Mauritius proliferation financing (PF) risk is a REAL AND PRESENT DANGER following the FSC suspension of 13 licences.

My friend and colleague at Axis Ameer Caunhye, associate director - compliance and risk- Axis Fiduciary Ltd, has written a TIMELY ARTICLE, Mauritius and its proliferation financing (PF) risk

• https://www.axis.mu/uplds/Proliferation-Financing-The-Silent-Threat-Mauritian-Financial-Institutions-Must-Confront.pdf

This article is timely because in July 2025, the Financial Services Commission of Mauritius.

• Suspended 13 licences of companies involved in shipping, suspected of connections to sanctioned parties or PF activities.

• Took decisive action by suspending 13 licences of companies involved in the shipping sector, citing suspected connections to sanctioned parties or proliferation financing (PF) activities.
• https://www.comsuregroup.com/news/sapang-shipping-inc-loses-its-mauritius-registered-agent-redbird-corporate-services-due-to-eu-sanctions-on-both/

Here is the breakdown of the 13 shipping companies whose licences were suspended due to suspected links to sanctioned parties or proliferation financing (PF) activities:

Suspended Shipping Companies – July 2025

1. Aklan Shipping Incorporated
2. Angat Shipping Incorporated
3. Bicol Shipping Incorporated
4. Campana Shipping Incorporated
5. Davao Shipping Incorporated
6. Morong Shipping Incorporated
7. Naga Shipping Incorporated
8. Elizario Shipping Incorporated
9. Ragang Shipping Incorporated
10. Tigwa Shipping Incorporated
11. Tirad Shipping Incorporated
12. Tunasan Shipping Incorporated
13. Sapang Shipping Incorporated

These suspensions were issued under Section 74(6)(a) of the Financial Services Act, which prohibits suspended companies from conducting any business unless explicitly approved by the FSC.

References

• Mauritius Financial Services Commission - OffshoreAlert https://www.offshorealert.com/category/documents/source/regulatory-agencies/mauritius-regulatory-agencies/mauritius-financial-services-commission/
•  NOTICE - fscmauritius.org https://www.fscmauritius.org/media/201690/3-notice-to-publish-suspension-bicol-shipping-incorporated.pdf

Context & Implications

• Sapang Shipping Inc. was also sanctioned by the EU on July 18, 2025, for its alleged involvement in the Russian oil trade and its ties to the ABC Group and Ah-Chuen family.
• These companies were likely involved in complex trade routes, dual-use goods, or front operations that masked PF-related activities.
• The FSC’s actions reflect Mauritius’ commitment to FATF Recommendation 7 and its UN Sanctions Act 2019 enforcement.

Key Details:

• These companies were most likely linked to entities or individuals subject to international sanctions, particularly those not listed by the United Nations, but designated by OFAC (US), the EU, or the UK.
• The suspensions were part of Mauritius’ broader effort to strengthen its PF controls, especially in high-risk sectors like shipping, logistics, and trade finance.
• The FSC acted under the United Nations Sanctions Act 2019, which mandates enforcement of UN resolutions and defines proliferation broadly—including technical assistance, brokering, and services related to WMDs.

Why Shipping Is High-Risk:

• PF networks often exploit maritime trade to move dual-use goods (civilian/military applications).
• Shell companies and complex ownership structures in shipping make it easier to obscure links to sanctioned entities.
• Vessels may be registered under flags of convenience or operate through jurisdictions with weak PF oversight.

Mauritius’ Response:

• The FSC’s enforcement reflects a proactive stance in aligning with FATF Recommendation 7 on targeted financial sanctions.
• The country has improved its PF framework significantly since exiting the FATF grey list in 2021.
• The National Sanctions Secretariat (NSSec) now coordinates PF-related sanctions enforcement and guidance.

To support his article, Comsure would like to add the following

Key Findings on Mauritius and Proliferation Financing Risk

1. Indirect Exposure via Financial Infrastructure

Mauritius is a well-established international financial centre offering services in trade finance, cross-border transactions, and corporate structuring. These strengths also create vulnerabilities:

• PF-linked transactions can be masked through legitimate-looking trade, front companies, and layered ownership structures.
• Dual-use goods (civilian and military applications) traded through Mauritius may be exploited for PF purposes.
• Complex corporate vehicles and trusts can obscure beneficial ownership, making it harder to detect links to sanctioned entities.

2. Legal and Regulatory Framework

Mauritius has taken significant steps to mitigate PF risks:

• United Nations Sanctions Act 2019: Defines proliferation broadly, including technical assistance and brokering.
• National Sanctions Secretariat (NSSec): Coordinates implementation of UN sanctions and targeted financial sanctions (TFS).
• FIU Guidelines: Provide detailed instructions for reporting persons on PF screening, reporting, and compliance.

3. FATF Compliance and Monitoring

• Mauritius was placed on the FATF Grey List in 2020 due to deficiencies in AML/CFT/CPF (Counter-Proliferation Financing).
• It exited the list in October 2021, having achieved “Compliant” or “Largely Compliant” ratings across all 40 FATF Recommendations, including Recommendation 7 (PF-related sanctions).

4. Challenges and Gaps

Despite progress, Mauritius faces ongoing challenges:

• Low awareness of PF risks across sectors.
• Sanctions screening often limited to UN lists, ignoring OFAC, EU, and UK designations.
• Technical expertise is lacking for identifying dual-use goods.
• Ownership obfuscation remains a vulnerability.

5. International Cooperation and Risk Assessments

• Mauritius is actively engaged with ESAAMLG and FATF.
• It completed its second National Risk Assessment (NRA) in May 2025, which includes PF risks.

Conclusion

Mauritius is not directly involved in proliferation financing cases, but its financial system is vulnerable to indirect exposure. The country has made commendable progress in strengthening its PF controls, but continued vigilance, broader sanctions screening, and sector-specific training are essential to mitigate evolving risks.

PF Typologies Relevant to Mauritius

Mauritius, as a well-established international financial centre, faces indirect exposure to PF risks due to its global trade and financial services infrastructure. Key typologies include:

1. Trade-Based PF Typologies

• Dual-use goods: Items with both civilian and military applications (e.g., chemicals, electronics, aerospace components).
• Front companies: Entities posing as legitimate businesses to mask PF-related transactions.
• Unusual trade routes: Goods routed through multiple jurisdictions to obscure origin/destination.
• Over/under-invoicing: Used to disguise the actual value or nature of goods.

2. Sanctions Evasion

• Transactions involving entities sanctioned by OFAC, EU, or UK, even if not listed by the UN.
• Use of correspondent banking to route payments through jurisdictions with weak PF controls.

3. Complex Ownership Structures

• Use of shell companies, trusts, and layered ownership to obscure beneficial ownership.
• Lack of transparency in corporate vehicles facilitating PF.

4. Sector-Specific Risks

• High-risk sectors include shipping, logistics, chemicals, and aerospace.
• Recent enforcement: In July 2025, Mauritius suspended 13 shipping-related licences linked to PF concerns.

5. Cyber-Enabled PF

• Use of cryptocurrency exchanges and digital assets to fund WMD programs (e.g., DPRK cyberattacks).

PF Risk Assessment Checklist for Financial Institutions

Based on FATF guidance and best practices, here’s a practical checklist:

1. Customer Due Diligence (CDD)

• Identify customers in high-risk jurisdictions (e.g., DPRK, Iran).
• Assess involvement in dual-use goods or sensitive industries.
• Verify ownership structures and beneficial owners.

2. Sanctions Screening

• Screen against UN, OFAC, EU, and UK lists.
• Include vessel IMO numbers, bank identifiers, and free-text fields in transaction monitoring.

3. Transaction Monitoring

• Flag unusual trade routes, mismatched payment values, and complex payment chains.
• Monitor trade finance instruments and correspondent banking relationships.

4. Geographic Risk Assessment

• Evaluate exposure to jurisdictions with weak AML/CFT frameworks or under UN sanctions.

5. Staff Training

• Train staff to recognise PF typologies and red flags.
• Include PF in AML/CFT training programs.

6. Use of Technology

• Deploy AI/ML tools to detect suspicious patterns and reduce false positives.

7. Governance & Reporting

• Embed PF risk into AML/CFT frameworks.
• Establish clear reporting lines and escalation procedures for PF-related concerns.

8. Enhanced Due Diligence (EDD)

• Apply EDD for clients in high-risk sectors.
• Verify end-use certificates and supply chain integrity.

References

• Proliferation Financing: The Silent Threat Mauritian Financial ...https://www.axis.mu/uplds/Proliferation-Financing-The-Silent-Threat-Mauritian-Financial-Institutions-Must-Confront.pdf
• COUNTER PROLIFERATION FINANCING - FIU Mauritius https://www.fiumauritius.org/fiu/wp-content/uploads/2022/07/Guidelines-on-Implementation-of-Targeted-Financial-Sanctions-TFS.pdf
•  Mauritius - Financial Action Task Force https://www.fatf-gafi.org/en/countries/detail/Mauritius.html
•  Overview of Mauritius' AML/CFT/CPF Compliance and Ongoing Initiatives https://mauritiusifc.mu/amlcft/overview-of-mauritius-amlcftcpf-compliance-and-ongoing-initiatives
•  AML/CFT - Bank of Mauritius https://www.bom.mu/financial-stability/amlcft
• Proliferation Financing Risk Assessment (6 Simple Methods) https://redcliffetraining.com/blog/proliferation-financing-risk-assessment