Financial Crime World

Mauritius Exits FATF Grey List: A Success Story by Mauritius Institute of Professional Accountants (MIPA)

Background

Mauritius, an Indian Ocean island nation with a thriving financial sector, faced international scrutiny in 2018 when the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) identified several deficiencies in the country’s implementation and enforcement of the Financial Action Task Force (FATF) anti-money laundering (AML) and counter-terrorism financing (CTF) standards. Mauritius’ Economy, with a total of approximately $660.2 billion in assets across over 21,000 global business entities, was nearly 60 times its GDP, making it susceptible to financial crimes.

Deficiencies Identified and Response

In response, Mauritius launched the National Risk Assessment (NRA) system in 2019 and committed to addressing vulnerabilities identified in the initial evaluation. The country’s overall money laundering risk was assessed as medium-high, and the accountancy sector was identified as a medium risk area. Mauritius completed its National Risk Assessment and implemented legal changes but was placed on the FATF Grey list for strategic deficiencies.

Mauritius Institute of Professional Accountants’ (MIPA) Action Plan

In the face of this challenge, MIPA, the regulatory body of the accounting profession in Mauritius, responded by:

  1. Creating an action plan
  2. Releasing “Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Guidelines” (2021)
  3. Engaging in an awareness strategy focused on licensees

Awareness Strategy

  • Increased understanding of AML/CFT obligations
  • Improved reporting
  • Better record-keeping

Focused Areas

  • Risk assessments
  • Customer due diligence
  • Record-keeping
  • Training requirements

Enhancing AML/CFT Capabilities

In addition to the above efforts, MIPA made strides in enhancing its AML/CFT capabilities by:

  1. Creating an AML/CFT unit
  2. Providing staff training
  3. Launching onsite inspections

Collaborations

MIPA gained the practical expertise needed to conduct effective assessments by partnering with:

  • Experienced AML/CFT supervisors: Bank of Mauritius and the Financial Services Commission

Adopting a Risk-Based Approach to Inspections

MIPA adopted a risk-based approach to inspections, leading to:

  • Increased focus on high-risk entities
  • Enhanced accuracy in data collection

Addressing Instances of Non-Compliance

To tackle instances of non-compliance, MIPA applied proportionate and effective remedial actions, aiming to improve the overall culture of compliance with AML/CFT regulations.

Challenges and Achievements

Despite encountering challenges, including resistance from licensees and shifting to online inspections during COVID-19, MIPA’s efforts bore fruit. Mauritius successfully exited the FATF Grey list in 2021, becoming one of the first countries in the world to do so. In the same year, Mauritius was rated compliant with 39 out of 40 FATF recommendations. The remaining deficiencies related to the implementation of Recommendation 15, Virtual Assets and Virtual Asset Service Providers.

MIPA looks forward to building on this progress by conducting thematic reviews and refining supervisory approaches to improve compliance with FATF standards. This successful journey from FATF Grey list to global compliance is a testament to the determination and adaptability of MIPA and the Mauritian government.

Presentation at PAODAG Meeting

Jasbine Heenaye presented this case study at the October 2022 Professional Accountancy Organization Development & Advisory Group (PAODAG) meeting.