MAURITIUS: Financial sector must file plans to identify AML gaps
The Bank of Mauritius and the Mauritius Financial Services Commission have issued new anti-money laundering guidance, ordering all regulated entities to conduct a gap analysis against their requirements, and to submit plans to remedy any deficiencies in their risk-based approach, customer due-diligence, ongoing monitoring, reporting of suspicious transactions, record-keeping and employee training. Entities failing to comply with the guidelines may face regulatory action.
Mauritius’ Handbook and Guideline to strengthen their anti-money laundering and countering the financing of terrorism framework
Mauritius started the year on a high note in the area of anti-money laundering and countering the financing of terrorism (“AML/CFT”) by issuing two complementary documents: the Anti-Money Laundering and Countering the Financing of Terrorism Handbook: 2020 (the “Handbook”) and the Guideline on Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation (the “Guideline”).
In January 2020, the Financial Services Commission (“FSC”) issued the Handbook, which is a consolidation of the FSC’s guidance on anti-money laundering and financing of terrorism and proliferation of weapons of mass destruction (“WMD”). It is also a supplement to the Code on the Prevention of Money Laundering and Terrorist Financing, 2012 (as amended) (the “Code”).
The purpose of the Handbook is to provide financial institutions with guidance on applying national measures to combat money laundering and terrorist financing, and on complying with the requirements of the Financial Intelligence and Anti-Money Laundering Act, 2002 (“FIAMLA”), Financial Intelligence and Anti-Money Laundering Regulations, 2018 (“FIAML Regulations”) and the Code. Financial institutions should apply the Handbook when assessing the adequacy of their internal systems and controls and resolve any identified inadequacies, as failure to comply with these laws may result in regulatory action.
In assessing the level of compliance with these laws during onsite visits, the FSC will take the Handbook into account.
On 15 January 2020, the Bank of Mauritius (the “Bank”), as the designated AML/CFT supervisory authority of financial institutions, issued the Guideline under section 50 of the Bank of Mauritius Act, 2004.
In summary, the Guideline:
- replaces the Guidance Notes on Anti-Money Laundering and Combating the Financing of Terrorism for Financial Institutions issued in terms of the Bank’s letter dated 20 January 2017;
- applies to all financial institutions, members of their board of directors, management and employees;
- outlines the relevant requirements of the FIAMLA, FIAML Regulations, Banking Act and the United Nations (Financial Prohibitions, Travel Ban and Arms Embargo) Sanctions Act;
- sets out the broad parameters within which financial institutions should operate in order to address and prevent the risks of money laundering and financing of terrorism and proliferation;
- provides financial institutions with guidance in order to assist them with understanding and effectively performing their statutory and regulatory obligations; and
- provides practical guidance to assist financial institutions in designing and implementing AML/CFT policies, procedures and controls in the relevant areas of operation.
Failure to comply with provisions of the Guidelines may result in regulatory actions, including monetary penalties, the imposition of non-monetary sanctions, and in very serious instances, the revocation of the financial institution’s licence.
The Guideline requires all regulated entities to conduct a gap analysis against its requirements and formulate an implementation plan to address any identified gaps. The plan should then be submitted to the Bank upon request. Importantly, financial institutions must use the revised Guideline to conduct their 2020 AML/CFT external audits. The external audit should consider the status of a financial institution’s implementation plan in its assessment in the event that the financial institution would not have completed its implementation plan by the 2020 audit cycle.
The FSC’s Handbook and the Bank’s Guideline both cover the risk-based approach, customer due diligence, ongoing monitoring, reporting of suspicious transactions, record-keeping and employee training. As such, financial institutions should apply the minimum criteria set in the Handbook and Guideline in the event that there is knowledge, suspicion or reasonable grounds to suspect money laundering and financing of terrorism and proliferation.
The Handbook and Guidelines do not intend to cover guidance on all money laundering and financing of terrorism and proliferation of WMD risks that a financial institution may encounter or provide an exhaustive list of AML/CFT systems and controls and recommended practices. Financial institutions should, therefore, apply the guidance provided in a reasonable, proportionate, risk-based and outcome-focused manner.
Financial institutions should also take into consideration the factors outlined by the FSC and the Bank when identifying, assessing and mitigating the risks of these criminal activities and implement customised measures to combat money laundering and financing of terrorism and proliferation of weapons of mass destruction. Updated AML/CFT deterrence policies should be maintained and employees regularly trained on emerging typologies.
The costs of non-compliance with AML/CFT requirements can be devastating.