‘Mauritius is on a war-footing to comply with FATF’

Mauritius is in the eye of storm for being put in the ‘grey-list’ with non- compliant countries for money laundering.

The European Union had classified Mauritius as a high risk jurisdiction last week. Mauritius has been one of India's largest source of fund flows due to which SEBI and the government this month said it will allow money to flow from the country as usual.

But could fund flows come under pressure in future? Mauritius Minister of Finance Seeruttun Mahen Kumar, in an email interaction with BusinessLine , spoke about the various issues involved.

Mauritius has opened its doors unconditionally to reviews of its AML framework by Financial Action Task Force (FATF) and Eastern and Southern Africa Anti Money Laundering Group (ESAAMLG). Currently, we are largely compliant with 35 out of 40 FATF Recommendations, including the “Big Six Recommendations”, and we have already submitted a progress report on March 20 on the implementation of remaining measures.

As per FATF Action Plan, Mauritius does not have any technical compliance issues. We have achieved all FATF expectations with criminalisation of the money laundering, terrorism financing, implementation of framework for targeted financial sanctions, customer due diligence, record keeping and reporting of suspicious transactions. When FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed time. This list is often externally referred to as the ‘grey list’. Jurisdictions under increased monitoring are actively working with FATF to address strategic deficiencies.

May be Mauritius-domiciled investors had other considerations which reduced their investments. But we provide certainty and predictability to India flows.

A tax haven is where there is lack of transparency, unwillingness to exchange information on tax matters, no economic substance and Nil or only nominal taxes. Mauritius fully exchanges tax information with others. We have a tax rate of 15 per cent, with a partial exemption of 80 per cent to promote specific activities only for specified incomes, it is reviewed and assessed by both the OECD and the EU. We are in the ‘white list’ on such tax matters. Mauritius has responded to all requests from Indian authorities on fund flows.

Indeed, we have taken note of the recent EU Directive, which is based on FATF observations. We have submitted a progress report to FATF on March 20 but due to Covid-19, the report has not yet been considered for review.

All Investment Funds authorised by the FSC are subject to ongoing reporting obligations, which include submission of Audited Financial Statements and Quarterly Statutory Returns. Investment Funds are required to have a licensed Investment Manager and other intermediaries such as Custodians, Administrators, Auditors to ensure the proper functioning of investment funds and hence protect the interests of investors. Legislations require that Investment Funds offer their shares by way of memorandum to disclose essential information which, includes details on the offering, the investment objective, the strategy being adopted, the different costs associated, details on the promoter/s, board of directors, management team, different committees, functionaries, risks associated with the strategy being followed and the framework on anti-money laundering and combating financing of terrorism.

Any entity wishing to obtain a Global Business Licence must satisfy the criteria laid down in the Financial Services Act 2007. The Commission conducts its screening exercise at different levels. The proposed activity must be allowed under the laws of Mauritius, the shareholders/beneficial owners must be fit and proper and per the provisions of Section 20 of the FSA, i.e. the shareholders/beneficial owners must be capable, knowledgeable and of good character, source of funding of the business must be disclosed and verified.