Mauritius – Avoiding the Shades of Grey of the FATF

Global Business

By Tahir Wahab

The cloudy shades of grey have gone, much to the relief of all financial stakeholders in Mauritius. It is now time to reflect and use this nightmare as a lesson for the future.

Countries are placed in the grey list for increased monitoring to counter money laundering and funding of terrorist activities and to address strategic gaps in their systems.

Mauritius exits FATF grey list. Pic – International Investment

The way forward should focus on three aspects

Mauritius and all stakeholders should by now understand that we all have a common destiny. be it the Government or all stakeholders within our financial services sector.

1 – Reputation building

First and foremost, the reputation of Mauritius is something everyone should protect. The government should by now understand the importance of communication; and appoint a PR-marketing firm possibly by setting up an ‘International Investment Bureau’ to cater for and facilitate business and re-promote actively our jurisdictions as a transparent and well-regulated jurisdiction to attract investors. Equally, an international PR-marketing firm should be appointed to counterbalance any negative press coverage around the world, as we should expect that there will be release of other versions of Paradise papers in the future.

2 – Monitoring Task Force

Secondly, we have experienced the rigorous process through which we had to go to ensure that we comply with all the recommendation of the FATF. Thus, we are already acquainted with the methodology used by the Financial Action Task Force (FATF) to assess compliance and non-compliant countries. The Government and monitoring agencies like the FSC, FIU and Bank of Mauritius should work together within a permanent committee to review all the recommendations on an ongoing basis and ensure technical compliance at all times including assessing the effectiveness of our AML/CFT regulations.

The Government should remain constantly alert and build on the momentum of recent legal initiatives to enhance the AML/CFT regime and ensure that our legal framework remains up to date with international best practices at all times.

3 – Implementation and effectiveness of AML/CFT

Technical compliance is one thing, but implementation and effectiveness is the crucial aspect. We should therefore as far as possible avoid scandalous episodes, such as the Sobrinho affair and others where lack of enhanced due diligence and proper risk-based approach can negatively impact on the image of Mauritius. We should not only be compliant but also seen to be compliant.

Therefore, stakeholders should not be complacent with compliance and ensure that every investor satisfies the set criteria. Here, the role of regulators is vital to ensure that sanctions and fines are imposed if ever there are deficiencies at this level.

Mauritius should properly identify, assess and understand its money laundering and terrorist financing risks, and co-ordinate domestically to put in place actions to mitigate these risks. This includes the involvement of competent authorities (described as role of supervisors by the FATF) and using a wide range of reliable information sources including risks assessment methodology as a basis for developing and prioritising AML/CFT policies and activities; and communicating and implementing those policies and activities in a co-ordinated manner across appropriate channels as and when there is need to do it without being afraid of the approach.

All the above measures should ultimately achieve three objectives:

  1. Policy, coordination and cooperation to mitigate the money laundering and financing of terrorism risks.
  2. Proceeds of crime and funds in support of terrorism are prevented from entering the financial and other sectors or are detected and reported by these sectors.
  3. Money laundering threats are detected and disrupted, and criminals are sanctioned and deprived of illicit proceeds. Terrorist financing threats are detected and disrupted, terrorists are deprived of resources, and those who finance terrorism are sanctioned, thereby contributing to the prevention of terrorist acts.

We should not lose sight that the ATF mutual evaluation cycles will be conducted five years after the publication of the mutual evaluation report (MER) which for Mauritius was in April 2018. The FATF will then conduct a follow-up assessment and look at the priority actions from the mutual evaluation report and the reforms the country has introduced to improve the effectiveness of its actions to protect the integrity of the financial system and its compliance with the FATF.

Tahir Wahab is a Fellow of the Chartered Association of Certified Accountants, Chartered Banker, and holds an MBA with Specialisation in Strategic Planning

* Published in print edition on 2 November 2021

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