SANNE briefing note: Mauritius regulatory changes 31 October 2019

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Peter Nagle

Country Head - Mauritius

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Background

Pursuant to the Finance (Miscellaneous Provisions) Act 2018 and Act 2019 passed in July 2018 and in July 2019 respectively in the Mauritius National Assembly, various enactments such as the existing Financial Intelligence and Anti-Money Laundering Act (“FIAMLA”) 2002, the Financial Services Act (“FSA”) 2007 and others have been amended with a view to align with international standards of the Financial Action Task Force on anti-money laundering and combatting terrorism financing.

In addition, new acts and regulations, namely, the FIAMLA Regulations 2018 and the United Nations (Financial Prohibitions, Arms Embargo and Travel Ban) Sanctions Act 2019 came into effect in October 2018 and May 2019 respectively.  

Given the above changes have an impact on the Global Business Sector, industry meetings were held and it has been understood from the regulator, the Financial Services Commission (“FSC”), that a new revised Code or Guidelines encompassing the amendments in the above mentioned legislations, will be issued.  Given that the new revised Code / Guidelines is expected by end of year 2019, SANNE Mauritius (“SM”) has, for the benefit, of its clients decided to disseminate information collected till date on these new regulations based on industry guidelines and clarifications received.  Below is only a heads-up and more detailed communication will be issued by SM once the FSC has issued the new revised AML Code or Guidelines.

A. KEY ARTICLES IN THE FIAMLA REGULATIONS 2018

1. Customer Due Diligence (“CDD”) Verification

  • As part of CDD verification, the names of relevant persons having a senior management position in a legal person or arrangement which is subject to CDD in line with the requirements of the Code on the Prevention of Money Laundering and Terrorist Financing issued by the FSC in 2012 and updated in May 2017 (“FSC Code 2012”) will now need to be disclosed;
  • In addition, there is now a 3 stage test required to establish the beneficial ownership of a legal person by:

       (a) identification of all the natural persons who ultimately have a controlling ownership interest in the legal person;

        (b) in case test (a) is not conclusive, then by identifying the natural person exerting control of the legal person through other means as may be specified by relevant regulatory body or supervisory authority; and finally,

        (c) where no natural person can be identified under (a) or (b), then identifying the natural person who holds the position of senior managing official.

This definition has been enhanced with further amendments brought by the Finance Act 2019 in the definition of beneficial owner in the Companies Act 2001.

SANNE Comments: Awaiting guidance from FSC on the definition of Controlling Ownership Interest.

2.  Designation of a compliance officer

As part of the implementation of the AML framework, a Compliance Officer at senior management level needs to be designated. The Compliance Officer will be responsible for the implementation and ongoing compliance of the reporting person with internal programmes, controls and procedures in line with the requirements of the FIAMLA 2002 and FIAMLA Regulations 2018.

SANNE Comments: This requirement came into effect in October 2018 and until such time the FSC guidelines are published on the minimum competency requirements along with details on the specific role and responsibilities of the Compliance Officer (“CO”), the Money Laundering Reporting Officer is currently also being deemed to be the Compliance Officer.  The CO role may require an independent person to the MLRO to be designated. We will keep you posted.

3. Re-designation of the Alternate Money Laundering Reporting Officer (MLRO)

The Alternate MLRO has now been re-designated as Deputy MLRO.

SANNE Comments: No regulatory action is required – Board to only take note of the new appellation when the MLRO Report is tabled to the Board.

B. KEY AMENDMENT IN THE FIAMLA ACT 2002

1. Registration by reporting person

Every reporting person (MLRO and Deputy MLRO) must be registered with Mauritius Financial Intelligence Unit (“FIU”) within the time and manner prescribed by the latter

SANNE Comments: Where SM officers have been appointed as MLRO or Deputy MLRO, the latter are making arrangements to get registered on the goAML portal, the online platform of the FIU.

C. KEY AMENDMENT IN THE FSA 2007

1. Register of beneficial owners

As per the changes brought by the Finance Act 2018 in the FSA 2007, all licensees need to keep and maintain, at all times, a register of the beneficial owners of each of its customers and record such information as the FSC may determine.

SANNE Comments:  SM maintains a record of beneficial owners and should there be further guidelines and clarifications from the FSC on any specific format and details to be included in the Register, SM will advise.

D. KEY ARTICLES IN THE UNITED NATIONS (FINANCIAL PROHIBITIONS, ARMS EMBARGO AND TRAVEL BAN) SANCTIONS ACT 2019

This Act is an addition to the existing Prevention of Terrorism Act 2002. It encompasses the roles and powers of the National Sanctions Committee towards declaration of designated parties and listed parties.

1. Prohibition to deal with funds or other assets of designated parties and listed parties

The National Sanctions Secretariat should be notified of such a case with sufficient details on same along with actions taken in line with this Act.

2. Prohibition on making funds or other assets available to designated parties and listed parties

Non-compliance to the above tantamount to an offence under this Act and is liable to fine or imprisonment.

3. Reporting Obligations

Where a party is declared as a designated party or listed party, the reporting person (including SM and regulated entities under its administration), shall immediately verify whether the details of the designated party or listed party match with the particulars of any customer, and if so, to identify whether the customer owns any funds or other assets in Mauritius and make a report to the National Sanctions Secretariat and the relevant supervisory authority as well.

4. Freezing Order          

The funds and assets of a designated party will be frozen in line with the requirements of this Act and will remain in force as long as the party is a designated party.

 SANNE Comments: SANNE has in place internal controls that assist in identification of designated parties and listed parties. Guidance is awaited from the FSC/FIU on the notification process. 

If you have any queries, please speak to Yash Beeharee, Associate Director, Regulatory & Process Controls, Mauritius.