Key highlights from the Mauritius Enforcement Manual

The FSC is empowered under relevant laws to meet its statutory objectives as set out in the FSA that also lists down the administrative sanctions that the FSC may impose. This includes private warnings, public censure, disqualification of a licensee/officer, administrative penalty and revocation of licence. The above-mentioned administrative sanctions are backed by other enforcement powers such as suspending a licence, giving warnings, giving directions, applying to the Judge in Chamber for freezing of assets of the licensee, applying to the courts for injunction and restitution orders or prosecute various offences with the consent of the Director of Public Prosecutions.

• Underlying principles of Enforcement Policy – There are three broad underlying principles which are (1) Effectiveness and efficiency (2) Fairness and (3) Transparency, Proportionality and Consistency.
• Settlement – One of the FSC’s objectives through enforcement is to ensure compliance with regulatory requirements. To this effect, the FSC will be introducing a Settlement Framework on a case by case basis which will help to settle matters in a timely, proportionate and appropriate manner.
• Investigations v/s Inspections – An investigation is conducted where there are reasonable grounds to believe that the licensee has committed, is committing or is likely to commit a breach of any relevant laws, conditions of licence or any direction issued by the FSC. The holder of a licence as well as its officers may be subject to investigation. A person under investigation is expected to assist in the investigation process and to provide the required information in a timely manner and should not intentionally obstructs and/or give false or misleading information, if not, in some circumstances, the person may on conviction be liable to a fine not exceeding MUR500,000 and imprisonment for a term not exceeding 5 years. On the other hand, an onsite inspection is a supervisory tool used by the FSC to understand the business model of the licensee and extent the latter is complying with relevant laws and guidelines.
• Powers of the FSC pertaining to enforcement actions – There are a number of powers and functions of the FSC that can be delegated to the Chief Executive. These include giving directions to a licensee/person or even suspending a license. The Enforcement Committee (“EC”) is an internal independent committee of the FSC. The purpose of the EC is to exercise the disciplinary powers of the FSC on matters that have been referred to it by the Chief Executive.
• Financial Services Review Panel – The function of this Panel is to review any decision made by the EC, FSC or a regulatory organisation under relevant laws. The aggrieved licensee (recipient of a decision notice issued by the EC) can apply to the Review Panel within the statutory deadline of 21 days, to review any decision made by the EC with which it is not satisfied. The determination of the Review Panel can be challenged through a judicial review application to the Supreme Court.

Enforcement measures as specified in the Manual are applicable to Financial Institutions, including Management Companies, and to holders of a Global Business Licence (“GBL”) also authorised to conduct financial services. All references to GBL thereafter is in this context.

• Grounds to initiate inquiry

The holder of a GBL may be subject to an inquiry based on the following circumstances:

• If the person has committed a breach or is likely to commit a breach of the relevant laws, any condition of its licence or any direction issued by the FSC; or
• If the person is carrying or is likely to carry out any activity which may cause serious prejudice to the soundness, stability, integrity and reputation of the financial system of Mauritius.
• Who can be subject of an inquiry?
• A corporation holding a GBL; any person who has held a GBL; and a present or past officer, or controller of the holder of a GBL.
• Obligations of persons under inquiry

A corporation holding a GBL shall, when so required by the FSC in exercising its general powers of supervision, furnish all such information and produce such documents as may be required of him by the FSC in order to ensure and monitor compliance with the relevant laws.

• Powers of inquiry

During an inquiry, the Chief Executive may by notice: (1) request the production of any document to be inspected at such reasonable time and place; (2) take copies of or extracts from any document so produced; and (3) issue directions.

• Criminal offence for failure of cooperation by the holder of a GBL during inquiry

It is considered as a criminal offence to: (a) fail to produce a document requested by the Chief Executive for inspection after having been duly notified in that respect; (b) obstruct the Chief Executive or the inquirer from taking copies or extracts of the document produced; and (c) fail to comply with a direction issued by the Chief Executive with respect to the provision of information and/or documents for the purposes of the inquiry.

• Revocation of a Global Business License

The FSA lists down the grounds on which a GBL can be revoked and are as follows: (i) where it is necessary to protect the good repute of Mauritius as a centre for financial services; (ii) to prevent or mitigate damage to the integrity of the financial services industry; and/or (iii) to protect the public in general. Prior to revocation of a GBL, the FSC may suspend it. The holder of the GBL will be duly notified of the reasons behind the revocation and will be allowed to make written representations as to why the revocation is not justified.