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Proclamation of ‘The Anti-Money Laundering and Combating the Financing of Terrorism (Miscellaneous Provisions) Act 2020’

The Anti-Money Laundering and Combating the Financing of Terrorism (Miscellaneous Provisions) Act 2020 has been approved by the Parliament of Mauritius and gazetted (GN No. 85) on 9 July 2020.

A brief on the salient provisions therein, relative to the financial services industry are provided below.

 

Banking Act 2004 (as amended)

  • Provisions have been made for more frequent and extensive inspection by the Bank of Mauritius (BoM) on licensee’s internal control procedures aiming at handling and managing risk related to money laundering and terrorism financing;
  • The application process for a licence for banking related activities would include a scrutinized assessment on the applicant’s group related principals as well.

 

Companies Act 2001 (as amended)

  • Emphasis is on the identification and disclosure of the Beneficial Owner(s), i.e. the ultimate natural person(s) holding directly or indirectly through nominee arrangement more than 20% of the shares in a company or legal arrangement established under the laws of Mauritius;
  • In the instance where no natural persons can be identified, as per the revised definition of Beneficial Owner, the controlling person(s) of the said corporate structures shall be the person(s) holding executive position and powers. Note: Given that each legal regime shall have its distinct shareholding structure, an individual assessment is to be performed in accordance with the provisions under S.91 (8) of the Companies Act 2001 (as amended);
  • The concept of identification of beneficial owner shall also be extended to Limited Partnerships, Foundations and Limited Liability Partnerships, with a fine not exceeding MUR 300,000 to be levied for any breach or non-compliance with the prescribed disclosure obligations;
  • As part of ongoing reporting, entities registered/incorporated under the laws of Mauritius, including domestic companies, foreign companies and Global Business entities would henceforth be required to submit the full name and usual residential address of the identified Ultimate Beneficial Owners (UBOs) to the Corporate and Business Registration Department (CBRD), within 14 days from the date of alteration/change;
  • For any implied breach of the provisions under S.91 (3) in relation to the maintenance of an updated share register, inclusive of nominee arrangements, the Court shall as it deem appropriate, order the company and its directors to restore compliance thereat, in addition to the fine not exceeding MUR 300,000;
  • Regarding access to the such records and compilation at CBRD level, any requestor for information shall upon application and settlement of the prescribed fees be allowed to access the following information on a registered company, in addition to its name and registered office address: – 
    • Proof of incorporation;
    • Legal form and status;
    • Basic regulating powers; and
    • List of directors.
  • With respect to the exchange of information principle being adopted, each company is henceforth required to authorise at least one of its resident officer(s), to arrange for such requested information and/or the company’s updated particulars and beneficial ownership details to be submitted to the local competent authorities. The company is hereby required to notify the CBRD on the authorised resident officer, with the latter’s name and particulars, within a delay of 14 days from the date of authorization. Any subsequent change in the authorised officer shall be notified to the CBRD, within 14 days of the alteration.

 

Financial Intelligence and Anti Money Laundering Act 2002 (FIAMLA)

  • With the ultimate objective of capturing a larger pool of market players, as being potential whistleblowers of money laundering malpractices and with a view of clarifying upon what is supposedly to be regarded as an indicator for financial malpractice,  two (2) key definitions under FIAMLA, namely ‘Financial Institutions’ and ‘Suspicious Transaction’ have been revised;
  • The Integrity Reporting Services Agency (‘IRSA’) and the Counterterrorism Unit are being empowered to participate in the implementation and enforcement of the Government’s strategy for an effective AML/CFT framework, in accordance with the recommended international norms;
  • While emphasis is being put on the obligation to report suspicious transactions, causing a number of relevant laws to be amended, the delay for the reporting person and Auditor, including the Money Laundering Reporting Officer (MLRO), the Deputy MLRO, cash dealer and other members of a relevant profession and occupation, to report a validated Suspicious Transaction Report (STR) shall now onwards be 5 working days instead of 15 days from the date on which the suspicion was raised;
  •  Regarding the financial sanctions to the qualifying offences under FIAMLA shall upon conviction be as follows: 
    • Failure to report a suspicious transaction not later than 5 working days from the date the suspicion was rose – A fine not exceeding MUR 1 million and a term of imprisonment not exceeding 5 years;
    • Failure to apply an effective risk assessment in view of detecting an act of money laundering and terrorism financing – A fine not exceeding MUR 10 million and a term of imprisonment not exceeding 5 years;
    • Conspiring or assisting in a claimed financial malpractice – A fine not exceeding MUR 10 million and a term of imprisonment not exceeding 5 years;
    • Causing obstruction by destroying evidence and relevant records – A fine not exceeding MUR 10 million and a term of imprisonment not exceeding 5 years;
    • Objection or failure to provide such requested information to the regulatory body – A fine not exceeding MUR 1 million and a term of imprisonment not exceeding 5 years;
  • On an enforcement point of view, a dedicated ‘Financial Crime Court’ shall be established with the relevant proceedings to be fast tracked and contraveners to be sanctioned as per the defined legislative provisions.

 

Financial Services Act 2007 (as amended)

  • While identification of Beneficial Ownership has been the baseline of The AML/CFT (Miscellaneous Provisions) Act 2020, S.23 of the Financial Services Act 2007 (as amended) in relation to ‘Approval of Controllers/Beneficial Owners’ caters for some excepted cases, principally cases where an alteration in the licensee’s shareholding structure carries no voting rights, for instance a Collective Investment Schemes/Close Ended Funds (CIS/CEF) and Reporting issuers that do not hold an activity licence;
  • Moreover, similar to BoM, the Financial Services Commission shall be increasing its frequency for the conduct of both its onsite and offsite inspections.

 

The Good Governance and Integrity Reporting Act 2015

  • The application and enforceability of this legislation is being extended to such unexplained wealth of at least 2.5 million rupees in cash, seized by an enforcement authority during a criminal investigation.

 

Contributed by: Regulatory & Compliance Department

Date of publication: 14 July 2020