In 2018, the Eastern and Southern Africa Anti-Money Laundering Group conducted a Mutual Evaluation Report (MER) in Mauritius to assess Mauritius' implementation and enforcement of the Financial Action Task Force's (FATF) international standards on anti-money laundering, countering the financing of terrorism, and countering the financing of proliferation. The MER summarized key deficiencies identified in the country’s technical compliance, including FATF recommendations that Mauritius was found to be non-compliant with. To give a sense of Mauritius’ economy relative to the world’s at the time of this first MER process in 2018, there were 21,443 global business entities, with total assets of approx. USD 660.2 billion, representing nearly 60 times the size of Mauritius’ GDP.

In response to the MER, in 2019 Mauritius launched the National Risk Assessment (NRA) system to identify, understand, and assess money laundering and terrorist financing risks in the country, and comply with the FATF’s international standards. Mauritius' overall money laundering risk was assessed as medium-high, indicating that the country required additional measures to address identified vulnerabilities and to mitigate the risks effectively. The accountancy sector was rated as medium risk. Although Mauritius completed the NRA exercise and amended laws and regulations pertaining to money laundering and terrorism financing to reflect deficiencies, it was placed on the FATF Grey list for strategic deficiencies in effectiveness. The practical implications of being on the grey list meant that Mauritius was subject to enhanced monitoring and reporting, financial institutions operating within the country faced stricter regulations and scrutiny, and investors were likely to perceive the country as having higher risks associated with money laundering and terrorist financing, just to name a few.   

After being placed on the FATF list in January 2020, the Mauritius Institute of Professional Accountants (MIPA), a regulatory body of the accounting profession in Mauritius, developed an action plan. The Institute published “Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Guidelines” in early 2021 to help licensees better understand their obligations and guide them in implementing an AML/CFT framework. MIPA also developed an awareness strategy and conducted outreach to the licensees as a key remedial action. Developing an awareness strategy ensured:

  • Increased awareness and knowledge of AML/CFT legal obligations and risk management in the sectors being supervised;
  • Improved understanding of FATF international standards to ensure compliance;
  • Improved suspicion transaction reporting by entities;
  • Increased quantity and quality of reporting; and
  • Increased numbers of reporting persons registered on goAML, the United Nations’ platform to counter AML/CFT used by Member States.

The themes covered during the ongoing outreach sessions included:

  • the National Risk Assessment
  • AML/CFT obligations related to customer due diligence
  • Enhanced due diligence
  • Record keeping
  • Training requirements
  • Maintaining accurate and up-to-date beneficial ownership information
  • Targeted financial sanctions for proliferation and terrorism financing
  • STR reporting

Appropriate AML/CFT supervisory agencies also convened and cooperated with one another, resulting in establishing an AML/CFT supervisory forum. This enabled supervisors to share best practices and lessons learned to ensure compliance with AML/CFT obligations. To that end, a memorandum of cooperation was signed by supervisory authorities to formalize their coordination regarding policy formulation, exchanging information, joint outreach, staff training, and operational coordination to combat money laundering, terrorist financing, and proliferation in Mauritius. The parties to the memorandum included the Bank of Mauritius, Financial Services Commission, Financial Intelligence Unit, Attorney General Office, Registrar of Companies, Gambling Regulatory Authority, and MIPA.

MIPA took significant strides in enhancing its AML/CFT capabilities, including establishing an AML/CFT unit and providing ongoing training to its staff. However, prior to 2020, onsite inspections for AML/CFT compliance were not conducted by MIPA. While the staff had received extensive AML/CFT training, they lacked the practical on-field expertise. Recognizing this, the Bank of Mauritius and the Financial Services Commission, experienced supervisors with over a decade of experience, collaborated with MIPA. Their valuable guidance and support equipped MIPA staff with the necessary expertise to conduct effective on-site assessments.

To optimize resources and focus efforts, a risk-based approach was adopted by MIPA. This involved prioritizing high-risk licensees during onsite inspections. Given that the sector was relatively new to AML/CFT regulations, it was crucial to cross-verify the information provided by licensees during the inspections. This meticulous process ensured the accuracy and reliability of the data, contributing to the overall effectiveness of the assessments.

In the beginning, MIPA adopted a pragmatic approach to remediation of instances of non-compliance since the sectors under the PAO’s purview were only recently exposed to AML/CFT supervision, and levels of awareness and understanding of AML/CFT obligations and risk management needed to be raised sufficiently in the supervised sectors. After ensuring that the sectors were adequately sensitized to AML/CFT matters through its outreach strategy, MIPA conducted onsite and offsite inspections to determine reporting entities' level of compliance with AML/CFT obligations. The next step was to apply proportionate, dissuasive, and effective remedial actions and sanctions to instances of non-compliance. MIPA applied regulatory and enforcement actions proportionate to the deficiencies and/or breaches observed to improve the culture of compliance with AML/CFT obligations.

MIPA encountered many challenges from the listing to the delisting phases. The accounting sector was new to AML/CFT obligations and conducting outreach to all of them appeared daunting. Implementing a robust AML/CFT framework was costly, especially for smaller and medium-sized firms. MIPA also faced considerable resistance from licensees during onsite inspections, as they were not willing to collaborate. Further, as a result of the second COVID-related lockdown in 2021, onsite inspections were being conducted via online platforms.

Nevertheless, despite these challenges, MIPA enhanced its engagement with reporting entities as a result of the various onsite inspections and outreach conducted. This helped to inculcate a culture of compliance by the reporting entities as the responsive rate for providing information has improved. As more and more inspections and outreach sessions were conducted, there are fewer non-compliance issues noted.

Mauritius successfully exited the list in 2021 and was amongst the first countries in the world to have exited the list before the deadline set by FATF. The country was also rated compliant with 39 of 40 FATF recommendations in 2021. The only outstanding Recommendation where Mauritius still had was for Recommendation 15, Virtual Assets and Virtual Assets Service Providers, where it successfully upgraded from 'Partially Compliant' to 'Largely Compliant in 2022.'

In the future MIPA hopes to conduct a thematic review on those areas where there are recurrent deficiencies. As the industry gains more experience, MIPA will continue to refine its supervisory approach to improve compliance with AML/CFT obligations.

Jasbine Heenaye presented this case study at the October 2022 Professional Accountancy Organization Development & Advisory Group (PAODAG) meeting.

Jasbine Heenaye
Jasbine Heenaye

AML/CFT Manager

Ms. Jasbine Heenaye is an established professional in the Anti-Money Laundering and Combatting Terrorist Financing world. She has actively contributed at national and international levels for Mauritius in the fight against money laundering and terrorist financing. She also participated in the first National Risk Assessment in Money Laundering and Terrorist Finance for Mauritius, along with participating in the ESAAMLG Mauritius re-rating application exercise post MER, ESAAMLG Council of Ministers and was part of the Mauritian delegation at FATF Joint Group Committee meetings to discuss and demonstrate the effective actions taken by Mauritius to effectively combat ML and TF. She has a Bachelor of Law (LL.B) Hons and is an Associate of the Institute of Chartered Secretaries and Administrators and is currently the AML/CFT Manager at the Mauritius Institute of Professional Accountants. She is the Team Leader of the Designated Non-Financial Businesses and Professions (DNFBP) vulnerability team for the drafting of the second National Risk Assessment Report (NRA) being conducted in Mauritius this year.

Tanya Musumhi

Tanya Musumhi is an IFAC regional manager, responsible for the Southeast Asia, Central Asia and Eastern Europe regions. In this role, she helps IFAC’s member organizations and other professional accountancy organizations adopt and implement international standards and best practices and ensure the relevance and resiliance of the accountancy profession. Prior to her time at IFAC, Tanya was a grant capacity senior program manager at World Vision US.  

Tanya holds an MA in International Law and Economics from the World Trade Institute, University of Bern, Switzerland (2009) and an MA in International Policy Studies from the Middlebury Institute of International Studies at Monterey (2007).