Mauritius FSC AML/CFT/CPF Handbook – X10 POINTERS

The Handbook results from the FSC’s efforts to uphold the country’s reputation as a sound international financial centre. It sheds light on the enhanced approach to fighting money laundering and terrorist financing and sets the tone for the regulator’s expectations from its licensees.

The following ten highlights do not purport to provide an all-encompassing summary of the handbook, but they are significant.

Scope and Applicability

1. The Handbook is designed to guide all financial institutions. It applies to special categories of persons, including but not limited to holders of financial services licences, management companies, global legal advisory service providers, insurers, collective investment schemes, investment managers and investment banking licence holders.

• https://www.fscmauritius.org/media/131386/updated-aml-cft-handbook.pdf

2. Its applicability extends to more than simple investment holding structures which only hold a Global Business Licence.

Legal Status

1. The Handbook provides that the guidance included therein is not enforceable but is illustrative to the extent that conforming conduct would tend to indicate compliance with the legislative framework.
2. The Handbook goes on to say that the FSC will take this Handbook into account when assessing the level of compliance with

• The Financial Intelligence and Anti-Money Laundering Act 2002 (the “FIAMLA”),

https://gra.govmu.org/gra/wp-content/uploads/2021/09/Fiamla-2020.pdf

https://www.icac.mu/wp-content/uploads/2015/06/140318-FIAMLA.pdf

3.Financial Intelligence and Anti-Money Laundering Regulations 2018  (the “FIAMLR”)

https://www.bom.mu/sites/default/files/the_financial_intelligence_and_anti-money_laundering_regulations_2018.pdf

https://www.fiumauritius.org/fiu/wp-content/uploads/2022/08/financial-intelligence-and-anti-money-laundering-regulations.pdf

• ANY AML/CFT “Code” issued by the FSC –

1. PLEASE: The March 2012 Code on the Prevention of Money Laundering and Terrorist Financing issued by the Mauritian Financial Services Commission (FSC) has been repealed [SEE NOTES AT THE END OF THIS UPDATE]

Compliance Officer

1. The FIAMLR enactment introduced the designation of a compliance officer at the senior management level responsible for ensuring continued compliance with the legislative framework's requirements and undertaking day-to-day oversight of the program for combating money laundering and terrorism financing.
2. The Handbook makes a major contribution by clarifying the role of the compliance officer.
3. As such, a financial institution must ensure that the compliance officer has timely and unrestricted access to its records and sufficient resources to perform his or her duties.
4. The compliance officer should cooperate fully with the staff.
5. In addition, they should be fully aware of their obligations and those of the financial institution and have regular contact with the board.
6. Where, owing to the financial institution's size, the compliance officer holds additional functions or bears other responsibilities, the financial institution must ensure that any conflicts of interest between the duties of the compliance officer role and those of any other functions are identified, documented, and appropriately managed.
7. An overarching obligation is that the compliance officer should be independent of the core operating activities of the financial institution and should not be engaged in soliciting business.

Risk Based Approach

1. The Handbook significantly discusses the risk-based approach expected from financial institutions.
2. Risk is broken down into three limbs: threat, vulnerability, and consequence.
3. Building on this premise is the weightage allocated to the various risk factors and how financial institutions can apply these principles.

Risk Rating

1. The FSC would expect a financial institution to avoid a tick box approach when assessing risks and consider each customer on a case-by-case basis or in group risk-rated buckets based on their profiles, looking at any dangers they pose along with any mitigating factors.
2. A risk rating matrix may be used, but the factors used should be documented, and details should be provided on how any risks identified would be mitigated.
3. The FSC would have no objection to templates or forms being used during the risk assessment; however, how these work should be precise, the scoring system, and how the score should be reviewed or overridden.

Third Party Reliance

1. It is common practice to have a third-party reliance arrangement.
2. To ensure that such arrangements meet the FSC’s expectations, the Handbook considers an example of an arrangement between a fund or its administrator and a relevant third party.
3. The arrangement should be unambiguous. It should also be written and signed and free of any conditional language, whether explicit or implied.

Electronic Identification and Verification

1. Consideration is given to systems used to carry out electronic verification of natural persons, and guidance is provided as to the steps that could potentially be used to ensure the system's adequacy.

Technological Factors

1. To keep up with the rapid pace and evolution of technology, the Handbook also sheds some light on the operational, reputational and legal risks which are posed by the use of  new and pre-existing products such as:

• Digital information storage, including cloud computing.
• Digital or electronic documentation storage.
• Electronic verification of documentation.
• Data and transaction screening systems; or
• The use of virtual or digital currencies.

Appropriate Scrutiny

1. Regulation 28(2) of the FIAMLR requires ‘appropriate scrutiny’ of any unusual activity and enhanced due diligence measures in appropriate cases.
2. Financial institutions are provided with some tips that should be considered when conducting ‘appropriate scrutiny’, and specific instances are likely to cause suspicion after conducting said appropriate scrutiny.

Employee Screening and Training

1. Employee screening and training have always been considered a practical component of AML/CFT measures in an organisation. The Handbook states that the guiding principle of all AML and CFT training should be to encourage directors, officers, and employees, irrespective of their level of seniority, to understand and accept their responsibility to contribute to protecting the financial institution against the risks of money laundering and terrorism financing.
2. The Handbook also includes a section devoted to the categories of employees who will receive additional training.

NOTES

1. The March 2012 Code on the Prevention of Money Laundering and Terrorist Financing issued by the Mauritian Financial Services Commission (FSC) has been repealed.
• https://www.fscmauritius.org/media/1157/fsc-aml-cft-code-31-may-17.pdf
2. The FSC announced this decision on 6 November 2020 via a Circular Letter referenced as CL061120 –
• https://www.fscmauritius.org/media/85191/circular-letter-cl06112020.pdf
3. The repeal will remain in effect until additional enforceable Anti-Money Laundering / Combatting Terrorist Financing (AML/CFT) requirements are issued.
4. Please note that the repeal of the Code 2012 does not affect any obligations or liability incurred under the repealed Code 2012, any previous operations of the repealed Code 2012 or anything duly done or suffered under the repealed Code 2012, any regulatory action already taken because of non-compliance with the repealed Code 2012, or any investigation carried out under the repealed Code 2012.
5. The FSC reserves its rights to take any regulatory/disciplinary actions for any breaches of the Code 2012 that occurred on or before the date upon which the Circular has been Issued.

Information about the Financial Intelligence and Anti-Money Laundering Act 2002 (FIAMLA) and the Financial Intelligence and Anti-Money Laundering Regulations 2018 (FIAMLR):

Financial Intelligence and Anti-Money Laundering Act 2002 (FIAMLA)

1. FIAMLA is a crucial legal framework enacted to combat money laundering and the financing of terrorism.
2. It was proclaimed by Proclamation No. 31 of 2002 and came into effect on 10th June 2002 in Mauritius
3. The Act provides for establishing and managing a Financial Intelligence Unit and a Review Committee to supervise its activities.
4. It also provides for the offences of money laundering, the reporting of suspicious transactions, the exchange of information concerning money laundering, and mutual assistance with overseas bodies concerning money laundering.

Financial Intelligence and Anti-Money Laundering Regulations 2018 (FIAMLR)

1. The Minister made the FIAMLR under sections 17C, 17D, 17E, and 35 of the FIAMLA.
2. These regulations provide detailed requirements for banks, financial institutions, cash dealers, and members of relevant professions or occupations to comply with the FIAMLA.
3. They cover a wide range of topics, including the definition of beneficial owners, business relationships, correspondent banking, cross-border wire transfers, and domestic wire transfers

Source

• https://chambers.com/articles/ten-things-to-retain-from-the-fsc-handbook-on-anti-money-laundering-and-countering-the-financing-of
• The Financial Intelligence and Anti-Money Laundering Act 2002 (the “FIAMLA”),
• https://gra.govmu.org/gra/wp-content/uploads/2021/09/Fiamla-2020.pdf
• https://www.icac.mu/wp-content/uploads/2015/06/140318-FIAMLA.pdf
• Financial Intelligence and Anti-Money Laundering Regulations 2018  (the “FIAMLR”)
• https://www.bom.mu/sites/default/files/the_financial_intelligence_and_anti-money_laundering_regulations_2018.pdf
• https://www.fiumauritius.org/fiu/wp-content/uploads/2022/08/financial-intelligence-and-anti-money-laundering-regulations.pdf