Police Rewards: A Case of Breach of Trust and Banking Laxity

Qs & As

By Lex

The ongoing investigation into the controversial “Reward Money” saga has taken a disquieting turn with the revelation that millions of rupees in reward monies were deposited in commercial bank accounts, including personal ones, or transited for eventual payments of “reward” to potential police informers or police officers responsible for the arrests of drug traffickers. It would seem that these transactions did not immediately trigger scrutiny or flags by the banks involved, given their unusual nature and magnitude. Lex examines the critical questions that this matter brings to the forefront.

* What are the regulatory requirements for banks to exercise due diligence and report suspicious activities involving their customers?

Section 2 of the Financial and Intelligence Anti Money Laundering Act [FIAMLA] defines a suspicious transaction as a transaction which gives rise to a reasonable suspicion that it may involve amongst other matters, the laundering of money or the proceeds of any crime; or is made in circumstances of unusual or unjustified complexity; appears to have no economic justification or lawful objective gives rise to suspicion for any other reason. Banks should be on the lookout for such transactions and report them to the Bank of Mauritius and to investigating bodies.

* We presume that the duty of banks in Mauritius to exercise vigilance over all accounts and transactions would not be waived even for government institutions — whether it’s the Police Force or any other investigative agency. One would expect them to, if transactions and report any suspicious activity to the relevant authorities. Does it appear that they have assumed their responsibility in that regard?

A waiver would be applicable only in cases of exempt transactions. The FIAMLA limits the payment of cash in a bank to Rs. 500,000. Even when cheques are deposited the practice is for banks to query a customer unless it is a bank transfer. An exempt transaction is defined in FIAMLA as a transaction between the Bank of Mauritius and any other person; between a bank and another bank; between a bank and a financial institution.

The transaction should not exceed an amount that is commensurate with the lawful activities of the customer, and the customer is, at the time the transaction takes place, an established customer of the bank or financial institution; and the transaction consists of a deposit into, or withdrawal from, an account of a customer with the bank or financial institution.

* Given that the Police Force is not involved in any commercial activities, unlike, for example, the CWA (water) or the CEB (electricity) selling their services to consumers, are there good reasons why the Reward Money mechanism should have been operated at the level of a commercial bank instead of through the services of the Accountant General?

From information available, all deposits and withdrawals were made at a commercial bank. The questions that should have been asked are as follows: Did that bank exercise due diligence and did it ensure that the police satisfied the exempt transactions criteria?

Whatever banks were involved, they either failed in their duty of due diligence. The sheer scale of the scandal, with deposits and withdrawals totaling millions of rupees, could not have been possible without the complicity or gross negligence of certain bank officials, who were likely subjected to intense internal and external pressure.

* Given that the Police Force’s Reward Money mechanism was operated through a commercial bank, one would also assume that established protocols and oversight mechanisms would have been put in place to ensure accountability. Whose responsibility was it to do that?

Based on the information now available from recent arrests and investigations, it would appear that the police’s reward money — which is funded by taxpayers through the Consolidated Fund — became a mechanism for some officers to misappropriate funds with impunity.

Since the Police Commissioner has discretion over the payment of this reward money, it would also appear that he failed completely to use that authority judiciously. This oversight allowed for the approval of requests that were not genuine and claims for amounts that were both unreasonable and exaggerated.

* It would seem that successive reports of the Director of Audit have made comments on the financial management and procedures of the Police Force, including a focus on the reward money mechanism, especially relating to issues of lack of control and transparency, concerns over auditing, and procedural flaws. Why could the abuse still persistin spite of the red flags raised?

Dishonesty and greed had so deeply corrupted the system of police reward money that former commissioner Khemraj Servansing was forced to put a stop to it. We are told that the reaction from some sections of the police force was one of deep demotivation, as if their livelihood depended entirely on these funds.

Based on recent revelations, it’s clear the police reward money became a windfall for a select few officers close to the top. Once the system was corrupted, red flags were ignored by everyone. This widespread negligence started with top government officials and spread throughout some sections of the police force.

* What are the obligations of the Financial Intelligence Unit (FIU) regarding the detection and investigation of suspicious transactions involving significant sums, particularly those linked to public officials or government operations?

The Financial Intelligence Unit (FIU) is primarily responsible for receiving, analyzing, and disseminating information related to suspicious transactions to relevant authorities. It acts as a central agency in detecting and investigating potential money laundering and terrorist financing activities.

Once the FIU identifies suspicious activity, it disseminates the information to relevant law enforcement agencies, supervisory authorities, and other relevant bodies. This dissemination enables these authorities to further investigate and potentially prosecute criminal activity.

The FIU also disseminates information to foreign FIUs for international cooperation in combating financial crime.

* What role does the Bank of Mauritius play in overseeing commercial banks to ensure they adhere to anti-money laundering and suspicious transaction reporting regulations, especially concerning public funds?

The Bank of Mauritius sets out its duties in Chapter 2 of its ‘Guideline on Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation’.

To put it simply, the Bank of Mauritius has a main job when it comes to fighting financial crime: it makes sure that all the financial businesses it licenses are following the rules to stop money laundering and the funding of terrorism. These financial businesses include: banks, other companies that take deposits (like credit unions), money lenders, and money changers.

Basically, the Bank of Mauritius is the main referee, making sure these financial institutions play by the rules to keep the financial system clean.

* Given the disquieting way in which public reward monies appear to have been handled—or even misappropriated—it raises a question about the role of the Bank of Mauritius. While the sheer volume of daily banking transactions in the country is massive, it cannot be argued that the Bank of Mauritius is exempt from detecting such irregularities?

As the designated supervisor of all financial institutions under its purview, the Bank is required to ensure these institutions comply with key banking laws, including the Financial Intelligence and Anti-Money Laundering Act and the Financial Crimes Commission Act.

It was therefore the duty of the Bank’s former officials to have detected these flaws. It is to be hoped that the Financial Crimes Commission will now investigate these former officials for any potential failures.

* In light of so many cases of bad loans running into billions of rupees registered down the years at the level of commercial banks, it would seem there is an issue with the supervisory functions of the Bank of Mauritius. Given these repeated issues, how can the Bank of Mauritius restore public trust in its ability to effectively regulate the banking sector and protect depositors?

Given the long history of bad loans at commercial banks, it’s clear there was a serious issue with the Bank of Mauritius’s supervisory functions. The core challenge for the Bank’s new leadership is to restore public trust in its ability to effectively regulate the sector and protect depositors.

With a new team now at the helm, there is hope that the laissez-faire and laissez-aller policies of former officials will become a thing of the past. The new leadership’s success will depend on its ability to rebuild confidence by demonstrating a truly effective and transparent approach to regulation.

Mauritius Times ePaper Friday 15 August 2025