Louis, Mauritius - In a move to combat money laundering and terrorist financing, the government of Mauritius has implemented stringent regulations for financial institutions operating in the country.

New Correspondent Banking Requirements

The Financial Services Commission (FSC) requires all financial institutions to establish correspondent relationships with foreign financial institutions only if they are satisfied that the institution is effectively supervised by the relevant authorities and has effective customer acceptance and Know-Your-Customer (KYC) policies. Additionally, financial institutions must obtain approval from senior management before establishing new correspondent relationships and document the respective AML/CFT responsibilities of each institution.

Prohibition on Correspondent Relationships with Shell Companies

The regulations also prohibit financial institutions from entering into or continuing a correspondent relationship with a financial institution incorporated in a jurisdiction that has no physical presence and is unaffiliated with a regulated financial group. This is aimed at preventing shell companies from using Mauritius as a hub for illegal activities.

Enhanced Customer Identification Procedures

In accepting business from non-face-to-face customers, financial institutions must apply effective customer identification procedures and specific measures to mitigate the high risk posed by non-face-to-face verification of customers. The FSC has also stipulated that additional steps are required in relation to identification and verification for non-face-to-face business relationships.

Reporting Suspicious Transactions and Penalties

The regulations require financial institutions to report suspicious transactions to the Financial Intelligence Unit (FIU) and impose penalties for non-compliance, including fines not exceeding MUR 1 million and imprisonment for up to five years.

Annual Reporting Requirements

Furthermore, the Bank of Mauritius has issued guidelines requiring financial institutions to review their practices as part of their general external and internal audit processes. While there is no requirement for an independent external audit report, financial institutions must submit a yearly report on their AML/CFT systems and controls to the Bank of Mauritius.

Membership in International Organizations

Mauritius is a member of the Egmont Group and has signed several memoranda of understanding on exchange of information with its foreign FIUs. The country’s Data Protection Act 2004 governs the processing of personal data, and financial institutions must obtain the express consent of customers before processing their personal data.

Risk-Based Approach to Monitoring Transactions

The FSC has implemented a risk-based approach to monitoring transactions, allowing for monitoring outside of jurisdiction. While there is no requirement to use automated suspicious transaction tools, financial institutions are required to implement effective customer due diligence procedures.

Conclusion

Overall, Mauritius’ AML/CFT regulations aim to ensure that the country’s financial system is not used for illegal activities and provides a safe and secure environment for legitimate businesses and individuals.

Practical Guidance

Case Law and Constitutional Law

  • There is a general confidentiality obligation upon banks to keep information on their customers confidential, which may only be lifted by way of a court order.