Financial Crime World

Mauritius Financial Institutions Face Increased Scrutiny with New Compliance Audits

The Financial Services Commission (FSC) of Mauritius has introduced new guidelines for financial institutions in the country, aimed at combating money laundering and terrorist financing. The latest amendments to the Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) Handbook require licensees to conduct regular independent audits and risk-based business assessments.

Background

The FSC’s AML/CFT Handbook, issued in January 2020, provides guidelines for financial institutions on how to comply with local legislation. The latest amendments introduce a new chapter on independent audits and additional provisions on implementing an adequate business risk assessment.

Responsibility for Business Risk Assessment and Internal Compliance Culture

According to the handbook, the ultimate responsibility for business risk assessment and internal compliance culture lies with the board of directors. Management, compliance, and risk management teams must work together to perform assessments, which involve identifying, analyzing, and testing controls at regular intervals.

Independent Audits

The new chapter on independent audits is designed to help licensees meet regulatory and legal requirements through an independent compliance audit. The FSC requires financial institutions to have an audit function in place to review and verify compliance with AML/CFT measures.

Key Components of Independent Audit

  • Risk-based: in line with international best practices
  • Covers key components of the AML/CFT program
  • Frequency and extent of the audit depend on:
    • Size of the licensee
    • Nature of the business
    • Context and complexity of operations
    • Internal risk assessment

Reporting Findings and Corrective Actions

The findings of the report should be reported to senior management and the board of directors, which has the responsibility to take appropriate corrective actions. The FSC will assess the extent to which the business risk assessment reflects the residual risks faced by each licensee.

Benefits of New Guidelines

The new guidelines aim to ensure that financial institutions in Mauritius are adequately equipped to detect and prevent money laundering and terrorist financing activities. Compliance with these standards is expected to enhance the integrity and effectiveness of AML/CFT programs in the country’s financial sector.