Mauritius updates to the Anti-Money Laundering and Combatting the Financing of Terrorism handbook

On 31 March 2021, the FSC issued a communiqué advising of the release of an updated version of the AML/CFT Handbook with main changes brought to sections on assisting Financial Institutions (FI) in conducting an effective AML/CFT Independent Audit and in implementing an adequate Business Risk Assessment.

The Financial Services Commission (FSC) in Mauritius issued an Anti-Money Laundering and Combatting the Financing of Terrorism Handbook 2020 (AML/CFT Handbook) in January 2020, which provides guidelines to assist financial institutions in applying national measures to combat money laundering and terrorist financing and to comply with the Financial Intelligence and Anti-Money Laundering Act 2002 (FIAMLA), and the Financial Intelligence and Anti-Money Laundering Regulations 2018 (FIAML Regulations 2018).

On 31 March 2021, the FSC issued a communiqué advising of the release of an updated version of the AML/CFT Handbook with main changes brought to sections on assisting Financial Institutions[1] (FI) in conducting an effective AML/CFT Independent Audit and in implementing an adequate Business Risk Assessment.

Salient Features

Scope of independent audit – in line with international best practices, the exercise should be risk-based and scope of audit to mandatorily test compliance in areas listed in that section which includes AML/CFT policies and procedures, internal risk assessments and AML/CFT training.
Choosing the audit professional – audit function should be independent and separate from the operational and executive team dealing with AML/CFT processes of the FI. The audit professional should also have the necessary skills, qualifications, experience and understanding of local AML/CFT regulations and sufficient knowledge of the industry.
Assessing the “independence” of the audit professional – conducted by an in-house professional that can demonstrate independence or sourced to an external audit professional after carrying out some level of due diligence. Criteria to assess independence have been provided in this section.
Frequency of the independent audit – it should be commensurate with the FI size, nature, context, complexity and internal risk assessment. The greater the AML risk, the greater the frequency of audit. Guidelines also provided for newly setup FIs and those in the process of winding up.
Key components of the AML/CFT programme – as part of the audit exercise, it will involve review and assessment of the framework, together with sample testing of policies and procedures. A comprehensive list can be provided to form part of audit exercise.
Audit outcome, report and recommendations – output will need to report if the AML/CFT programme covers all relevant components, is adequate and effective throughout a specified period, and identifies areas of potential failings and recommended courses of action. It is the responsibility of the Board of Directors of the FI to take appropriate corrective actions to remediate any issue identified in the independent audit report within specified agreed timelines.
Filing with the FSC – financial institutions are not required to file the audit report with the FSC periodically but shall do so for a specified period, upon request of the FSC.

Clarification on role of Management, Compliance, Audit and the Board of Directors of the FI on the Business Risk Assessment (BRA).

Risk Management is a cyclical process whereby identification, analysis and testing of effectiveness of controls is expected at regular intervals. The appropriate risk mitigating strategy should be revised as and when needed. The list of risk factors provided in the AML/CFT Handbook is not exhaustive and the FI will need to assess other appropriate and relevant risk factors depending on circumstances of the business.

Following repeal of the Code on the Prevention of Money Laundering & Terrorist Financing (the ‘Code’) as per FSC Circular issued on 6 November 2020, all references to the Code have been removed from the AML/CFT Handbook.

To access the updated ML/CFT Handbook, click here.

[1] Financial Institution is an entity that is licensed under section 14 (Financial Services), 77A and 79A of the Financial Services Act; the Insurance Act ; the Securities Act; or the Captive Insurance Act

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Yash Beeharee Director, Compliance & Control - Mauritius

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