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Money Laundering : the remedial measures taken by the BOM

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Money Laundering : the remedial measures taken by the BOM

The Eastern and Southern Africa Anti-Money Laundering Group (‘ESAAMLG’), an FATF-Style Regional Body, has published, on Friday 21 September 2018, the 2nd Round Mutual Evaluation Report for Mauritius on its assessment of the country’s level of compliance with the FATF forty recommendations and the level of effectiveness of its AML/CFT system. The Report, however, also identified areas for improvement in the Bank’s AML/CFT supervisory and regulatory framework, such as, a more documented AML/CFT risk-based framework. Further to this report, the BOM issued a communiqué highlighting the remedial measures which is in on-going.

  • The Bank started to engage with the World Bank way back in early 2017 to formalise a documented risk-based AML/CFT supervisory framework and the implementation of this process has effectively started since January 2018 and is on-going.
  • The Bank has set up a dedicated arm for AML/CFT supervision of financial institutions and enhanced its AML/CFT off-site monitoring supervisory toolkit through a revision of its reporting requirements.
  • The Bank has reviewed its licensing criteria since October 2017 to make it mandatory for an applicant to have a fully automated AML/CFT system in place prior to the start of operations.
  • With a view to enhancing cooperation with other stakeholders in the fight against money laundering and financing of terrorism, the Bank moved from bilateral to tripartite memorandum of understanding with the Financial Intelligence Unit and the Financial Services Commission on 19 September 2018.
  • The technical deficiencies in the legislation have been addressed to a large extent through a number of amendments brought to the Bank of Mauritius Act, Banking Act and Financial Intelligence and Anti-Money Laundering Act in the Finance (Miscellaneous Provisions) Act 2018, the purport of which are, inter alia, as follows:
  • to ensure that the Guidance Notes issued by the Bank meet all the criteria of the FATF on Combating Money Laundering and the Financing of Terrorism & Proliferation (the FATF Recommendations);
  •  The Bank has been vested with powers to impose administrative penalties on financial institutions for non-compliance with the Guidance Notes;
  • The Bank may issue regulations, guidelines, directives or instructions in order to discharge, or facilitate the discharge of, any obligation binding on Mauritius by virtue of a decision of the United Nations Security Council;
  • The Bank may share information with competent agencies responsible for AML/CFT;
  • Financial institutions can disclose information among themselves in circumstances set out in FATF Recommendations and Methodology;
  • The existing practices of the Bank with respect to (a) due diligence conducted on the beneficial owners of an applicant for a banking licence and (b) the prohibition for the establishment of a shell bank in Mauritius have been entrenched in the law;
  • The timeframe to undertake an on-site examination is at the discretion of the Bank to facilitate risk-based supervision;
  • Financial institutions have been required to undertake a risk assessment, including money laundering and terrorism financing risk, prior to the launch or use of new products and new business practices.

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