Exiting the Grey List


By Jan Arden

Following several meetings regarding the country’s progress, the Financial Action Task Force (FATF) conveyed on 25 June 2021 that Mauritius has substantially completed its action plan at a technical level and that the FATF will conduct an on-site inspection in Mauritius to verify implementation of the reforms outlined in its last progress report submitted in April 2021. The same day the Ministry of Financial Services and Good Governance issued a communique to congratulate all stakeholders for their efforts and reassert the commitment of the Government to continue to take all necessary steps to sustain reforms in order to strengthen the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime.

It is a most welcome piece of news that the numerous shortcomings and strategic deficiencies identified in 2020 have at last been fully addressed, opening the way for the on-site inspection and evaluation which would presumably take place this month, in time for the October plenary. However, without wishing to dampen enthusiasm of seasoned operators or the celebratory mood in government quarters (EDB, BoM, Ministry of Financial Services), and while hoping our institutions are up to scratch for the evaluation, let us remain guardedly optimistic for a couple of reasons.

The first has to do with the onsite evaluation itself. Quoting from official FATF documents,

“The scope of the evaluations will involve two inter-related components for technical compliance and effectiveness.

The technical compliance component will assess whether the necessary laws, regulations or other required measures are in force and effect, and whether the supporting AML/CFT institutional framework is in place.

The effectiveness component will assess whether the AML/CFT systems are working, and the extent to which the country is achieving the defined set of outcomes.”

If the technical side has been reasonably defended and the FATF has accepted that our set of laws and regulations meet the compliant or largely compliant (C/LC) status, much of the on-site evaluation would be focused on demonstrating the effectiveness with which those laws and regulations are applied, across the board, consistently and predictably, with demonstrable results and sanctions whenever applicable. Which is where our regulatory and investigative authorities will have to demonstrate with sufficient evidence that they are indeed up to the task and are getting results, not just in a few odd cases, but as credible independent deterrent of fraudulent, illicit and criminal financial activities within a sustainable policy framework. No two ways to understand that the ball rests squarely in the hands of the government team.

We may also note that Government has announced some measures in its Budget Speech 2021/2022 to continue enhancing the AML/CFT legislative framework of the country, key among which are a Financial Crime Commission to better manage the fight against financial crime and a new Bank of Mauritius Bill and Banking Bill to reflect best international practices. Both are as yet in the realm of wishes and desires rather than concrete demonstrable evidence of progress.

Another reason to remain guarded has to do with our risk profile which has far less to do with terror financing, than with money laundering that is associated with drug dealing, gambling and outright corruption.

Chief among this dark trio is corruption, bribery and general pilferage or siphoning of public funds to the benefit of cronies and associates of high officials and politicians in office. Money laundering is the process of concealing illicit gains that were generated from criminal activity and the FATF consequently attaches importance to the fight against corruption. The more so now that the G20 has called upon the FATF to integrate the problem of corruption in the framework of its work on combating money laundering. Corruption and money laundering are intrinsically linked, say both the FATF and the G20, and they might be taking a close look at high-profile affairs and scandals which have regularly hit the headlines over the past few years. The Senor Alvaro’s princely treatment and the St Louis gate may, for instance, be on the menu of savvy auditors although they certainly would not be the only ones.

It is also common knowledge to the FATF that money laundering and corruption of processes during the Covid pandemic, often through abuse of convenience emergency procurement contracts, have emerged as major issues. The resilience of our regime, our processes, the due diligence of our Boards and Ministries at STC, Commerce and Health are on the front line. Our institutions may be tested on that front and have to satisfy auditors with concrete evidence that high-level and other abstruse committees were actually doing their statutory duties to the best of their abilities within the parameters and constrictions of the pandemic.

As for the massive funds generated from drugs and narco-trafficking, they are intrinsically tied to money-laundering, often on a trans-national basis, through a variety of means and mechanisms known to auditors. Are the ADSU and the FIU equipped and encouraged to keep up a permanent vigilance and perform effective money-trails and audits on illicit gains that are sufficiently huge to attract attention? Will the Lam Shang Leen commission of inquiry on drug trafficking and its principal recommendations concerning the ADSU or the vulnerable points of entry be taken up by the auditors?

The last of that sordid trio of white-collar crime and money-laundering is the betting, gambling, casinos and horse-racing activities which have undoubtedly become an industrial concern of late. The fate of the Parry Report on horse-racing, an interim version of which was submitted to the former President of the Republic late 2014, has been dubious but in December 2015 the late PM, SAJ, did invite two renowned UK horse-racing integrity specialists, Messrs D.P. Gunn and J.P. Scotney, to advise and make recommendations. The interview granted by Benn Gunn, in Week-End issue of 15th August makes rather damning reading: none of their 13 recommendations have been implemented, blocked it seems by influential persons at the GRA and PMO. He sums up his views that the alternative track being pursued by the Government of Mauritius “lacks the essential and fundamental element of independence”.

We trust, if the matter comes up for review, that the authorities will convince auditors that theirs is a genuine attempt to put “ordo ab chao” rather than hidden agendas to benefit private gains.

All in all, then, the on-site effectiveness evaluation will depend to a considerable degree on the agencies and institutions being manned by government’s appointees and nominees defending the country’s cause since we were plunged into the damaging twin lists of FATF and the EU in 2020. That the bone marrow has not been damaged and rotten to the point that salvage cannot be expected from the dysfunctional Parliament or from the institutions with the notable exception of the judiciary.

As for the trivialization of costly, time and resource-consuming commissions of inquiry, their reports either tossed away, sat upon or simply used to stoke political ends, the auditors may smile. But certainly, the latest, as a posthumous twist to the Britam saga, smacks more of contempt for our judiciary and Law Lords, through an attempted rehashing of the government narrative of 2015 that was dismissed convincingly in International Arbitration and confirmed, two months ago, in our highest judiciary instance, the Privy Council.

While we wish the contrary were true, the ride to exiting the nefarious FATF grey list may not be as smooth as our officials would have us believe. Patriotism is not the parroting of official narratives but an unending quest for greater and nobler values, ethics, morals and justice, often against the formidable weight of self-protecting establishments, formerly colonial, nowadays financial empires and their interests.

* Published in print edition on 17 August 2021

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