In February last, the FATF issued a new list of ‘jurisdictions under increased monitoring’ – commonly known as the ‘grey list’ – which included Mauritius for the first time alongside 17 other jurisdictions. The Minister of Financial Services & Good Governance Mahen Kumar Seeruttun then argued that we should make a distinction between a jurisdictions under increased monitoring i.e. the grey list and high-risk jurisdictions subject to a call for action i.e. the black list.
It was more "fear than harm" ,he asserted, as the FATF did not call for the application of enhanced due diligence to the greylisted jurisdictions. We were just being put under increased monitoring and time and again he reproduced the same arguments that since the 2018 report, Mauritius has made numerous amendments to its legal framework and is today in compliance with 35 of the 40 recommendations by ESAAMLG, fooling themselves and the other stakeholders.
Now we have the MBA, which is not only surprised at the inclusion on the European Union’s blacklist, but came out with the same oft said arguments about the numerous amendments to the legal framework . And the height of it all is the stance of the ATMC, which has rushed to the rescue of Government, claiming that the EU has not applied the same FATF standards.
For how long will they continue to deny the fact that having the legislation in place is not enough?; we have to ensure the effectiveness of the legal framework and institutions in delivering the desired outcomes. Our anti money laundering legislation has flashing sharp teeth, but they do not really bite in terms of immediate and effective responses to addressing financial crime.
Mauritius has not made positive and tangible progress on several effectiveness issues, including the lack of effective risk based supervision, the lack of improvement in access to beneficial ownership information, the lack of capability to conduct money laundering investigations, including parallel investigations, the lack of control and oversight over non-profit organizations on terrorism financing, and the lack of implementation of targeted financial sanctions related to terrorism and proliferation financing. There is an urgent need for a complete review and overhaul of ICAC and other law enforcement agencies to boost the country’s effectiveness in tackling drug and financial crime.
On the question of the EU basis for adding Mauritius to the blacklist, we would like to add that EU identifies annually a blacklist of non-EU countries, known as high risk third countries, which have strategic deficiencies in their anti-money laundering or terrorist financing (AML/CFT) regime that pose significant threats to the EU financial system. On 7/5/20, the EU Commission adopted a revised blacklist of 22 countries, which also includes Mauritius. This new blacklist will be submitted to the European Parliament for approval within 2 months at latest.
In drawing up its list, the EU considers that “the internal EU market would be exposed to serious risks of ML and TF if the EU does not add jurisdictions identified by the FATF to the EU list”. The EU Commission assessed available information from the FATF, and where appropriate, other sources of information to reach its conclusion. Its analysis confirmed the respective strategic deficiencies of these countries as identified by the FATF. The EU also goes beyond the FATF listing by identifying more countries on its blacklist, using additional and stricter criteria based on its own EU money laundering directives
The implications of the EU blacklisting for Mauritius can be seriously damaging for the conduct of business through EU banks and other financial institutions. Although EU blacklisting does not carry express sanctions, all relevant businesses in the EU are legally obligated to apply higher due diligence controls to financial flows involving blacklisted countries.
All banks and other financial institutions are bound to apply enhanced due diligence measures in all EU member states with respect to business relationships or transactions involving the EU blacklisted countries. Enhanced due diligence includes obtaining additional information on the customer and on the beneficial owner, or obtaining senior management approval for establishing a business relationship. For new listed countries like Mauritius, the enhance due diligence measures will apply from 1 October 2020, to make allowance for the impact of the Covid-19 pandemic.
