News that the UK Government has included Mauritius on its so called “money laundering and terrorist financing blacklist” rang the usual alarm bells in the local media, some (again) rushing to describe yet another “final-nail-in-the-coffin” situation. The truth is far from alarming.
As part of the Brexit process, the UK is having to detach many of its former processes from that of the European Union and set up its own.
Regulation 33 (1) (b) of the UK Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, provides for the application by relevant persons of enhanced customer due diligence measures and enhanced ongoing monitoring, in addition to customer due diligence measures in relation to any business relationship with a person established in a high-risk third country. 1
Regulation 33 (3) went on to define a “high-risk third country” as a country which has been identified by the European Commission in delegated acts adopted under Article 9.2 of the fourth money laundering directive as a high-risk third country. 2
The UK had already announced its intention of “introducing legislation which will define high risk third countries with a specific list of countries that replicates the Financial Action Task Force’s list of jurisdictions under increased monitoring.” 3
And with the end of the Brexit Transition Period on 31 December 2020, it did just that.
The Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2021 in effect amended Regulation 33 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, enabling the UK to have its own list of high risk third countries. No more than an act of government house-keeping, if you will.
Disappointing as it may be, this should not have any significant impact on Mauritian business with the UK. And we have seen this with the FATF and subsequently the EU listing already: businesses in Mauritius, both domestic and international, have been operating without interruption, albeit under a stricter compliance framework. Having an extra layer of checks and enhanced due diligence when it comes to processing transactions between Mauritius and other countries might not be ideal, but it is a hurdle which businesses in Mauritius and elsewhere are more than capable of dealing with to the satisfaction of all parties.
We know that ever since Mauritius was placed on the EU list of high-risk third countries last year, Mauritius’s Ministry of Financial Services and Good Governance has been working closely with the global money laundering and terrorist financing watchdog Financial Action Task Force (FATF) to address its concerns. Mauritius’ relentless efforts have been recently underlined by both the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) and the FATF.
In its Third Follow Up report on Mauritius dated December 2020, the ESAAMLAG commended the country’s progress in strengthening anti-money laundering and counter terrorist financing measures. It conducted a re-rating exercise, following Mauritius’ submission of the actions undertaken since its Mutual Evaluation Report adopted in 2018, and concluded that Mauritius was either compliant, largely compliant or partially compliant on 39 out of the 40 FATF Recommendations. 4
In its report issued following its plenary session of February 2021, the FATF, on its part, highlighted the country’s progress: “Mauritius has taken steps towards improving its AML/CFT regime, including by conducting outreach to promote understanding of ML and TF risks and obligations, and providing training for law enforcement authorities to ensure that they have the capability to conduct money laundering investigations. Mauritius should continue to work on implementing its action plan to address its strategic deficiencies.” 5
The conclusions of both the ESAAMLG and the FATF bode well for Mauritius’ continued endeavour to be removed from both the FATF and EU lists of countries under increased monitoring. The industry is confident that this objective will be reached in the shorter rather than the longer term. Until then, Mauritius remains without the shadow of a doubt a most attractive proposition for global business.
1The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (legislation.gov.uk)
3Annex A – Advisory Notice February 2020.docx (publishing.service.gov.uk)
4Mauritius: 2nd ENHANCED FOLLOW-UP REPORT (esaamlg.org)
5Documents – Financial Action Task Force (FATF) (fatf-gafi.org)