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FSC Issues Revised AML/CFT Guidelines for Individuals in Mauritius

The Financial Services Commission (FSC) in Mauritius has released a revised Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) Handbook, aimed at providing guidelines to licensees on how to combat money laundering and terrorist financing.

Key Changes and Updates

Independent Audit

A new chapter 13, “Independent Audit”, has been added to the handbook. This chapter outlines the importance of an independent audit function in evaluating a financial institution’s AML/CFT program. The chapter provides guidelines on conducting risk-based audits that cover all aspects of the program, including policies, procedures, and systems.

Business Risk Assessment

The emphasis on business risk assessment has been revised to place ultimate responsibility with the board of directors. The handbook stresses the importance of a systematic approach to risk management, involving identification, analysis, and testing of controls at regular intervals.

Revised Risk-Based Approach

Chapter 4, “Risk-Based Approach”, has been amended to provide guidance on implementing an adequate business risk assessment. According to the revised clause 4.3, the first line of defence is responsible for performing the risk assessment, with management, compliance, and risk management working together to identify vulnerabilities and develop strategies to mitigate risks.

Guidelines and Expectations

Cyclical Process

The handbook highlights the importance of a cyclical process in risk management, involving regular identification, analysis, and testing of controls to ensure that risks are accurately assessed and managed. It also emphasizes the need for licensees to demonstrate how their risk assessment is effective in line with their inherent risks and vulnerabilities.

Compliance Requirements

All licensees are expected to comply with the guidelines outlined in the revised handbook immediately. The FSC has warned that failure to adhere to the handbook’s provisions may result in regulatory action being taken against licensees.

Importance of Independent Audits

In a statement, the FSC emphasized the importance of independent audits in evaluating AML/CFT programs, stating that such audits are vital elements of any effective compliance program. The commission urged licensees to conduct regular risk-based audits and to provide written reports highlighting potential failings and recommended courses of action.

Conclusion

The revised handbook is seen as a major step forward in strengthening AML/CFT compliance in Mauritius, and its implementation is expected to enhance the integrity and effectiveness of the country’s financial sector.