(Published MTimes 31 May 2019)
This follow-up report of the Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) assesses the progress made by Mauritius to resolve the technical compliance shortcomings identified in its Mutual Evaluation Report (MER). New ratings are given when sufficient progress has been made.
This report does not cover the progress made by Mauritius in improving its effectiveness. Progress in this area will be assessed as part of a subsequent follow-up assessment. If sufficient progress has been made, the Immediate Outcome ratings may be reviewed.
This follow-up report only assesses the level of technical compliance with the Financial Action Task Force’s recommendations, i.e., whether the legal and other regulations in place to combat money laundering and the financing of terrorism and proliferation are in line with FATF’s standards, known as the FATF 40 Recommendations. There are four levels of ratings for technical compliance: Compliant, Largely Compliant, Partially Compliant, and Non Compliant.
Mauritius was rated Compliant on 4 FATF Recommendations, Largely Compliant on 10 Recommendations,Partly Compliant on 12 Recommendations, and Non Complianton 14 Recommendations. That was an extremely poor reflection of the state of our Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime.
For inclusion on the FATF blacklist, another one of the criteria is when the country is Non Compliant or Partly Compliant on at least 20 FATF recommendations, i.e., is faring poorly on half of the 40 Recommendations. Mauritius received in July 2018 a total of 26 Non Compliant and Partly Compliant Ratings – a dismally poor score. In response, Government introduced new amendments to the AML/CFT regime in the Finance Bill 2018, and new Financial Intelligence and Anti Money Laundering Act (FIAMLA) regulations which became effective on 1 Oct 2018. Amongst other measures, stricter customer due diligence requirements, the broadening of the definition of Politically Exposed Persons (PEPs), and the closer identification of beneficial ownership which aligned our legal framework better with FATF standards.
Following a submission from Mauritius, the ratings on technical compliance had been revised by ESAAMLAG in the follow-up report and Technical Compliance Re-Rating.Thus, 6 Non Compliants have been rerated as 2C, 3LC and 1PC 1 5 Partially Compliant ratings were apparently to 4C and one remained PC, and one LC changed to Compliant. These changes would reduce the number of Non Compliant and Partly Compliant to 16, which takes Mauritius out of a dangerous zone/the danger zone. Now Mauritius has a one-year Observation Period to work with ESAAMLG to address the deficiencies before a formal review by the FATF.
But this is only part of the narrative. The other component of the Mutual Evaluation Report is the effectiveness assessment. On the basis of FATF methodology, effectiveness is rated on 11 outcomes, ranging from whether supervisors effectively supervise, monitor, regulate financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) for AML/CFT compliance commensurate with the risks and to whether ML/TF offences and activities are effectively investigated and offenders are prosecuted and subject to proportionate sanctions. There are 4 levels of ratings of effectiveness: High, Substantial, Moderate, and Low.
The effectiveness ratings for Mauritius are dismal. It is rated Low on 7 outcomes, and Moderate on 4 outcomes. Among the criteria for the FATF to put a country on an AML/CFT Blacklist, is whether it has 9 or more Low or Moderate ratings on effectiveness, and at least 6 Lows. Mauritius has 11 Low or Moderate ratings and 7 Lows.
This poor rating is of grave concern. We barely escaped being backlisted last time round and we are not totally out of the woods as we are still on a kind of grey list and under monitoring . Did we have to undergo through all these trials? There is no point in blaming the earlier regime or the previous Minister of Financial Services. Enough time has been wasted. We need to realize that laws and regulations are not the end of the story, only the beginning. We must put greater efforts at ensuring that these laws and regulations are effectively applied, and not meant for show. To this end, the whole institutional framework must be reviewed with a view to enhancing performance and bringing concrete results, with the injection of additional human and financial resources, greater capacity training, and greater cooperation between law enforcement agencies, amongst other measures.
