As published in the India Business Standard
Mauritius may have got a step closer to exiting the grey list, with the Financial Action Task Force (FATF), an inter-governmental body which sets anti-money laundering standards, acknowledging the progress the island nation had made in its fight against money laundering and terrorist financing.
"Mauritius has taken steps towards improving its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime, including by developing a risk-based supervision plan for the global business and management companies," FATF said in a note.
The body has asked Mauritius to continue to work on implementing its action plan to address its strategic deficiencies by focussing on five aspects that include implementing the risk-based supervision plan effectively for the Financial Services Commission and ensuring the access to accurate basic and beneficial ownership information by competent authorities.
In February, the country was put on the list of jurisdictions that require increased monitoring. This list is often referred to as the “grey list”.
Meanwhile, Mauritius is back to being the second largest foreign portfolio investor in India in September after ceding its place to Singapore the previous month.
Jurisdictions under increased monitoring actively work with the FATF to address strategic deficiencies in their regimes. These are done to counter money-laundering, terrorist financing, and proliferation financing in a more efficient manner.
FATF has already rated as largely compliant the banking framework in Mauritius based on the control measures implemented for cross border transactions.
"Necessary actions continue to enhance and further align the framework in place for the financial services sector with international best practice. The Ministry wishes to reassure the investor community of Mauritius’ ongoing commitment, including at the highest political level, to exit the FATF process at the earliest," a communique from the Ministry of Financial Services and Good Governance, Mauritius, said last week.”
Mauritius has obtained technical assistance from the EU-funded AML/CFT Global Facility and the German government (through German Development Agency, GIZ) to support implementation of the FATF Action Plan. Mauritius meets 53 out of the 58 recommended actions, including the big six recommendations, and there is an agreed timeline to cure the identified shortcomings.
"The ICRG (International Co-operation Review Group) has informed FATF members of the significant progress made by Mauritius, despite the Covid-19 situation, to demonstrate effectiveness and they recommended that Mauritius continue with the implementation of the action plans," said Rubina Toorawa Chief Operating Officer, Sanne in Mauritius.”
She added that Mauritius has to continue the implementation and submit an updated report by end of this year for the next plenary in February 2021. It is expected that the plenary session will result in Mauritius coming off the grey list.
The FATF’s grey list may have created a negative perception towards Mauritius globally, especially among large investors like pension, endowment, and sovereign wealth funds, said experts. The RBI, too, rejected a few applications for NBFC licences recently, as the investment was routed through Mauritius.
Iceland and Mongolia were the two countries recently taken out of the grey list that comprises 16 countries including the likes of Pakistan and Yemen.