Mauritius Financial Institutions Face ML/TF Risks through Unregulated Services and Products
Introduction
The Financial Services Commission (FSC) has released a handbook outlining recommended practices for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). However, experts warn that certain financial institutions in Mauritius may be exposed to ML/TF risks through unregulated services and products.
AML/CFT Handbook Highlights
The FSC AML/CFT Handbook emphasizes the need for a risk-based approach to AML/CFT, requiring financial institutions to consider their own particular circumstances. The handbook provides guidance on good practices, including:
- Customer Due Diligence (CDD)
- Monitoring transactions
- Reporting suspicious activities
Unregulated Services and Products Pose ML/TF Risks
Despite these guidelines, some financial institutions in Mauritius may be using unregulated services and products that increase their exposure to ML/TF risks. For example:
- Offering cryptocurrency trading or other high-risk investment products without adequate CDD checks or monitoring
- Failing to implement robust AML/CFT policies and procedures
Consequences of Unregulated Services and Products
“The lack of regulation and oversight in these areas creates an environment where ML/TF activities can flourish,” said a financial expert who wished to remain anonymous. “Financial institutions that offer unregulated services and products are putting their reputation and customers at risk.”
Importance of Establishing a Robust Compliance Culture
The FSC handbook also highlights the importance of establishing a robust compliance culture within financial institutions. This includes:
- Ensuring that employees understand their role in AML/CFT
- Empowering employees to report suspicious activities
- Maintaining an open and positive approach to compliance and AML/CFT issues amongst all employees
Human Resources Play a Crucial Role in AML/CFT
In addition, the handbook emphasizes the importance of human resources in AML/CFT. It notes that a hierarchical approach within a business can hinder effective systems of control.
“Financial institutions must recognize the human element in AML/CFT and address any barriers that may prevent employees from reporting suspicious activities,” said another financial expert.
FSC AML/CFT Handbook Availability
The FSC AML/CFT Handbook is available online and provides detailed guidance on AML/CFT best practices for financial institutions operating in Mauritius.