Mauritius
Detailed Assessment Report on Anti-Money Laundering and Combating the Financing of Terrorism

A detailed assessment report on Anti-Money Laundering and Combating the Financing of Terrorism for Mauritius is discussed. Mauritius is well placed to capitalize on its national strategy to diversify its economy into global financial services by taking advantage of its linkages with both African and long-standing arrangements with the larger Asian economies. Additionally, Mauritius intends to offer new products in Islamic financial services and wealth management. The investigative and prosecutorial authorities have the necessary powers to execute their respective functions.

Abstract

A detailed assessment report on Anti-Money Laundering and Combating the Financing of Terrorism for Mauritius is discussed. Mauritius is well placed to capitalize on its national strategy to diversify its economy into global financial services by taking advantage of its linkages with both African and long-standing arrangements with the larger Asian economies. Additionally, Mauritius intends to offer new products in Islamic financial services and wealth management. The investigative and prosecutorial authorities have the necessary powers to execute their respective functions.

Detailed Assessment Report

1 General

1.1 General Information on the Republic of Mauritius

22. The Republic of Mauritius consists of the islands of Mauritius (main island), Rodrigues, Agalega, St. Brandon, and the Chagos Archipelago with a total area of some 2,040 sq kms. It obtained its independence from the British on March 12, 1968 and became a republic on March 12, 1992. The population of Mauritius is around 1.2 million people, mainly of Indian, African, Chinese, and European origin. English is the official language while French is widely used in the private sector and the media. Creole, a derivative of French, is understood and spoken by all Mauritians. In addition, several other languages are spoken by sections of the population.

23. The political system is based on the Westminster type democracy with the prime minister as head of the government. The President, who is the head of state, and the vice president are elected by parliament every five years. The separation of powers among the judiciary, the executive, and the parliament are defined in the Constitution of the Republic of Mauritius. Mauritius is a member of the Commonwealth, the United Nations and related organizations, the Organisation of African Unity, and the Indian Ocean Commission.

24. The main economic activities of Mauritius are sugar manufacturing, tourism, and the financial sectors. Financial services, comprising the business of banks, insurance companies, stock market, and other financial intermediaries, constitutes a fast growing sector of the Mauritian economy, representing around 10 percent of GDP in 2005 and employing more than 10,000 persons in both large and small establishments. The government is promoting the services sector, including IT and related services.

25. Mauritius has established the Independent Commission against Corruption under the Prevention of Corruption Act of 2002. The main function of the Commission is to investigate corruption and money laundering cases. Mauritius also ratified the United Nations Convention against corruption on December 15, 2004.

26. The Mauritian legal system is largely based on English and French law. Criminal procedure law is mainly English, while the Criminal Code was influenced by the French Code and the civil law is modeled on the Napoleonic Code. The three types of courts are the Magistrate’s Court, the Intermediate Court, and the Supreme Court. Appeals from the Supreme Court lie with the Court of Civil Appeal or with the Court of Criminal Appeal. The ultimate court of appeal is the Judicial Committee of the Privy Council in England.

27. Mauritius has established the Financial Reporting Council which is a fully autonomous oversight body with the responsibility to monitor and enforce the reporting of financial matters, as well as issuing accounting and auditing standards and codes. The main objects of the Financial Reporting Council are to promote the provision of high-quality reporting of financial and nonfinancial information by public interest entities as well as promote the highest standards among licensed auditors. The Mauritius Institute of Professional Accountants plays a similar promotion and oversight role with respect to professional accountants. Law practitioners are subject to the profession membership and Codes of Ethics of the Law Society and Bar Council. The Chamber of Notaries also oversights professional conduct. Chartered Secretaries adhere to the qualifications for membership of the profession’s international association. Requirements for legal persons and arrangements are also framed in legislation that covers companies, associations, cooperatives and trusts.

28. Mauritius has also established the National Committee on Corporate Governance, which is the national coordinating body responsible for all matters pertaining to corporate governance. The main objectives of the Committee are to establish principles and practices of corporate governance and to promote the highest standards of corporate governance.

29. The Mauritius Institute of Directors is responsible for promoting high standards of corporate governance, business and ethical conduct by Directors. Directors are required to adhere to the Mauritian Code on Corporate Governance, which is based on OECD principles.

1.2 General Situation of Money Laundering and Financing of Terrorism.

30. The authorities have indicated that the crime rate in Mauritius is relatively low, with drug related offenses being the most prosecuted crimes. Other crimes that occur less frequently are crimes against the person, such as sexual assault, assault, homicide, as well as traffic offenses. Money laundering is rarely prosecuted. One possible explanation could be that law enforcement officers tend to investigate the predicate offenses and the person is subsequently only charged for the predicate offense and not money laundering.

31. It should be noted that there is a case currently pending before the courts in a European country where Mauritian global business companies are suspected of having been implicated in a large international money laundering operation. The Mauritian FSC informed the mission that, further to a disclosure order made by the Court under the Mutual Legal Assistance in Criminal and Related Matters Act in 2003, assistance was provided to the foreign authorities from the FSC’s files. The (defunct) Economic Crime Office was the authority responsible for investigating money laundering cases which is now replaced by ICAC.

32. Transparency International’s Corruption Perceptions Index ranks Mauritius number 53 which indicates that corruption is a serious issue in Mauritius. Mauritius has begun to address this by establishing ICAC which is now operational and is investigating a number of corruption cases.

33. There have been no reported incidences of terrorist acts or indications of terrorist financing in Mauritius. While the UNSCR 1267 lists of designated persons and entities were initially circulated to financial institutions under the purview of both the BOM and the FSC, they are now only circulated to financial institutions supervised by the BOM. The FSC no longer circulates the amendments to the consolidated list to its licensees. So far, no positive match with the 1267 designations was identified. According to the authorities, no requests were made under UNSCR 1373.

1.3 Overview of the Financial Sector

34. The financial services sector grew by an average of 7 percent over the 2000/2006 period. Its assets are equivalent to 100 percent of GDP. The financial services sector has become an important pillar of the economy both in terms of value-added and employment generation, especially for higher-skilled jobs. It contributed to around 10 percent of GDP between 2000 and 2006 and now provides employment to more than 9,000 employees, mostly professionals in large establishments.

35. The financial services sector is regulated and supervised by two independent institutions, namely the Bank of Mauritius, for all deposit taking and foreign exchange matters, and the Financial Services Commission, for nonbank financial services such as insurance, capital markets, leasing activities, global business companies, and private pensions. With regard to the balance of risk of money laundering and terrorist financing to financial institutions, the mission concluded that the potential risk was greater in the banking sector—the sector regulated by the Bank of Mauritius—than the other sectors. The banking sector is the largest, it appears to be more international in its outlook, and it is actively seeking to attract customers from outside Mauritius. Measures have been taken by the Mauritius authorities to mitigate the risk to the sector. The customer bases of the insurance and investment sectors—regulated by the FSC—are generally domestic, although some investment firms are successfully attracting foreign customers.

36. In October 2004, the Government of Mauritius introduced new banking laws, namely the Bank of Mauritius Act 2004 and the Banking Act 2004. The objective in enacting the new Banking Act was to amend and consolidate the laws relating to the business of banking and other financial institutions. The Act empowers the central bank to issue guidelines and to revoke a banking license where a bank has been convicted by a court of an offense under any enactment relating to anti–money laundering or prevention of terrorism. The central bank is also empowered to revoke a banking license where a bank is carrying on business in a manner which is contrary or detrimental to the interests of its depositors or the public, fails to comply with any directive or instruction issued by the central bank under the banking legislation or contravenes any provision of the banking legislation. The Bank of Mauritius Act 2004 made provision for the establishment of the Bank of Mauritius, as did the 1966 Bank of Mauritius Act.

37. The Financial Services Development Act 2001 provided for the establishment of the Financial Services Commission. This Act was replaced during the mission by the Financial Services Act 2007, which provided the FSC with greater regulatory powers. Among other matters, it provides greater ability to undertake on-site inspections, to obtain information, and to apply administrative penalties. The Act also establishes an Enforcement Committee and a Financial Services Review Panel. The Act allows for sanctions to be imposed in instances of noncompliance relating to AML/CFT issues in respect of institutions and individuals. Based on meetings with FSC staff, it was clear to the mission that, going forward, the FSC intends to use the tools in the new Act to enforce the AML/CFT framework it administers. The new Act deals with, among others, the licensing, regulation, monitoring, and supervision of businesses in the financial sector and global business companies. Under the Financial Services Act 2007 transitional provisions, existing Freeport and ITC companies, will have until 30 June 2012 to take necessary measures to meet the requirements of the new Act in order to remain as global business licensees.

38. During the mission, the Stock Exchange Act 1988 and the Unit Trust Act 1989 were replaced by the Securities Act 2005. The new Act establishes a framework for the regulation of securities markets, market participants, and the offering and trading of securities. One of the principal aims of the Securities Act 2005 is to implement the Objectives and Principles of the International Organization of Securities Commissions. Mauritius has a stock exchange established since 1988. Under the Stock Exchange Act 1988, the objects of the Stock Exchange Company were specified as being to operate and maintain a stock exchange, to provide facilities for buying, selling and otherwise dealing in securities on the stock exchange; to establish a clearing service under the Securities (Central Depository, Clearing and Settlement) Act 1996; and to provide and maintain, to the satisfaction of the Commission, adequate and properly equipped premises for the conduct of its business.

39. The Stock Exchange Act was replaced by the Securities Act 2005 during the mission. Under the new Act, no person shall establish, operate or maintain a securities exchange without a license from the FSC. The FSC is not able to grant a license unless it is satisfied that the applicant has operating rules to ensure, as far as is reasonably practicable, that the market will operate fairly, transparently, and in an orderly way. The FSC must also be satisfied that that the applicant has adequate rules or systems for handling conflicts between the commercial interests of the applicant and the need for the exchange to ensure that it operates fairly, transparently, and in an orderly way; monitoring the conduct of participants on, or in relation to the exchange; and enforcing compliance with the operating rules of the market. The stock exchange operates two markets, namely, the official market which has some 40 listed companies and a market capitalization of 144 billion rupees and the development and enterprise market with a market capitalization of some 45 billion rupees. The total market capitalization of the exchange is equivalent to over 80 percent of GDP.

40. The Insurance Act 2005, which came into effect during the mission, replaced the Insurance Act 1987. One of the aims of the new Act is to implement the Insurance Core Principles of the International Association of Insurance Supervisors. It establishes a framework for the regulation and supervision of the insurance business. It also provides for the licensing of insurers and other insurance operators, and for the registration of insurance salespersons and other insurance professionals.

41. The following table sets out the types of financial institutions that can engage in the financial activities that are within the definition of “financial institutions” in the FATF 40+9.

Table 3.

Financial Activity by Type of Institution

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Table 4.

Employment in the Banking Sector

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1.4 Overview of the DNFBP Sector

42. Despite its relatively small size, the full range of DNFBPs styles are present in Mauritius. Mauritius has a Freeport Zone regime and a Global Business (international business) sector in addition to businesses that operate in the domestic economy. DNFBP activities are not one of the business activities approved to operate in the Freeport Zones. The legal framework provided by FIAMLA makes no distinction in its application to DNFBPs that operate domestically or which may operate in the global sector. There is no geographical restriction on where global businesses can be located in Mauritius. Table 5 in this section provides a profile of the DNFBP sector.

Table 5.

DNFBPs Operating in Mauritius

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Trust and Company Service Providers (TCSPs)

43. Trust and company service providers that service the global sector business in Mauritius must hold an FSC issued Management License. Of the 102 Licensees at the time of mission, 79 were Management companies and 23 were Corporate Trustees. Both categories were regulated by the FSC under the Financial Services Development Act 2001 until the mission. During the mission, the Act was replaced by the Financial Services Act 2007. The FSC also supervises the management companies that provide professional trustee services for domestic clients. Most of the management companies service both corporate and trust clients.

TCSPs - Global Business Sector

44. The 79 management companies, together with 23 qualified corporate trustees (that can also act as registered agents), service the global business (GBL) sector in Mauritius. Both management companies and qualified corporate trustees must hold a management license issued by the FSC; however, the license conditions for the management companies provide for a broader scope of activities: company formation, administration and management of GBLs and corporate trustee services. Corporate trustees are restricted to trustee services. Only management companies are allowed to act as registered agents. All GBLs must apply through or be represented in Mauritius by a holder of a management license. In the majority of cases, the management companies also hold trustee licenses through affiliated companies and act as the trustee for their global clients.

45. There were 28,981 businesses with global business licenses as of June 2006. There are two types of license: GB1 (8,706) and GB2 (20,285). GB1 businesses must have physical presence in Mauritius and are primarily involved in financial services, including funds management, banking, and insurance. GB2 licensees which must be represented in Mauritius by a registered agent (that is a management company), are mainly used for investment holdings for incorporated and high-wealth individuals and trading. The new Financial Services Act (FSA) which came into effect on September 28, 2007, strengthens statutory requirements for the conduct of global businesses. Global businesses that wish to conduct financial services are restricted to a GBL1 license. Most GBs are incorporated or registered in Mauritius and are subject to the requirements of the Companies Act. The FSC estimates indicate that in excess of 70 percent of total turnover in the global sector is generated through the financial services business conducted by GBL1 licensees.

46. For AML/CFT purposes, FIAMLA designates the FSC as the competent supervisory authority. The FSA (placed into effect during the on-site mission) creates the broader legal structure and framework for the FSC’s regulation of the nonbank financial institutions, and this includes TCSPs that service the global sector and qualified trustees that are also able to act for domestic trusts. Consistent with its approach to regulating and supervising the insurance and securities sectors, the FSC acts as the licensing authority (both for management companies, qualified trustees and the GBLs, conducts on and off-site inspections of the management companies and qualified trustees and has undertaken enforcement action. Prior to the enactment of the FSA, TCSPs were governed by provisions of the Financial Services Development Act which also required TCSPs to be licensed by the FSC. The FSD s27(5) also gave specific power to the FSC to conduct on-site inspections of the management companies licensed to provide trustee and company provider services to the global business sector.

TCSPs - Domestic market

47. Although the Companies Act 2001 allows individuals to form their own domestic companies, local lawyers, notaries, accountants and chartered secretaries continue to provide these corporate services. The assessors were unable to obtain any statistics to scope the size of the sector; however, industry advice suggests that such business is still undertaken by many of the local professions.

Law Practitioners (including notaries)

48. Solicitors, lawyers, and notaries fall under the Law Practitioners’ Act. Specific laws governing these three professions are the Law Society Act, the Bar Council Act and the Notaries Act.

49. In Mauritius, the legal profession is split between law practitioners (attorneys and notaries) and barristers. Attorneys and barristers are governed by the Law Practitioners Act (1984) and by the Mauritius Law Society Act (2005). (Description and analysis of the notary’s profession is included separately). In 2006, the Law Society also issued Rules and a Code of Conduct. Barristers are governed by the Mauritius Bar Association Act (1957), Law Practitioners Act and a Code of Ethics (1997). There are approximately 150 lawyers and 325 barristers practicing in Mauritius.

50. Attorneys are generally retained by clients for commercial litigation and other civil litigation. Barristers may be hired directly by clients for criminal litigation. They may be hired for civil litigation matters as well although the carriage of the case remains with the attorney. Barristers are also employed by management companies and international law firms to give legal opinions on corporate and commercial matters with regards to Mauritian law for companies holding global business licenses in Mauritius who are conducting international business through those companies.

51. Notaries are considered law practitioners covered by the Law Practitioners Act that applies to lawyers and barristers. They are also subject to the requirements of the Notaries Act. The Chamber of Notaries has a general role to maintain the internal discipline among notaries. A maximum of 60 notaries are allowed to practice (currently 54 do). Historically, all notaries must be located in Port Louis to assist in their knowledge of the client.

52. Notaries are involved in real estate transactions, where they act as the intermediary for both buyer and seller. In this role, notaries authenticate the deeds of title and transaction. The Notary will hold on deposit funds from the potential buyer and release net funds to the vendor when the title is transferred. The prohibition on large cash payments applies, and the normal practice is to rely on cheques placed with Mauritian banks.

53. Notaries are also involved in forming domestic companies for clients, although this business has fallen significantly following changes to the Companies Act that enable individuals to make their own application. Notaries provide a service to the GBLs and management companies in certifying true copies of board resolutions, powers of attorney and trust deeds, and that documents have been completed in accordance with the relevant Mauritian law.

Accountants and Auditors

54. In 2004, the Financial Reporting Act was passed. This Act provides for the setting up of the Mauritius Institution of Professional Accountants and the Financial Reporting Council. MIPA is responsible for the oversight of the professional conduct of registered accountants, and the FRC has a similar role with respect to licensed accountants.

55. There are currently 1,143 professional accountants registered with MIPA and 140 auditors who are required to be licensed by the FRC. Conflicting comment was received as to whether “accountant” is defined in law.

56. Professional accountants must have qualifications recognized by the various professional accounting bodies and work both in the public and private sector. All practices provide auditing and accounting services. The larger firms are increasingly moving into corporate advisory services, for example, on corporate financing proposals in the region. The local sector restricts itself to auditing work for the global sector as the accounting function service is provided by management companies. The industry is dominated by the five largest firms, which include international auditing firms.

Chartered Secretaries

57. There are approximately 100 Chartered Secretaries in Mauritius that meet the professional qualifications (legal or accounting). The international standard setting body is the Institute of Chartered Secretaries (based in London). All members of the local professional association (The Mauritian Association of Chartered Secretaries and Administrators) are required to adhere to the Institute’s professional code of ethics. The code addresses professional responsibilities which includes adherence to all relevant statutory and regulatory requirements. No specific guidance on AML/CFT matters have been issued.

58. Public companies and private companies of a certain turnover (30 million rupee) are required by the Companies Act to have a chartered (corporate) secretary and the Companies Registrar review verifies the membership status of all chartered secretaries that act for such companies. The role of the company secretary (currently about 20) is specified both in the Companies Act and the Code of Corporate Governance for Mauritius and essentially includes advising and assisting a board of its obligations to its own constitution, relevant statutory and regulatory requirements, Codes of Conduct and rules established by the Board. Company Secretaries are subject to the same “fit and proper” tests as directors.

59. In Mauritius, chartered secretaries also provide corporate services, including company formation and registered offices, nominee services, and management of bank accounts. The greatest risk to reputation is considered to be the acting as a nominee. Corporate Services are provided to the domestic sector. Chartered secretaries also work for the various management companies in an internal capacity. Any AML/CFT obligations are the responsibility of the management company.

Real Estate Agents

60. Real Estate agents are not regulated except that they operate with a trade license from one of the nine local authorities. The mission was made aware of a significant level of unlicensed activity; although no real estate price index exists, the sector is undergoing considerable growth, especially with respect to the government-promoted Integrated Resort Scheme (IRS), which enables high-value developments to be sold primarily to foreign buyers. The Board of Investments estimated that 4.5 billion MUR (approximately US$130 million) was invested in the IRS developments in the previous year.

61. A trade license enables a person to act as a broker between buyers and sellers of ‘immovable objects”—meaning property. There is no Agency law and the direction given by commercial code, which is based on French law, gives anyone the right to be involved in “buying and selling”. The trade license comes with no conditionality and is renewed on an annual basis. There is no monitoring of agents other than for payment of license fees.

62. The Real Estate Agents Association (30 members) advised that 150 to 200 persons operate as estate agents. The Association is seeking to improve the overall standards of the real estate sector and has issued a Code of Ethics, Rules and Regulations, including ethical membership requirements which are binding on its members. It has an internal disciplinary committee. All legal and transaction formalities concerning the acquisition or disposal of property in Mauritius is undertaken by notaries.

63. There is no real estate price index. Anecdotal comment suggests that the price of real estate has risen considerably in recent years. Increasing exemptions are being provided to allow foreigners to purchase real estate. The BOI facilitated IRS is a significant initiative to attract foreign buyers and investors. The IRS developers (Mauritian or foreign promoters) predominantly market the high value properties4 to international buyers. While the BOI undertakes a level of checking on the background of promoters before it approves the development application, this is more for credit worthiness.

64. The BOI does not regulate the IRS sector, although all the relevant regulations do require promoters/developers to establish bank accounts in Mauritius and hence be subject to the CDD processes of the financial sector. As part of its processes, the BOI will research annual reports and internet, and obtain source of funds and passport information. A KYC certification of the foreign buyer from the promoter’s Mauritian bank is provided to the BOI. Foreign investors must transfer all payments to the promoter’s Mauritian bank accounts. Subsequent to the on-site mission the authorities advised that the scope of the IRS has been extended to allow smaller private landowners to sell to foreign investors.

Dealers in Precious Metals and Stones

65. Dealers in precious metal and stones operate with a trade license from one of the local authorities. Although no official statistics were provided to the assessors, industry representatives advised there are approximately five to six hundred jewelers in Mauritius, although it is unclear how many separate businesses exist. Most jewelers work for established jewelry businesses. Approximately 15 of these jewelers are involved in the jewelry export business. The assessors were advised that unlicensed activity is a problem in the industry.

66. The BOM sells gold to the two registered precious metal dealers. The two gold dealers do not fall under the regulatory purview of the BOM. Like jewelers, they are required to be registered with the Controller of Assay’s Office and are governed by the provisions of the Jewelry Act 2007.

67. There is a level of oversight of licensed jewelers and jewelers are subject to transaction-based record keeping requirements for VAT and Customs purposes as well as for on-site quality checks by the Assay Office.

Casinos

68. In May 2007, the government enacted the Gaming Regulatory Authority Act to license, regulate, and supervise the business of casinos, horse racing, lotteries, gaming houses, bookmakers, and totalisator. The Act further empowers the Gaming Regulatory Authority to issue guidelines on the prevention of money laundering and the combating of the financing of terrorism to licensed casinos, bookmakers and totalisators. The Act was placed into effect with respect to casinos just prior to the onsite mission; however, the Board has yet to be constituted.

69. Six physical casinos in Mauritius operate on a yearly renewable licensing arrangement. The State Investment Corporation (SIC), which is the investment body of the government, maintains a majority shareholding in all licenses, and manages in partnership with private sector partners that are usually connected with the hotel operations that house a casino. The scale of the casinos is comparatively small, with the largest operating only 15 tables. Electronic gaming machines (“slots or pokies”) are subject to a separate license by the sector regulator and the minister approves the number of machines. Transaction limits for note loading machines are 50 rupee and table bet limits seldom exceed 500 rupee. The current rate of turnover value added tax is a relatively high 50 percent. Like all businesses in Mauritius, casinos are prohibited from making or accepting payments in cash in excess of 500,000 rupee.5 The Mauritian casino clientele is primarily local known patrons and the industry places strong reliance on its knowledge of their betting habits. Mauritian casinos do not host junkets simply because they cannot match the inducements of the larger international casino operators.

Non-Profit Organisations

70. The Registry of Associations Act 1976 provides for the legal framework for the registration, supervision, and monitoring of non-profit organizations. 8,000 associations are registered under the Registration of Associations Act as of December 31, 2006. The membership strength of these associations varies between seven and 25,000. These associations have many purposes, including to promote social, cultural, religious, educational, sports, philanthropic, and benevolent activities and to provide benefits to their members. They handle funds ranging from Rs 1000 to Rs 460 million.

1.5 Overview of commercial laws and mechanisms governing legal persons and arrangem

71. Legal persons may be formed as companies under the Companies Act 2001. Under section 91 of the Companies Act 2001, a global business company is required to maintain a share register which must record, among other information:

  • (i) the names and the last known address of each person who is or has within the last seven years been a shareholder; and

  • (ii) the date of any transfer of shares and the name of the person to or from whom the shares were transferred.

72. Under the previous FSD Act, a company holding a Category 1 global business license must at all times have a director resident in Mauritius. The new FS Act applies a ‘management and control test’ and requires GBL1 companies to have at least two directors, resident in Mauritius, and of sufficient calibre to exercise independence. Corporate directors are not allowed. A company holding a Category 2 global business license is not required to have a resident director and may appoint a corporate director. All global business companies must keep a register of directors containing:

  • (i) the names and addresses of the persons who are directors of the company;

  • (ii) the date on which each person whose name is entered on the register was appointed as a director of the company; and

  • (iii) the date on which each person named as a director ceased to be a director.

73. Any change in the directors of a company must be notified to the Registrar of Companies. A global business company must at all times have a registered office in Mauritius.

74. It is also possible to register societies commercial (used for business purposes) and societies civil (used to hold real property or other assets), societies en participation, and societies de fait which can be created under the civil code of Mauritius. These societies may be created in one of three ways: individuals can retain a notary to prepare the deed; the individuals may create the deed themselves, or individuals can create a society commercial de fait where there is no document but the arrangement exists in practice. Whichever form of creation is chosen, all can be registered with the company registry so that the deed or interest is registered and recognized publicly. The societies are much less regulated than companies in that much less information is required to be disclosed. No shareholder or beneficial information need be disclosed.

75. Joint ventures, consortiums, foreign societies, or partnerships may also be registered by the registrar but there is no legal requirement for them to register. In all cases, no shareholders, beneficial owners or beneficiaries, as may be applicable, needs to be disclosed to the registrar.

76. As at the end of August 2007, there were 31,325 domestic companies registered with the Company Registrar, and 188 foreign companies. There were 8,732 Global Business License One companies and 20,268 Global Business License Two companies. In total, there were 61,039 companies registered in Mauritius as of the end of August 2007.

Trusts

77. The Trust Act 2001 governs trusts settled by both residents and nonresidents. There is no provision requiring a trust to be filed with a state or regulatory body. The instrument creating the trust must name the trustee and the beneficiaries or class of beneficiaries as the case may be and identity the property transferred on trust. All trusts are required to have at least one qualified trustee which must be licensed to act as such by the FSC. Qualified trustees are licensed by the FSC under Section 24 of the FSD Act. The qualified trustee is issued with a management license and is thus required to undertake the verification of the identity of the applicant business and of the principals thereof and to keep records of the verification of identity documentation pursuant to the requirements of the FIAMLA and FSC’s Code on the Prevention of Money Laundering and Terrorist Financing intended for management companies.

1.6 Overview of strategy to prevent money laundering and terrorist financing

AML/CFT Strategies and Priorities

78. Mauritius enacted the Financial Intelligence and Anti-Money Laundering Act 2002 (FIAMLA), the Prevention of Corruption Act 2002 (POCA), and the Prevention of Terrorism Act 2002 (POTA). It is an active member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). The Financial Intelligence Unit, which is an independent body and a member of the Egmont Group, is responsible for collecting, analyzing, and disseminating data/information on anti-money laundering. The Independent Commission Against Corruption (ICAC), set up in 2002, is responsible for investigating corruption as well as money laundering matters. Powers were given to the Bank of Mauritius (BOM) and the Financial Services Commission (FSC) to issue and to enforce guidelines/Codes to their licensees on AML/CFT. With the enactment of the Gaming Regulatory Authority Act in May 2007, the Gaming Authority will have powers to issue guidelines on AML/CFT to its licensees, namely, casinos, bookmakers, gaming houses, etc.

79. The National Committee for Anti-Money Laundering and Combating the Financing of Terrorism, which was established under the FIAMLA, is responsible for promoting coordination among the FIU, investigatory authorities, supervisory authorities, and other institutions with a view to improving the effectiveness of existing policies to combat money laundering and the financing of terrorism. Most of the relevant authorities are enabled to communicate and cooperate with one another, but stringent confidentiality requirements in the POCA prohibit the ICAC from exchanging information with other authorities on a formal basis.

The institutional framework for combating money laundering and terrorist financing

80. The Ministry of Finance and Economic Development has been assigned the responsibility for money laundering and terrorist financing matters, including policy issues regarding AML/CFT. Other relevant ministries include the Ministry of Justice and Human Rights, the Ministry of Interior, and the Ministry of Foreign Affairs. Other bodies involved in AML/CFT include:

  • The Financial Intelligence Unit, which is the central agency in Mauritius responsible for receiving, requesting, analyzing and disseminating to the investigatory and supervisory authorities disclosures of financial information concerning suspected proceeds of crime, alleged money laundering offenses, and the financing of any activities or transactions related to terrorism;

  • The ICAC was set up under the Prevention of Corruption Act 2002, replacing the former Economic Crime Office set up under the repealed Economic Crime and Anti-Money Laundering Act 2000. Its role is to investigate corruption and money laundering offenses;

  • The Mauritius Police Force has three different units which may be called upon to investigate money laundering cases: the Special Cell and the Fiscal Unit (both located within the Central Crime Investigation Department), and the Anti-Drugs and Smuggling Unit;

  • The Solicitor General’s Office has been involved in the drafting of the AML/CFT legislative framework with the aim of combating money laundering and strengthening the financial system in Mauritius. In addition, the Office deals with incoming and outgoing requests for mutual legal assistance to and from foreign countries through the Central Authority, in respect of serious crimes like fraud and money laundering. The Office is the main prosecutorial body in Mauritius and is assigned with the responsibility of providing advice on issues pertaining to AML/CFT, as well as prosecuting money laundering cases which are referred to the Office by the Independent Commission Against Corruption;

  • The Commissioner of the Drug Asset Forfeiture Office is responsible for the confiscation of assets of persons convicted under the Dangerous Drugs Act of 2000;

  • The Mauritius Revenue Authority (MRA), which is able to enforce AML/CFT rules and regulations on incoming and outgoing passengers;

  • The BOM is the licensing and supervisory body of all banks, non-bank deposit-taking institutions, and cash dealers operating in Mauritius;

  • The FSC licenses, regulates, and supervises nonbank financial institutions in Mauritius. The nonbank financial sector includes institutions involved in insurance and pensions, capital market operations, leasing, and credit finance as well as global business activities;

  • The Financial Reporting Council has been set up as a fully autonomous oversight body with the responsibility to monitor and enforce the reporting of financial matters, as well as issuing accounting and auditing standards and codes;

  • The Mauritius Institute of Professional Accountants, a self regulatory body, is responsible for the supervision and regulation of the accountancy profession. It also promotes the highest standards of professional and business conduct of professional accountants and works to enhance the quality of services offered by them;

  • Mauritius has also established the National Committee on Corporate Governance, which is the national coordinating body responsible for all matters pertaining to corporate governance. The main objectives of the Committee is to establish principles and practices of corporate governance and to promote the highest standards of corporate governance;

  • The Mauritius Institute of Directors is responsible for promoting high standards of corporate governance, business, and ethical conduct by Directors

  • The Gaming Regulatory will be established by the Gaming Regulatory Authority Act 2007 to license and supervise casinos, bookmakers, and totalisator. This body will be responsible for issuing guidelines on AML/CFT.

Approach concerning risk

81. Mauritius has not undertaken a risk assessment for AML/CFT purposes.

Progress since the last IMF/WB assessment or mutual evaluation

82. In December 2002, an FSAP mission of the IMF/WB conducted a detailed assessment of the anti-money laundering (AML) and combating the financing of terrorism (CFT) regime of Mauritius. The mission reviewed the relevant AML/CFT laws and regulations and supervisory and regulatory systems in place to deter money laundering and financing of terrorism with a view to identifying the strengths, vulnerabilities, and development needs in the financial sector and assisting the Mauritian authorities in designing appropriate responses.

83. To give effect to those recommendations, the Anti-Money Laundering (Miscellaneous Provisions) Act, the Convention for the Suppression of the Financing of Terrorism Act 2003, and the Mutual Assistance in Criminal and Related Matters Act 2003 were passed in September 2003. The FIAMLA Regulations on record keeping, personal identification, etc. was passed in June 2003.

84. The Anti-Money Laundering (Miscellaneous Provisions) Act 2003 amended the then Banking Act 1988, the Financial Intelligence and Anti-Money Laundering Act 2002 and the Financial Services Development Act 2001 to provide, among others, for:

  • (a) the replacement of the Review Committee of the Financial Intelligence Unit by a Board;

  • (b) the setting up of a National Committee for Anti-Money Laundering and Combating the Financing of Terrorism to coordinate AML/CFT actions at the national level;

  • (c) the Financial Intelligence Unit to issue guidelines to banks, financial institutions, cash dealers and members of the relevant professions or occupations on the manner in which suspicious transaction reports should be made to the Financial Intelligence Unit;

  • (d) the Bank of Mauritius and the Financial Services Commission to issue codes and guidelines on anti-money laundering and the combating of the financing of terrorism and to enforce compliance with those codes and guidelines;

  • (e) a derogation from the duty of confidentiality of:

    • (i) banks, to allow them to report suspicious transactions and supply information relating to a reported suspicious transaction to the FIU;

    • (ii) the Bank of Mauritius and the Financial Services Commission to be able to refer information suggesting a possible money laundering offense or a suspicious transaction to the FIU;

    • (f) the Director of the FIU to request further information in relation to a reported suspicious transaction.

85. The Mutual Assistance in Criminal and Related Matters Act 2003 was passed which aimed at enabling the widest possible measure of international cooperation to be given and received promptly by Mauritius.

86. The Financial Intelligence and Anti-Money Laundering Act 2002 and the Regulations to the Act were promulgated to provide for, among others, the verification of client identity, record keeping, the appointment and responsibilities of money laundering reporting officer, and the implementation of internal controls and other procedures to combat money laundering.

87. The Prevention of Corruption Act 2002 was amended on several occasions. One notable change was to enable the Independent Commission Against Corruption to investigate corruption and money laundering cases not only after referral from the FIU, but also after referral from the Police, as well as on its own initiative.

88. A general review of the Guidance Notes to the banking industry on AML/CFT was undertaken following the enactment and proclamation of the Banking Act 2004 and Bank of Mauritius Act 2004. The Guidance Notes require financial institutions under the jurisdiction of the BOM to apply enhanced KYC for, among others, politically-exposed persons, correspondent banking, wire transfers, and high-risk individuals.

89. The Financial Services Commission has issued three Codes on AML/ CFT to the insurance sector, management companies, and investment businesses. These Codes are updated as the need arises to cater to developments in AML/CFT.

International cooperation and extradition

90. With the Mutual Assistance in Criminal and Related Matters Act 2003 (MACRM Act) and the Extradition Act 1970, Mauritius adopted comprehensive laws that enable it to provide a wide range of measures at the request of a foreign State. Both ML and TF are extraditable offenses.

2 Legal System and Related Institutional Measures

2.1 Criminalization of Money Laundering (R.1 & 2)

2.1.1 Description and Analysis

91. The Republic of Mauritius started fighting against money laundering in 1995 with the enactment of the Dangerous Drug Act (DDA) that criminalizes the laundering of the proceeds of drug-related offenses. It then criminalized money laundering on a larger scale in 2000 with the adoption of the Economic Crime and Anti-Money Laundering Act (ECAMLA), which took a threshold approach based on the gravity of the offense (crimes). The ECAMLA was subsequently replaced by the Financial Intelligence and Anti-Money Laundering Act of 2002 (FIAMLA), which criminalizes money laundering in the same terms as the ECAMLA.

92. Mauritius, therefore, has two money laundering offenses: a general one that applies to all crimes (Section 3 of the FIAMLA), and a more specific one that applies to the offenses listed under the DDA (Section 39 DDA).

Legal Framework
Criminalization of Money Laundering (c. 1.1 - Physical and Material Elements of the Offense):

93. Mauritius ratified the UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna Convention) on February 19, 2001. It implemented the relevant provisions of the Convention with the adoption of (and subsequent amendments to) the DDA.

94. It also ratified the UN Convention Against Transnational Organized Crime (Palermo Convention) on April 21, 2003. Section 188 of the Criminal Code, which is a remnant of the French Criminal Code and which was already in place at the time of the ratification, criminalizes the association of malefactors but no additional implementation measures were taken as a result of the ratification.

95. The International Convention for the Suppression of Financing of Terrorism was ratified on December 14, 2004 and was given force of law in its entirety (Section 3 of the Convention for the Suppression of the Financing of Terrorism Act of 2003). Further measures were taken as described under Special Recommendation II below.

96. Section 3 of the FIAMLA criminalizes money laundering in the same terms as the 2002 ECAMLA and provides that:

  • “(1) Any person who:

  • (a) engages in a transaction that involves property which is, in whole or in part, or directly or indirectly represents, the proceeds of any crime; or

  • (b) receives, is in possession of, conceals, disguises, transfers, converts, disposes of, removes from, or brings into Mauritius any property which is, in whole or in part directly or indirectly represents, the proceeds of any crime;

  • (c) where he suspects or has reasonable grounds for suspecting that the property is derived or realized, in whole or in part, directly or indirectly from any crime, shall commit an offense”.

97. The law further provides that a bank, financial institution, cash dealer or member of a relevant profession or occupation that fails to take such measures as are reasonable necessary to ensure that neither it nor any service offered by it, is capable of being used by a person to commit or to facilitate the commission of a money laundering offense shall commit an offense (Section 3(2) FIAMLA).

98. Articles 3(1)(b)&(c) of the Vienna Convention and 6(1) of the Palermo Convention require countries to establish as a criminal offense the following intentional acts (material elements): the conversion or transfer of proceeds; the concealment or disguise of the true nature, source, location, disposition, movement or ownership of or rights with respect to proceeds; and, subject to the fundamental or constitutional principals and basic concepts of the country’s legal system (Art. 2 para. 1 of the Vienna Convention and Art. 6 para. 1 of the Palermo Convention), the acquisition, possession or use of proceeds (Art. 3 para. 1 (b) (i) – (ii) of the Vienna Convention and Art. 6 para. 1 (a) (i) – (ii) of the Palermo Convention), as well as the participation in, association with or conspiracy to commit, attempts to commit, and aiding, abetting, facilitating and counseling the commission of any of the foregoing (Art. 6 (1) (b) (iii) Palermo).

99. The material elements of the money laundering offense under the FIAMLA are broad in many respects and cover most of the elements listed under the Conventions. In particular, Sections 3(1) (a) and (b) of the FIAMLA satisfy the requirements of the Conventions with regard to the conversion or transfer, concealment or disguise and acquisition, possession or use of proceeds of crime. However, the concealment and disguise referred to under Section 3(1) only seem to apply to the property itself, and whilst this would usually cover the location of the property, it would not necessarily and in all cases also cover the “true nature, source, disposition, movement or ownership of or rights with respect to proceeds” as required by the Conventions.

100. Section 39 of the DDA provides that:

  • “Any person who unlawfully,

  • (a) converts or transfers resources or goods derived from any of the offenses specified under sections 30, 33, 35, 36 and 38 with the aim either of concealing or disguising the illicit origin of the said goods or resources or of aiding any person involved in the commission of one of those offenses to evade the legal consequences of his actions;

  • (b) renders assistance for concealing or disguising the genuine nature, origin, location, disposition, movement or ownership of the resources, goods or rights thereto derived from one of the offenses under this Part;

  • (c) acquires, possesses or uses goods and resources, knowing that they are derived from one of the offenses under this Part,

  • shall commit an offense (…).”

101. The first elements of the offenses under the Vienna and Palermo Conventions (i.e., the conversion and transfer) are clearly covered under Section 39 of the DDA. The second elements (concealment and disguise) are also covered, but in a way which appears too restrictive. Under the Conventions, these elements are broad and include the concealment or disguise of almost any aspect of or information about the property. While concealing and disguising should include the illicit origin as mentioned in the DDA, it should also cover all the other elements listed in the Conventions, namely, the true nature, source, location, disposition, movement or ownership of or rights with respect to proceeds. Under the DDA, these elements are specifically listed, but only with respect to the ancillary offense of rendering assistance.

The Laundered Property (c. 1.2):

102. The money laundering offense refers to property which is, in whole or in part or directly or indirectly represents the proceeds of any crime. Property is defined under Section 2 of the FIAMLA as “property of any kind, nature or description, whether moveable or immoveable, tangible or intangible” and specifically includes:

  • (a) any currency, whether or not the currency is legal tender in Mauritius, and any bill, security, bond, negotiable instrument or any instrument, capable of being negotiated which is payable to bearer or endorsed payable to bearer, whether expressed in Mauritius or otherwise;

  • (b) any balance held in Mauritius currency or in any other currency in accounts with any bank which carries on business in Mauritius or elsewhere;

  • (c) any balance in any currency with any bank outside Mauritius;

  • (d) motor vehicle, ships, boats, works of art, jewelery, precious metals or any item of value; and

  • (e) any right or interest in property.”

103. Although corporeal and incorporeal assets are not specifically mentioned, they are clearly covered in the definition and list above. This definition of property applies to a broad range of assets and is in line with the definition under the Vienna and Palermo Conventions and the FATF Glossary.

104. Section 39 of the DDA refers to “resources or goods,” which the Act does not define. It is also unclear in the text of the law whether the legislator’s intention was to cover “resources and goods” that have been derived both directly and indirectly from the crime. The authorities, however, are adamant that they interpret “resources and goods” broadly to cover all types of property derived, directly or indirectly, from crime.

Proving Property is the Proceeds of Crime (c. 1.2.1):

105. Prior conviction for the predicate offense is not a prerequisite to a conviction for money laundering under the FIAMLA; the Act specifically provides that “a person may be convicted of a money laundering offense notwithstanding the absence of a conviction in respect of a crime which generated the proceeds alleged to have been laundered” (Section 6(1) FIAMLA). The law further mentions that in any proceedings for money laundering, it is sufficient to aver the information that the property is, in whole or in part, directly or indirectly the proceeds of a crime, without specifying any particular crime, and the court, having regard to all the evidence, may reasonably infer that the proceeds were, in whole or in part, directly or indirectly, the proceeds of crime (Section 6(3) of the FIAMLA).

106. The principles under both provisions of the FIAMLA were already contained in the ECAMLA, respectively under Section 17(6) and (7). In one case conducted under the ECAMLA before the Intermediate Court, the specifics of the predicate offense (which had been committed abroad) were not provided in detail by the prosecution. The defense counsel moved for a stay of the proceedings on the grounds that Section 17(7) (the current Section 6(3) of the FIAMLA) breached Sections 10(1) and 10(2) of the Constitution of Mauritius which provide for a fair hearing and the right for the defendant to be informed in detail of the nature of the offense he is charged with. The Court agreed with the State Counsel (both in the ruling and in the final judgment) that, although the Prosecution must prove that the property was tainted and that the accused had reasonable grounds to suspect that he was dealing with the proceeds of a crime, it is not necessary to aver the predicate offense, and the need for particulars of the predicate offense therefore does not arise.6 The accused person was convicted for money laundering and sentenced to a 1,000,000 Rupees fine. It should be noted, however, that the accused party subsequently challenged this judgment on several grounds, including the constitutionality of Section 17(7) of the ECAMLA. The case was pending before the Appeals Court at the time of the assessment and the trial scheduled for early 2008.

107. According to the authorities, although this is not specified in the Act, prior conviction for the predicate offense is a necessary precondition to a conviction for money laundering under Section 39 of the DDA. Both offenses may nevertheless be (and have been) tried during the same proceedings.

The Scope of the Predicate Offenses (c. 1.3):

108. The Mauritian authorities opted for a threshold approach under the FIAMLA with the money laundering offense applying to “crimes”, i.e., offenses punishable by penal servitude (imprisonment imposed for life or for a minimum term of 3 years) and/or a fine exceeding 5,000 rupees (Sections 4 and 11 of the Criminal Code).7 Several of the categories of offenses designated by FATF as the minimum standard for the list of predicate offenses constitute offenses under Mauritian law. However, a number of them carry an imprisonment sentence for a duration ranging from 11 days to 5 years (as opposed to penal servitude for a longer term), which entails that they constitute misdemeanors, as opposed to crimes. Others still do not constitute an offense, and therefore, like the misdemeanors, do not fall within the scope of the money laundering offense. In some instances, such as larceny, the main offense is classified as a misdemeanor when it is committed in its “simplest” form, but takes the more serious nature of a crime when it was committed with aggravating circumstances (such as the use of violence, or the fact that the offense was committed by a criminal group). It is worth noting that the amount of money or other assets involved in the offense is not an aggravating element: the theft of a large amount of money, for example, does not constitute a crime but only a misdemeanor and the laundering of the proceeds of the theft entirely evades the scope of the FIAMLA.

109. The money laundering offense under the DDA applies to the conversion and transfer of resources or goods derived from the offenses covered by the Act which include illicit trafficking in narcotic drugs and psychotropic substances.8

110. The following categories of offenses designated by the FATF constitute predicate offenses under Mauritian law (under both FIAMLA and DDA):

  • Participation in an organized criminal group and racketeering - Section 188 of the Criminal Code. Section 188 provides that “any association of malefactors against the persons or property of individuals is a crime against the public peace”. Pursuant to Section 189, “such a crime exists by the mere fact of an organisation of a band, or of correspondence between such band and its chiefs or commanders, or of an agreement having for object to give an account or to make a distribution or division of the produce of their wrongful acts.” It should be noted that this particular offense gave rise to some level of confusion during the assessment because of the reference to the breach of peace. Initially, it was unclear whether breach of peace was a specific element of the offense which would have excluded other groups acting in pursuit or organized with a view to obtain financial gain without breaching the public peace. The authorities then indicated that this was not the case based on an analogy with French law: they explained that Section 188 was a remnant of the French Code adopted by Mauritius, that French law therefore constituted a valid source of information for interpretation purposes and that, under French law, the breach of peace is not an element of the offense. In their view, this would be the reason why Section 188 could be interpreted broadly. It should also be noted that this particular offense is rarely applied and that the fact that a specific crime was committed by a group is usually taken into account as an aggravating element under the main offense, rather than in the application of Section 188.

  • Terrorism, including terrorist financing - Section 4 of the CSFT Act;

  • Trafficking of children – Section 13A of the Child Protection Act 1994 (as amended in 1995 and 2004);

  • Corruption – Sections 4, 5, 6 – 17 of the POCA;

  • Fraud is covered by the offense of Swindling – Section 330 of the Criminal Code; Embezzlement is also a crime when committed by a public or a ministerial officer, or by a servant or a person in service receiving wages, or a pupil, clerk, workman, journeyman or apprentice, to the prejudice of his master – Section 333 subsection 2 of the Criminal Code;

  • Counterfeiting currency – Sections 93 to 100 of the Criminal Code;

  • Murder, grievous bodily injury – Sections 214 to 223, 228 and 229 of the Criminal Code;

  • Kidnapping and hostage taking (“sequestration”) – 258 and 268 of the Criminal Code;

  • Sexual exploitation of minors (i.e. victims under the age of 18) – Sections 14 and 18 of the Child Protection Act;

  • Theft is covered by the offense of Larceny with wounding, larceny with violence by night breaking and larceny with other aggravating circumstances (larceny with armed weapon, or by two or more individuals, or in public dwelling, or on a public road), larceny by night breaking – Sections 303, 304 and 305 of the Criminal Code;

  • Extortion – Section 307 of the Criminal Code;

  • Forgery – Sections 106 – 112, 117, 118 of the Criminal Code

111. Other categories of designated offenses are not predicate offenses under Mauritian law:

  • Trafficking in adult human beings and adult migrant smuggling (not criminalized);

  • Sexual exploitation of adults (misdemeanor);

  • Illicit arm trafficking (not criminalized);

  • Illicit trafficking in stolen goods and other goods (not criminalized);

  • Counterfeiting and piracy of products (misdemeanor);

  • Environmental crime (misdemeanor under the Environmental Crime Act);

  • Theft - While the notion of robbery is covered by the various forms of larceny with aggravating circumstances listed above, the notion of theft (larceny outside these circumstances) is a misdemeanor, not a crime, and is, therefore, not covered by the FIAMLA;

  • Smuggling (misdemeanor);

  • Piracy (misdemeanor);

  • Insider trading (misdemeanor) and market manipulation (not criminalized).

Threshold Approach for Predicate Offenses (c. 1.4):

112. Under the Mauritius threshold approach, the money laundering offense under the FIAMLA applies to all serious offenses (i.e., crime) under national law, in line with the standard. Mauritius adopted a list approach under the DDA. Criteria 1.4 therefore, does not apply to the DDA.

Extraterritorially Committed Predicate Offenses (c. 1.5):

113. Predicate offenses for money laundering extend to activities carried out and acts or omissions which occurred outside Mauritius which would have constituted a crime had they been carried out in Mauritius (Section 2 of FIAMLA, definition of crimes subsection b). The previous AML-specific Act, the ECAMLA, contained a similar provision and on at least one occasion, the Intermediate Court of Mauritius found the defendants guilty of laundering the proceeds of a crime which had been committed abroad.9

114. Section 29 of the DDA sanctions anyone who “in any place outside Mauritius, does any act preparatory to or in furtherance of the commission in Mauritius of” an offense against the Act. Section 30 further sanctions any person who “procures the importation or exportation of any dangerous drugs.” The Mauritian authorities therefore retain their jurisdiction over money laundering offenses when the predicate offense has been carried in another country. According to the authorities, many such cases have been brought before the Supreme Court, but their outcome was not shared with the mission. The assessors were nevertheless concerned that, since a prior conviction for the predicate offense is a condition for money laundering charges to be brought before the court, the fact that the predicate occurred in another country could constitute an additional hurdle that the prosecution may only overcome if the foreign courts have successfully tried the author of the predicate offense and if the international cooperation mechanisms are effective.

Laundering One’s Own Illicit Funds (c. 1.6):

115. A conviction for both the money laundering offense and the predicate crime (self-laundering) is specifically made possible under Section 6(2) of the FIAMLA: “A person may, upon single information or upon separate information, be charged with and convicted of both the money laundering offense and the offense which generated the proceeds alleged to have been laundered”.

116. The money laundering offense under Section 39 DDA applies to “every person” who unlawfully engages in the activities listed, and no distinction is made between the author of the predicate offense and the launderer. This would suggest that “every person” includes the author of the asset-generating offense and that a conviction for both offenses is possible under the DDA. This view was shared by the prosecution and, in one case pending before the court at the time of the assessment mission, a person who had previously been convicted for an offense under the DDA was being prosecuted for laundering the proceeds of that crime.

Ancillary Offenses (c. 1.7):

117. The money laundering offenses under both acts are enhanced by a number of dispositions of the Criminal Code (and the FIAMLA) which criminalize various forms of participation in the crime. The authors of the activities listed below are considered as accomplices and punishable by the same offense as the money launderer (Section 37 of the Criminal Code and 45 of the Interpretation and General Clauses Act (IGCA) of 1974):

  • (a) Attempt – any person who attempts to commit an offense is liable to the penalty provided for the completed offense (Section 45 of the IGCA);

  • (b) Conspiracy – under section 4 FIAMLA, any person who agrees with one or more other persons to commit a money laundering offense as defined under Section 3(1), and (2) shall commit an offense; in the case of conspiracy to commit the money laundering (or predicate offenses) under the DDA, the general provision of Section 109 of the Criminal code (Supplementary part) apply. Section 109 in particular provides that any person who agrees with one or more other persons to do an act which is unlawful, wrongful or harmful to another person, or to use unlawful means in the carrying out of an object not otherwise unlawful, shall commit an offense and shall, on conviction be liable to penal servitude for a term not exceeding 5 years and to a fine not exceeding 10,000 Rupees.

  • (c) Aiding and abetting, and facilitating - Section 38 of the Criminal code provides that any person who knowingly aids and abets the author of any crime or misdemeanor in the means of preparing, facilitating, or perpetrating the crime or misdemeanor, shall be deemed an accomplice, even in cases where the crime which was the object of the conspirators or instigators has not been committed. The Criminal Code also explicitly provides that the sanctions envisaged for the main offense also apply to accomplices (Section 37). The same applies for anyone who, by gift, promise or abuse of authority or power, machination or culpable artifice instigates, or gives any instruction for, the commission of a crime or misdemeanor shall be punished as an accomplice in the crime or misdemeanor, as well as to any person who procures arms, instruments, or any other means used in the commission of a crime or misdemeanor, knowing that they were to be so used (Section 37(1) and (2) of the Criminal Code). Harboring offenders is also an offense (Section 39 of the Criminal Code).

  • (e) Counseling – although not specifically mentioned in the FIAMLA or the Criminal Code, counseling is covered by the notions of aiding and abetting mentioned above.

Additional Element—If an act overseas which do not constitute an offense overseas, but would be a predicate offense if occurred domestically, lead to an offense of ML (c. 1.8):

118. Although neither the FIAMLA, nor the DDA, nor the Criminal Code make provision to this effect, the authorities are of the view that where the proceeds of a crime are derived from the conduct that occurred in another country, which is not an offense in that country but which would have constituted a predicate offense had it occurred in Mauritius, it would constitute a money laundering offense in Mauritius if the elements of this offense have been committed in Mauritius.

Liability of Natural Persons (c. 2.1) and The Mental Element of the ML Offense (c. 2.2):

119. The money laundering offense under FIAMLA requires intent and therefore applies to anyone who knowingly engages in a transaction that involves tainted property or receives, is in possession of, or engages in any of the activities listed, where he suspects or has reasonable grounds for suspecting that the property is derived from a crime. Intent is not defined but the authorities indicated that it refers to the traditional concept of “knowledge” where the accused is aware of the criminal nature of his conduct and of the results that it could reasonably cause. It does not extend to reckless (dolus eventualis), but nor should this necessarily be the case under the standard. As for determining the intent, the suspicion that the property was the proceeds of a crime or the reasonable grounds for suspecting that it was the proceeds of crime, Section 6(3) of FIAMLA explicitly allows the judges to infer the intentional element of the ML offense from objective factual circumstances. After the mission, case law was provided to show that judges have inferred intent from objective factual circumstances (The State v. Susan Dalziel (2007), The State v. Ann Wills Kayiwa (2008).)

120. Intent is also required under the DDA: the money laundering offense of Section 39 applies to any person who engaged in any of the activities listed knowing that the goods or resources were the proceeds of crime. Although this is not specified in the DDA as it is in the FIAMLA, the authorities indicated that inference from objective factual circumstances also applies to the money laundering offense under the DDA, as in any proceedings for any other type of crime, pursuant to long standing judicial practice in Mauritius. It seems that the rules of evidence in criminal procedures follow the principle of “conviction in time” (free moral judgment) adopted from French law. It would, therefore, also appear that the judge may draw inferences as to the offender’s knowledge or intent from objective facts or factual circumstances.

121. With the enactment of the FIAMLA (and its predecessor, the ECAMLA) and the inclusion of “suspicion or reasonable grounds to suspect that the property was derived from crime, the authorities opted for an approach which is lighter on the prosecution with the adoption of a standard of proof which is considerably easier to reach. Under the DDA, the standard is higher, with the prosecution having to prove that the defendant engaged in the acts listed under Section 39 “knowing” that he or she was dealing with tainted property. The reasons for the differentiation in the requirements and the standard of proof are unclear. The DDA was amended on a number of occasions over the last years but none of these amendments brought Section 39 DDA in line with Section 6 of the FIAMLA.

Liability of Legal Persons (c. 2.3):

122. Both the FIAMLA and DDA refer to the “person” who commits the offense. Pursuant to Section 2 of the IGCA, “person” also applies to and includes a group of persons, whether corporate or incorporate. The IGCA applies both to civil and criminal proceedings and legal persons may, therefore, be held criminally liable for having criminally engaged in activities in violation of the Criminal laws, including the FIAMLA and DDA.

Liability of Legal Persons should not preclude possible parallel criminal, civil, or administrative proceedings & c. 2.4):

123. According to the authorities, parallel civil or administrative sanctions may apply, where available (see write up on Recommendation 17 for sanctions available).

Sanctions for ML (c. 2.5):

124. Under Section 8 FIAMLA, any person who is found guilty of money laundering is liable to a fine not exceeding 2 million rupees (circa US$65,000) and to penal servitude for a term not exceeding 10 years.

125. Money laundering under the DDA is subject to a fine not exceeding one million rupees and to imprisonment for a term not exceeding 20 years.

126. Both sentences are slightly higher than the average sanctions for other economic crimes and appear to be effective, proportionate, and dissuasive.

Prosecution of money laundering offenses under both acts:

127. All money laundering cases are tried before the Intermediate Court (Section 7 of the FIAMLA), except drug cases which are lodged before the Supreme Court and which also include a count of money laundering under the DDA. The DPP is in charge of the prosecution but, pursuant to Section 72(5) of the Constitution, he may delegate the prosecution to other persons, including officers “outside” his office, namely, for money laundering cases, members of the police force and of the ICAC.

Statistics:

Table 6.

Statistics on Money Laundering Investigations Undertaken by the ICAC

(2002 to August 2007)

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Table 7.

Statistics on Money laundering investigations conducted by the Police CID, prosecutions and conviction under former AML law (ECAMLA) and FIAMLA

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Table 8.

Statistics on money laundering investigations enquired by the Police (ADSU), prosecutions and convictions under DDA

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128. The nine sentences pronounced under Section 39 of the DDA range from fines of 25,000 Rupees to imprisonment (for terms up to 18 months) and a fine, and to penal servitude (for a period of 3 years) and a fine.

Table 9.

ADSU statistics on the number of investigations led into money laundering cases under the DDA

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Table 10.

ADSU statistics on outstanding ML investigations

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Table 11.

ADSU Statistics on ML Investigations

(NB the statistics provided are considerably more detailed: confidential information was removed for the purposes of this report)

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Table 12.

Statistics provided by the Police

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Implementation:

129. Both money laundering offenses have only been used in a limited number of cases. In comparison with the number of investigations initiated on the basis of the predicate offenses, in particular drug offenses under the DDA, the number of investigations for money laundering appears rather low. The overall length of time needed to conclude the investigation, prosecute, and try money laundering cases seems relatively long, with some proceedings lasting several years.

130. While most of the drugs-related money laundering cases are prosecuted and sentenced on the basis of the DDA, the prosecution authorities informed the mission that in at least one instance, the money laundering offense was prosecuted under the FIAMLA even though a prior conviction for the predicate offense was pronounced under the DDA. The case was still pending in the Intermediate Court at the time of the on-site mission.

131. Prosecutions into the money laundering offenses have been led by senior officers of the Director of Public Prosecution’s (DPP) office as well as by police officers from the Anti-Drug and Smuggling Unit and members of the ICAC: The Police prosecuted straightforward money laundering cases involving small amounts which resulted from the commission of drug offenses under the DDA. Larger and more complex cases were prosecuted by the senior officers of the DPP’s office. Police officers in charge of the prosecutions under the DDA have received specific training on criminal proceedings. The ICAC led the prosecution in only one instance so far but several cases were under an ICAC investigation at the time of the assessment and it was likely that the prosecution would be conducted by the ICAC staff. The ICAC “prosecutors” are ex-State Law officers who worked at the DPP’s office and therefore have previous experience in prosecution.

132. The prosecution of the money laundering offense under the DDA is clearly more cumbersome than under the FIAMLA, because the prosecutor must establish beyond reasonable doubts that the accused knew that he or she was dealing with the proceeds of a crime under the DDA, whereas under the FIAMLA, the prosecution only needs to establish that the accused suspected or had reasonable grounds to suspect that he or she was dealing with tainted property. This led the DPP on at least one occasion to prosecute the laundering of the proceeds of a drug-related offense under the FIAMLA, instead of the DDA after the conviction for the predicate offense had been secured under the DDA. The case was still pending during the assessment and it therefore remains to be seen whether the court agrees to apply the FIAMLA in lieu of the DDA.

2.1.2 Recommendations and Comments

133. While both the money laundering offenses are comprehensive in many respects, they lack the necessary level of detail to fulfill all the requirements under the standard. In order to be effective, both offenses should cover all the material elements listed in the Vienna and Palermo Conventions, and the DDA should define resources or goods broadly in order to encompass all aspects of property listed in the Conventions. The need for prior conviction under the DDA constitutes an additional obstacle that the prosecution must overcome before it can secure a conviction for money laundering under Section 39. Furthermore, the higher standard of proof required in the DDA entails that it is more difficult to establish the money laundering offense under the DDA than under the FIAMLA. Prosecutions for money laundering under the DDA should be facilitated to the same extent as under the FIAMLA.

134. With the adoption of the FIAMLA, the authorities sent a clear message as to their intention to apply the money laundering offense to all serious offenses under the Mauritian legislation. However, the underlying criminal laws (including the Criminal Code) were not amended to guarantee the widest range of predicate offenses. As a result, several of the categories of offenses which should constitute predicate offenses to money laundering under the standard (i.e., the list of designated categories of offenses in the FATF Glossary) are outside the scope of the FIAMLA, either because they have not been criminalized in Mauritius or because they carry a lower sanction and constitute misdemeanor rather than crimes. This is probably the main shortcoming of the offense under the FIAMLA because it narrows the scope of Section 3 and considerably hampers the authorities’ fight against money laundering (at least domestically).

135. As mentioned above, the notion of fraud is covered by the offense of swindling under the Criminal Code. While this may be sufficient to comply with the standard on this point, some authorities expressed concern about the fact that embezzlement is not a predicate offense to money laundering. It would, therefore, seem appropriate to ensure that the proceeds of embezzlement (in its simple form) may also fall within the scope of the money laundering offense, in particular when the amounts involved are high.

136. Section 188 of the Criminal Code (association of malefactors) covers organized crime in a way which broadly meets the requirements of the Palermo Convention. However, the authorities do not make use of it and seem to consider it as outdated. Furthermore, it is possible that the discussions held during the mission as to whether a breach of peace is a necessary element of the offense or not may arise again and it is unclear whether the courts would agree with the view on Section 188 expressed by the representatives from the DPP’s. The law enforcement agencies maintain that domestic organized crime is not of particular concern in Mauritius, but the situation with respect to transnational organized crime involving Mauritius is unknown. It would, therefore, seem appropriate for the authorities to establish the risk of transnational organized crime and reconsider Mauritius’ implementation of the Palermo Convention.

137. It is unclear whether any legal action (including parallel sanctions) has been (or should have been) brought against legal persons. It was, therefore, not possible to assess the effectiveness of the Mauritian framework on this particular element.

138. Whilst the authorities maintain that the notion of “resources and goods” under the DDA should be interpreted broadly, it would prove useful, for the sake of clarity, to specify this in the text of the DDA, for example by giving a definition of “resources and goods” in line with the standard.

139. Overall, it is unclear why there have been so few investigations, prosecutions, and convictions for money laundering over the last years. While the exact extent of the money laundering phenomenon in Mauritius (and in other countries) is not known, the crime statistics provided by the police and the ICAC give an indication as to the number of asset-generating offenses that take place in Mauritius (see annex 4) and, to a certain extent, provide some indication as to the level of money laundering that may occur in Mauritius. One could expect the number of investigations, prosecutions, and convictions for money laundering under both the FIAMLA and the DDA to be higher. It also seems that the relevant authorities need further training on the specificities of the money laundering offense and on the Mauritius AML/ CFT framework in order to be able to investigate, prosecute, and sentence money laundering cases effectively.

140. In light of the above, it is recommended that the authorities ascertain why the number of investigations into money laundering, in particular with respect to laundering the proceeds of corruption and DDA offenses, is so low.

141. It is further recommended that they take measures to:

  • Ensure that all the material elements of the money laundering offense listed in the Vienna and Palermo Conventions are covered by including the concealment or disguise of “true nature, source, location, disposition, movement or ownership of or rights with respect to proceeds;”

  • Ensure that the crime of money laundering apply to all serious crimes and that the following acts and activities constitute predicate offenses to money laundering: trafficking in adult human beings and adult migrant smuggling; sexual exploitation of adults; illicit arm trafficking; illicit trafficking in stolen goods and other goods; counterfeiting and piracy of products; environmental crime; theft; piracy; smuggling; insider trading and market manipulation;

  • Although the notion of “fraud” under the standard is adequately covered under Mauritian law by the swindling crime, it is recommended that the authorities also include embezzlement as a predicate offense for money laundering at least where it constitutes a serious offense due to the large amounts of funds involved;

  • Ensure that Section 188 of the Criminal Code is applied as and when appropriate and reconsider the implementation of the Palermo Convention;

  • For the sake of clarity, amend the text of the DDA and explicitly specify that the property covered by the money laundering offense under the DDA covers all assets of every kind, whether corporeal or incorporeal, moveable or immoveable, tangible or intangible, and legal documents or instruments evidencing title to, or interest in such assets;

  • Ensure that conviction for money laundering under the DDA may also be secured in the absence of prior conviction for the predicate offense;

  • Consider lowering the level of proof required under the DDA in order to bring it in line with the FIAMLA and ensure that prosecutions under the DDA are not rendered unnecessarily cumbersome; and

  • Ensure that all authorities involved in the investigation, prosecution, and trial of money laundering cases are fully educated and trained on the specificities of the offense.

2.1.3 Compliance with Recommendations 1 & 2

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2.2 Criminalization of Terrorist Financing (SR.II)

2.2.1 Description and Analysis

Legal Framework:

142. Mauritius ratified the International Convention for the Suppression of the Financing of terrorism on December 14, 2004 and ratified or acceded to 9 of the other relevant UN Conventions10 and protocols. At the time of the assessment, it was considering acceding to the Convention on the Physical Protection of Nuclear Material of March 3, 1980 and to the Convention on the Marking of Plastic Explosives for the Purpose of Detection of March 1, 1991. It has signed and was considering ratifying the International Convention for the Suppression of Acts of Nuclear Terrorism.

143. The Republic of Mauritius enacted several pieces of legislation over the last years to fight against terrorism and its financing:

  • Prevention of Terrorism Act (POTA) was enacted in 2002 mainly with a view to criminalize terrorist acts and to provide the relevant authorities with the necessary powers to fight against terrorism;

  • It was subsequently enhanced with the adoption, by the Prime Minister, of Regulations No. 14 and No. 36 of 2003, generally referred to as the Prevention of Terrorism (Special Measures) Regulations; and

  • The Convention for the Suppression of the Financing of Terrorism Act (CSFT Act) was passed in 2003. Section 2 provides that, subject to the act, the 1999 International Convention for the Suppression of the Financing of Terrorism (which is annexed to the Act) has force of law in Mauritius.

Criminalization of Financing of Terrorism (c. II.1):

Crit. II.1 a)

144. Section 4 of the CSFT Act establishes the terrorist financing offense in the following terms:

  • “Any person who, by any means whatsoever willfully and unlawfully, directly or indirectly, provides or collects funds with the intention or knowledge that it will be used, or having reasonable grounds to believe that they will used, in full or in part, to commits in Mauritius or abroad:

  • (a) an offense in breach of an enactment specified in the [Second] schedule;11 or

  • (b) an act of terrorism.

commits an offense.”

145. The Second Schedule of the CSFT Act refers to the hostage-taking offense of Section 12 of the POTA and various forms of attacks against civil aviation. “Acts of terrorism” are criminalized under Section 3 of the POTA and mean any act which:

  • (a) may seriously damage a country or an international organization; and

  • (b) is intended or can reasonably be regarded as having been intended to:

    • (i) seriously intimidate a population;

    • (ii) unduly compel a government or an international organization to perform or abstain from performing any act;

    • (iii) seriously destabilize or destroy the fundamental political, constitutional, economic or social structures of a country or an international organization; or

    • (iv) otherwise influence such government, or international organization; and involves or causes,

  • as the case may be:

    • (i) attacks upon a person’s life which may cause death;

    • (ii) attacks upon the physical integrity of a person;

    • (iii) kidnapping a person;

    • (iv) extensive destruction to a government or a public facility, transport system, an infrastructure facility, including an information system, a fixed platform located on the continental shelf, a public place or a private property, likely to endanger human life or result in major economic loss;

    • (v) the seizure of an aircraft, a ship or other means of public or goods transport;

    • (vi) the manufacture, possession, acquisition, transport, supply or use of weapons, explosives or of nuclear, biological or chemical weapons, as well as research into, and development of, biological and chemical weapons;

    • (vii) the release of dangerous substances, or causing of fires, explosions or floods, the effect of which is to endanger human life; and

    • (viii) interference with or disruption of the supply of water, power or any other fundamental natural resource, the effect of which is to endanger life.”

146. As defined above, the notion of “acts of terrorism” is very broad. Mauritius nevertheless falls short of the standard on this point, and in particular of the definition of “terrorist acts” provided in the FATF Glossary, because it has not ratified all the relevant UN Conventions and Protocols and criminalized all the acts that they cover.

147. Under Section 4 of the POTA, it is an offense for anyone to belong to, or even profess to belong to a “proscribed organizations.” The qualification as to what constitutes a “proscribed organization” lies with the Judge in Chamber: where two or more persons associate for the purpose of (a) participating or collaborating in an act of terrorism; (b) promoting, encouraging, or exhorting others to commit an act of terrorism; or (c) setting up or pursuing acts of terrorism, the Judge may, on an application made by the Commissioner of the police, declare the entity to be a proscribed organization. This definition is in line with the definition of terrorist organizations provided in the standard.

In addition to the general provision of Section 4 CSFT Act (mentioned above) which criminalizes the collection of provision of funds to finance terrorism, Section 6 of the POTA criminalizes the “provision of, or making available” financial or other related services to a “proscribed organizations.”

148. Although broad in its scope, the terrorist financing offense fails to comply fully with the standard because the provision of funds to and collection of funds for individual terrorists is not criminalized when no act of terror in particular has been identified.

Crit. II.1 b)

149. Section 2 of the CSFT Act replicates the ICSFT’s definition of funds and covers assets of every kind, whether tangible or intangible, moveable or immovable, however acquired and includes legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such assets, including but not limited to, bank credits, travelers’ cheques, bank cheques, money orders, shares, securities, bonds and letters of credit.

Crit. II.1 c)

150. The CSFT Act explicitly provides that for an act to constitute the financing of terrorism offense, it is not necessary that the funds were actually used to carry out the act of terrorism (Section 4(2)). However, neither the Act nor the ICSFT which is attached make provision for the application of the offense in circumstances where there is no proven link with a specific terrorist act.

Crit. II.1 d)

151. The attempt to commit the offense of terrorist financing is criminalized under the general provision of Section 45 IGCA and carries the same sanction as the terrorist financing offense.

Crit. II.1 e)

152. It is also an offense to participate in the terrorist financing crime, to organize or direct others to commit the crime and to contribute to the crime, in application of the general provisions of Sections 37 and 28 of the Criminal Code.

Predicate Offense for Money Laundering (c. II.2):

153. Terrorist financing constitutes a crime under Mauritian law and is, therefore, a predicate offense to the money laundering offense under the FIAMLA.

Jurisdiction for Terrorist Financing Offense (c. II.3):

154. The terrorist financing offense under Section 4 of the CSFT Act applies regardless of whether the terrorist act was committed or would have been committed in Mauritius or in another country. Under Section 7(h) of the CSFT Act, Mauritius Courts have jurisdiction to try the offenses under the Act where the offense is committed by a person who is, after the commission of the act, in Mauritius, regardless of whether the offense was committed within or outside Mauritius, and that person cannot be extradited to a foreign state having jurisdiction over the offense.

The Mental Element of the TF Offense (applying c. 2.2 in R.2), Liability of Legal Persons (applying c. 2.3 & c. 2.4 in R.2) and Sanctions for FT (applying c. 2.5 in R.2):

155. According to the authorities, under the general principle of the free evaluation of evidence in Mauritius, for proceedings into terrorist financing (as for any other type of crime) the judge may infer the intent from objective factual circumstances presented before him or her. The terrorist financing offense under the CSFT Act refers to “any person” which, pursuant to section 2 of the IGCA, may include legal persons as well as natural persons.

156. According to the authorities, parallel actions are possible where available (see write up under Recommendation 17 for available sanctions).

157. Terrorist financing is punishable by penal servitude for a term of not less than 3 years (Section 4(3) of the CSFT Act). In addition, the Court may order the forfeiture of the funds which were used or intended to be used for or in connection with the offense, or which constitute the proceeds of the offense (Section 4(4) of the same act).

Implementation and Statistics:

158. There have been no cases of terrorist financing investigated in Mauritius so far and the law enforcement authorities informed the assessors that no terrorist activities (including funding) have been identified.

2.2.2 Recommendations and Comments

159. The terrorism financing offense under Mauritian law is broadly in line with the standard. It covers in particular all the funds defined under the ICSFT. It nevertheless suffers from a few shortcomings that may hamper the authorities’ fight against terrorist financing.

160. It is, therefore, recommended that the authorities take action to:

  • Ratify and implement the Convention on the Physical Protection of Nuclear Material of March 3, 1980, the Convention on the Marking of Plastic Explosives for the Purpose of Detection of March 1, 1991, and the International Convention for the Suppression of Acts of Nuclear Terrorism.

  • Ensure that the terrorist financing offense also applies to the direct or indirect provision or collections of funds by any means with the unlawful intention that they be used or in the knowledge that they are to be used in full or in part by an individual terrorist; and

  • Ensure that the terrorist financing offense does not require that the funds be linked to a specific terrorist act.

2.2.3 Compliance with Special Recommendation II

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2.3 Confiscation, freezing, and seizing of proceeds of crime (R.3)

2.3.1 Description and Analysis

161. As a general rule, forfeiture and confiscation (both terms are used inter-changeably) are conviction-based and are considered both as a secondary penalty and as a measure of security. They are mandatory under the DDA but not under the POCA – while the Court must order the forfeiture of the property which was found to be the proceeds of unlawful dealings in dangerous drugs, it has discretionary powers in all other money laundering cases as to whether to order the removal of the funds and other assets or not, as well as to the extent of the confiscation. The Mauritian authorities took stringent measures, both under the DDA and the FIAMLA, with the reversal of the burden of proof on the accused person’s possessions. They also established, for the purposes of forfeiture under the DDA, an independent Drugs Assets Forfeiture Office (DAFO) which is responsible for identifying the property subject to forfeiture.

Legal Framework:
Confiscation of Property related to ML, FT or other predicate offenses including property of corresponding value (c. 3.1) and Confiscation of Property Derived from Proceeds of Crime (c. 3.1.1 applying c. 3.1):

162. Section 8(2) of the FIAMLA provides that “any property belonging to, in possession of or under the control of a person convicted of [a money laundering offense] will be deemed, unless the contrary is proved, to be derived from a crime, and the Court may, in addition to any penalty imposed, order that the property be forfeited.” The notion of property under the Act is broad and covers all types of property, whether moveable or immoveable and whether tangible or intangible (see full definition in the write-up for recommendation 1). According to the authorities, it also covers instrumentalities used in or intended for use in the commission of the money laundering offense. The wording of Section 8(2) and the definition of property supports their views.

163. Additional provisions for forfeiture may be found in the POCA: Section 82 (4) provides that where a person is convicted under either the POCA or the FIAMLA, the court may order the forfeiture of “the property the subject-matter of the offence” in addition to any penalty imposed.

Crit. 3.1.1 a)

164. Both the FIAMLA and the POCA are silent on the confiscation of property derived from the proceeds of crime. The authorities were adamant, however, that such property, including income, profits or other benefits from the proceeds of crime, falls within the notion of proceeds of crime because the legislator’s intention was to provide the broadest definition of property.

Crit. 3.1.1 b)

165. The confiscation measures under Section 8(2) of the FIAMLA and 82(4) of the POCA are very broad as far as the accused person’s property is concerned and the burden of proof was reversed: it is incumbent upon the accused person to provide sufficient evidence to convince the Court that all or parts of the property in his possession or in a third party’s hands and under his control, was of lawfully origin. Property owned by a third party, however, may not be forfeited unless the prosecution is able to prove beyond reasonable doubt that the third party participated in any way in the money laundering offense.

166. In short, the property subject to confiscation is all the accused person’s possessions, regardless of their nature, their source and their purpose, that have not been proved as legitimate.

167. Where a forfeiture order under Sections 82 of the POCA or 8 (2) of the FIAMLA cannot be enforced (in particular, where the property cannot be located, has been transferred to a third party to avoid forfeiture, is located abroad, has been substantially diminished in value and rendered worthless, or has been commingled with other property that cannot be divided without difficulty), the Supreme Court may order the person to pay an amount equal to the value of the property that would have been forfeited (Section 64 of the POCA).

168. The identification of property subject to confiscation under the DDA is based on a similar principle as under the FIAMLA, namely, the reversal of the burden of proof. The procedure for confiscation is more detailed than the procedure under the FIAMLA and is the most frequently used of all forfeiture procedures in place. It is also the only instance where the authorities rely on a separate office to trace the assets subject to confiscation (the DAFO).

169. When a person is brought before the Court on a charge of money laundering under Section 39 of the DDA, the Court may order (and, according to the authorities, usually does order) a provisional ban on the defendant’s assets: when such an order is issued, the person charged may no longer dispose of any of his assets, nor make any withdrawal from any account or deposit at any bank or other financial institution until the order is revoked, or until he is acquitted of the money laundering offense (Section 45(1) of the DDA). The Court may also order the defendant to file an affidavit setting out all his assets and disclosing all his accounts and deposits at any bank or other financial institution. After the issuance of the Court order, the DPP must publish the order in the Mauritius “Gazette” and at least two daily newspapers, and give notice of the order to all notaries, banks, and financial institutions in Mauritius (Section 45(2) of the DDA).

170. Upon conviction for the money laundering offense, the DPP refers the matter for enquiry to the Commissioner of the DAFO (Section 45(3) DDA). After full enquiry, the Commissioner establishes the property subject to confiscation and reports back to the DPP, who may then apply to the Supreme Court for an order for the forfeiture of the possessions of the convicted person or any member of his family (Section 45(7) and (10) DDA). Provision was made for a reversal of the burden of proof: Where the Supreme Court finds that the possessions of the convicted person, or of any member of his family, or any part thereof are the proceeds of unlawful dealing in dangerous drugs by the convicted person, the Supreme Court shall order the forfeiture of those possessions (Section 45(10) of the DDA). For the purposes of forfeiture, the possessions of the convicted person shall be presumed, unless the contrary is shown upon a balance of probabilities, to be the proceeds of unlawful dealing in drugs (Section 45(11) of the DDA). Under the DDA, possessions mean “property, movable or immovable, including any cash in a bank account or bank deposit whether in a person’s own name or fictitious name” (Section 2 of the DDA).

171. Instrumentalities used in or intended for use in the commission of the money laundering offense or the predicate offense are not specifically mentioned as being part of the “possessions”. The authorities maintain that the notion of “possession” under Section 2 of the Act should be interpreted broadly and thus cover instrumentalities but they did not provide any case law that would support their interpretation of the law. While a broad interpretation of the law could cover instrumentalities that are in the convicted person’s (or his family’s) possession, it would not cover instrumentalities in another person’s hands. The assessors were, therefore, of the view that it has not been established that all instrumentalities would indeed be part of the property that may be confiscated.

3.1.1.a) and b)

172. The law does not specify whether property derived from the proceeds of crime, including income, profits or other benefits, may be subject to confiscation. According to the authorities, any income, profit or other benefit derived from proceeds of crime would be subject to confiscation insofar as they are considered as proceeds of crime, but no case law was provided to make this point.

173. As mentioned above, the property subject to confiscation goes beyond the convicted person’s possessions and includes the possessions of the members of his family unless it was proven that they are not the proceeds of crime (Section 45(10) of the DDA). However, the Act does not specify whether property held by third parties other than family members may be confiscated.

174. The forfeiture of all terrorist property is made possible under Section 6 of the CSFT Act. This applies to property which:

  • (a) has been, is being, or is likely to be used for any act of terrorism or by a proscribed organization;

  • (b) is the proceeds of an act of terrorism; or

  • (c) is gathered for the pursuit of, or in connection with, an act of terrorism (Section 2 CSFT Act and Section 2 POTA).

175. Section 4(4) of the CSFT Act enables the court before which a person is convicted of terrorist financing to order the forfeiture of funds which:

  • (a) were, or intended to be, used for, or in connection with, the offense;

  • (b) constitute the proceeds of the offense.

176. Funds are defined under the Act as:

  • (a) assets of every kind, whether tangible or intangible, movable or immovable, however acquired; and

  • (b) includes legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such assets, including, but not limited to, bank credits, travelers’ cheques, bank cheques, money orders, shares, securities, bonds, drafts and letters of credit (Section 2).

177. The POTA, which mainly deals with terrorism and terrorist acts rather than terrorist financing, also enables the court to order the forfeiture of any terrorist cash, with accrued interest or terrorist property (Section 32(2)).

178. No provision is made for the confiscation of property of corresponding value under the relevant acts.

3.1.1 a) and b)

179. As mentioned above, forfeiture of the property derived from the proceeds of a terrorist act is made possible under Section 4(4) of the CFST Act. There are no similar provisions that would apply to property derived from the proceeds of terrorist financing.

180. No distinction is made with respect to the person who owns the property subject to forfeiture. This would imply that all property described above, including that owned by a third party, may be forfeited.

Provisional Measures to Prevent Dealing in Property subject to Confiscation (c. 3.2):

181. The POCA provides for the measures that may be taken to secure the property subject to confiscation during the various phases of an investigation led by the ICAC. Measures that may be taken by the police during its own investigations conducted under the FIAMLA are mentioned in the Police Act.

182. Where there are reasonable grounds to suspect that a person has committed an offense under the FIAMLA (or the POCA), the Judge in Chambers may, on application by the ICAC, issue an attachment order. The order attaches in the hands of the person named in the order (whether that person is himself the suspect or not) all money or other property due or owing or belonging to or held on behalf of the suspect, and require the latter to declare the nature and source of all money or other property attached. The order also prohibits the person from transferring, pledging, or otherwise disposing of the money and property attached. When such an order is made, the ICAC publishes the order in the next issue of the Mauritius “Gazette” and at least two daily newspapers, and gives notice of the order to all notaries, banks, financial institutions, cash dealers and any other person who may hold or be vested with the property belonging to or held on behalf of the suspect (Section 56 of the POCA). Unless revoked by the Judge, the attachment order remains in force for 60 days. It may be renewed for successive periods of 60 days if the Judge is satisfied that the ICAC has obtained or is likely to obtain substantial new information relating to the offense (Section 57(2) and (3) of the POCA). In practice, such attachment orders have been issued in a number of proceedings and some have remained in force for several years.

183. Section 58 of the POCA further enables the authorities to seize moveable property which is the subject-matter of or relates to the offense.

184. Where a person is charged, or is about to be charged with a money laundering offense (or a corruption offense), the Supreme Court may, on application by the DPP, order the attachment of all moneys and other property due or owing or belonging to or held on behalf of the accused, as well as prohibit the accused or any other person from transferring, pledging, or otherwise disposing of any money or any property attached (Section 62 of the POCA). Upon issuance of the order under Section 62, the DPP has to communicate the content of the order: he must cause notice of the order to be published in the next issue of the Mauritius “Gazette” and in at least two daily newspapers published in Mauritius. He must also give notice of the order to all notaries, banks, financial institutions and cash dealers, and any other person who may hold or be vested with the property belonging to or held on behalf of the accused (Section 62(5) of the POCA). The law explicitly specifies that any payment, transfer, pledge or other disposition of property made in contravention of a freezing order shall be void (Section 62(8) of the POCA).

185. Finally, the police may, in the course of its own investigation under the FIAMLA, or on request from the ICAC, seize the property subject to confiscation in application of the general powers provided under Section 14 of the Police Act.

186. For the purposes of clarification, it is worth mentioning Section 52 of the POCA, because it gave rise to some confusion in practice: Pursuant to Section 52 of the POCA, the ICAC may, where it has reasonable grounds to believe that there is, on specified premises or in any place of business, evidence which may assist in its investigation, issue a warrant authorizing its officers to enter and search the premises and “remove” therefrom “any document or material which may provide evidence relevant to an investigation” conducted by ICAC. The purpose of this section is to enable the ICAC to undertake certain investigative measures without the need to apply for a court order. While the purpose is clear, the wording is not and Section 52 is imprecise on two counts: firstly, it suggests that the ICAC may search any premises and place of business. This is not entirely accurate since the ICAC (like the police), needs to apply for a court order to search the premises of a bank and obtain disclosure of banking records (see Recommendation 28). Secondly, the inclusion of the term “material” in the list of objects that the ICAC may seize, could suggest that the ICAC is empowered to seize proceeds of crime that it may identify during the search. The authorities explained that this is not the case, and that the proceeds of crime discovered during an ICAC search may only be seized by the police in application of Section 14 of the Police Act, or attached following the procedure mentioned below. To sum up, while the ICAC may, of its on accord, search premises and businesses other than banks and seize any documents which may serve as evidence for the purposes of the investigation, it may not enter and search bank premises without applying for a court order, nor can it seize the proceeds of crime without the assistance of the police.

187. The provisional measures which may be taken under Section 45 of the DDA (order to the convicted person not to dispose of any of his assets publication and notification of the order to notaries, banks and financial institutions) are described under 3.1 above. The DDA also enables the police and the customs to seize and detain any material, equipment, devices, or other movables fit and intended for use in the commission of the offense (section 51(2) DDA).

188. Where there are reasonable grounds to believe that there is any place, building, vessel, or any other property in respect of which a forfeiture order may be made, the Judge in Chambers may issue a restraint order prohibiting any person from disposing of that property, or otherwise dealing with any interest in that property, other than as may be specified in that order. The application for the order is made by the Commissioner of the Police. The Judge may also appoint a person to take control of and manage the whole or part of the property, as well as require any person having possession of the property to give it to the person appointed (Section 5(2) CSFT Act). The power to manage or otherwise deal with the seized property includes, if necessary, selling perishable goods or rapidly depreciating property and destroying dangerous property and property of little value (Section 5(3) CSFT Act).

189. The POTA also makes provision for attachment of property where a person is charged or is about to be charged with an offense under the Act: Section 16 enables the judge, upon application from the Commission of the Police to attach all moneys and other property due, owing, or belonging to, or held on behalf of the suspect. As is the case under the DDA and the FIAMLA, attachments order under the POTA are published in the Mauritius “Gazette” and in two daily Mauritian newspapers and the Commissioner of the Police must give notice of the order to all notaries, banks, other financial institutions and cash dealers, and any other person who may hold or be vested with property belonging to or held on behalf of the suspect.

Ex Parte Application for Provisional Measures (c. 3.3):

190. While it is only a requirement under the CFST Act (Section 5(1)), the authorities confirmed that all applications for freezing, seizing, or attachments mentioned above are made ex-parte.

Identification and Tracing of Property subject to Confiscation (c. 3.4):

191. Sections 52, 54, and 55 of the POCA enable the ICAC to trace tainted property (and to enforce property tracking and monitoring orders) either on its own accord or with the assistance of a Judge.

192. Under Section 52, the Commission is empowered to issue a warrant to enter and search premises and business places other than banks, as well as “seize and take possession of any book, document, computer disk or other article” and other objects (other than the proceeds of crime), which may assist in its investigation. It may exercise these powers without having recourse to the judge.

193. Under Section 54, the ICAC may apply for an order for disclosure where it needs, for the purposes of its investigation, to determine whether any property belongs to, is in possession or under the control of, a person, or where the Commission has reasonable grounds to suspect that a person has committed, is committing, or is about to commit an offense which the Commission has powers to investigate.

194. There are two main differences between the measures taken under Section 52 and those ordered under Section 54. The first difference is a result of Section 64 of the Banking Act: the search and seizing powers granted under Section 52 only apply with respect to persons and entities other than banks. If the information sought is held by banks, a court order is necessary due to confidentiality requirements under the Banking Act, and the ICAC must follow the procedure laid out under Section 54 of the POCA (see also write up under Recommendation 28). The second difference lies in the enforcement of the measures taken: only the disclosure order made by the Judge under Section 54 may be enforced: A Judge in Chambers may, on good cause shown by the ICAC that any person is failing to comply with, is delaying or is otherwise obstructing a directive made in accordance with Section 54, order that the ICAC or any officer may enter any premises of a bank, financial institution, cash dealer, or member of a relevant profession or occupation,12 search the premises and remove any document, material or other things therein for the purpose of executing the order (Section 55 of the POCA).

195. The DDA enables the Judge in Chambers to grant the police a range of powers to investigate when there are reasonable grounds to suspect that a money laundering offense (or another offense under the DDA) has been or is likely to be committed (Section 56). He may issue a warrant authorizing any police officer to:

  • (a) tap or place under surveillance, for a period not exceeding 6 months, the telephone lines used by persons suspected of participation in money laundering (or other) offense;

  • (b) have access to the computer systems used by the suspect and place them under surveillance;

  • (c) place a bank account under surveillance when it is suspected of being used for operations related to money laundering (or other) offense; and

  • (d) have access to all bank, financial, and commercial records that may reasonably concern transactions related to offense.

196. The DDA also enables the Commissioner of the DAFO (who is responsible for identifying all property subject to confiscation) to require of his own accord (i.e., without having to apply for a court order) any person, including banks and other financial institutions, the convicted person and members of his family, to make any disclosure relating to the possessions of the convicted person (Section 45(4) DDA). The Banking Act takes the Commissioner’s power into account by stating that the duty of confidentiality does not apply when a bank is summoned by the Commissioner acting under Section 45(4) of the DDA to provide evidence and any relevant record, book, or document (Section 64(3)(k)). Failure to comply with the Commissioner’s order may entail a fine and imprisonment (except where it is the accused person who is in breach of the order, in which case only the fine will apply; Sections 42 45(5)(a) and (c)).

197. Section 17 of the POTA enables the Commissioner of the police to trace all relevant property after application for a court order. If the Commissioner of the Police has reasonable grounds to suspect that a person has committed, is committing, or is about to commit an act of terrorism or is in possession of terrorist property, he may apply to a Judge in Chambers for an order (a) compelling the suspect to deliver to him any document relevant to identifying, locating, or quantifying any property belonging to or in possession of or control of that person; (b) requiring a bank or any other financial institution, trustee, cash dealer, or custodian to produce to him all information and deliver to him all documents regarding any business transaction conducted by or on behalf of the suspect.

Protection of Bona Fide Third Parties (c. 3.5):

198. The publications in the “Gazette” and the newspapers called for under the POCA, DDA, and CSFT Act ensure that the public at large, and in particular bona fide third parties, are informed of the provisional measures which are being undertaken and of the confiscation orders. Further provisions were made under the POCA and the POTA to enable bona fide third parties to uphold their rights in spite of the measures taken, but they have no equivalent under the DDA.

199. Section 62 (3) of the POCA enables the Judge, in making a freezing order, to authorize:

  • (a) the payment of debts incurred in good faith and due to creditors of the accused, before the request for the order was made to the DPP;

  • (b) the sale, transfer, or disposal of any property by the accused where the Supreme Court is satisfied that such sale, transfer, or disposal is necessary in order to safeguard the property rights of any other person claiming an interest in the property.

200. These authorizations ensure that the freezing measures do not prejudice the rights of bona fide third parties, in line with the requirements of the Palermo Convention.

201. There are no provisions under the DDA that ensure some level of protection of the rights of bona fide third parties. This shortcoming in the DDA is of particular significance in light of the fact that the possessions belonging to the family member of the convicted person are automatically considered to be tainted unless their lawful origin is established by the family members. The automatic extension of the freezing and confiscation measures to possessions of the members of the convicted person’s family is, in itself, in violation of the Palermo Convention, and the automatic assumption that family members are not bona fide parties should at the very least be counter-balanced by appropriate measures that ensure that the rights of bona fide third parties, including family members, may be upheld.

202. A person who claims an interest in property that has been forfeited in application of the CSFT Act and who has been given notice of the order of forfeiture may make an application to the Supreme Court to vary or set aside an order, no later than 60 days after the day on which the forfeiture order was placed (Section 6(8) CSFT Act). Furthermore, before ordering the forfeiture of the funds that were used for, or intended to be used for, or in connection with the terrorist financing offense or which constitute the proceeds of the terrorist financing offense, the Court must give every person appearing to have an interest in the funds, an opportunity to be heard (Section 4(5) of the CSFT Act).

Power to Void Actions (c. 3.6):

203. The Civil code provides that any contract must have a lawful purpose. According to the authorities, the judge may prevent or void any contract or other actions where the persons involved knew or should have known that as a result of that contract the authorities would be prejudiced in their ability to recover property subject to confiscation, on the basis that the contract or action in question does not have a lawful purpose. This general principle applies regardless of the laws under which the provisional measures and the confiscation were ordered.

Additional Elements (Rec 3) – Provision for a) Confiscation of assets from organizations principally criminal in nature; b) Civil forfeiture; and, c) Confiscation of Property which Reverses Burden of Proof (c. 3.7):

204. Extended confiscation is not a current feature of Mauritian law. One possible explanation could be the limited use which is made of Section 188 of the Criminal Code (association of malefactors). Confiscation without conviction (civil forfeiture) is not available, but discussions on a potential extension of the forfeiture mechanisms are being held. As mentioned above, Mauritius reversed the burden of proof in forfeiture procedures conducted under the relevant laws. The onus is, therefore, on the accused person to demonstrate that the property was acquired through lawful means.

Implementation and statistics:

205. The statistics provided by the authorities indicate that the ADSU (Police) and the ICAC make regular applications for provisional measures under the DDA and the POCA. Anecdotal evidence suggests that the amount of assets frozen in application of the DDA at the time of the assessment reached some 100 million Rupees.

Table 13.

Applications made by the ICAC

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Applicable since 2004 – Banking Act 2004.

206. According to the DAFO, some 15 applications for forfeiture under the DDA are pending, either before the DPP or before the courts.

207. However, while the courts generally give suit to the applications for attachment, no property has been successfully forfeited so far. Confiscation has been ordered on one occasion, but was subsequently challenged (and the case was pending before the Court of Appeals at the time of the assessment). No specific explanation was provided but some of the authorities met expressed concern with respect to the timing of the attachment measures and claimed that such measures are often taken too late in the procedure and that the assets are being disposed of in the meantime.

Constitutionality of confiscation measures

208. Some of the defense lawyers met during the on site visit claimed that the confiscation measures ordered in application of the FIAMLA were, in their view, unconstitutional when the predicate was an offense other than drug-trafficking, corruption, or fraud. They also informed the mission of their intention to challenge the constitutionality of a confiscation order based on another predicate offense. Although the assessors feel that there is no conflict between the Mauritian confiscation framework and the Constitution, they consider the debate raised by the lawyers is nevertheless worth mentioning because it highlights the difficulties that the authorities face when implementing the AML/CFT framework. The current debate is the following: The Constitution of Mauritius provides for the general protection of personal property (Section 8) and enumerates a limited number of exceptions under which the State may remove a person’s possessions. One of the exceptions listed relates to measures taken “to the extent that the law makes provision for the taking of possession or acquisition of property (…) by way of penalty for breach of the law or forfeiture in consequence of a breach of the law or in consequence of the inability of a drug-trafficker or a person who has enriched himself by fraudulent and/or corrupt means to show that he has acquired the property by lawful means” (Section 8(1) (4)(a)(ii)). According to the defense lawyers, the restrictions in the Constitution should be interpreted strictly and confiscation may only be ordered in application of the DDA or the FIAMLA when the predicate offense is drug-trafficking, corruption, or “fraud” (i.e., under Mauritian law, swindling or embezzlement). The Constitution, however, is not limited to a specific type of crime. On the contrary, the inclusion in Section 8 of “penalty for breach of the law, or forfeiture in consequence of a breach of the law” and of enrichment by “fraudulent means” clearly broadens the scope of the crimes beyond drug-trafficking, corruption, and fraud. This inclusion and the fact that the FIAMLA explicitly provides for confiscation enable the authorities to forfeit tainted property in application of the FIAMLA regardless of the nature of the predicate offense. This view was shared by the representatives of the DPP’s office. While it does not appear to be a real “threat” to the confiscation framework, the ongoing debate nevertheless exemplifies the fact that confiscation in money laundering cases is a novelty with which the lawyers are not familiar.

2.3.2 Recommendations and Comments

209. The confiscation and provisional measures provided for by the Mauritian laws are flexible and the property subject to confiscation, although not fully in line with the standard, is extensive. The authorities in charge of these measures (Police, ICAC, DPP, DAFO) are afforded adequate powers to identify and trace property which may become property subject to confiscation. The procedure by which these measures may be taken ensure sufficient publicity after the issuance of the relevant orders and the reversed burden of proof should undoubtedly facilitate the application of forfeiture.

210. However, the timing of the provisional measures is key to an effective confiscation system and the fact that some measures may be taken too late is of great concern.

211. The lack of measures under the DDA to enable bona fide third parties to protect their rights is also of concern, in particular considering that the reversal of the burden of proof applies equally to the offenders and members of his or her family.

212. Possible challenges against confiscation orders based on a strict interpretation of the Constitution have the potential to hamper the authorities’ efforts to remove tainted property from the hands of criminals.

213. Finally, the fact that no property has been successfully confiscated several years after the relevant laws were passed raises serious doubts as to the effectiveness and the real implementation of the confiscation framework.

214. In order to bring the Mauritian legal framework in full compliance with the standard, the authorities are recommended to:

  • Provide for the confiscation of property of corresponding value when forfeiture under the DDA and the POTA when the property subject to confiscation under the DDA and the POTA is not available;

  • Ensure that instrumentalities and property derived from the offense may be forfeited;

  • Enable confiscation under FIAMLA to take place even when the property subject to confiscation is owned by third parties;

  • Enable confiscation under the DDA to take place even when the property subject to confiscation in owned by third parties who are not family members;

  • Provide protection for the rights of bona fide third parties who may be affected by a forfeiture measure under the DDA and in a way which is consistent with the requirements of the Palermo Convention;

  • For the sake of clarity, amend Section 52 POCA with respect to the premises and business places that ICAC may search, and the material that ICAC may seize;

2.3.3 Compliance with Recommendation 3

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2.4 Freezing of funds used for terrorist financing (SR.III)

2.4.1 Description and Analysis

Legal Framework:

215. As mentioned under Special Recommendation II, the Republic of Mauritius has enacted several pieces of legislation over the last years to fight against terrorism and its financing, the most relevant of which are the Prevention of Terrorism Act of 2002 (POTA) and the Convention for the Suppression of the Financing of Terrorism Act of 2003 (CSFT Act). The Prime Minister also issued implementing regulations in 2003 (Regulations no. 14 and 36 of 2003, the Prevention of Terrorism (Special Measures) Regulations 2003 and the Prevention of Terrorism (Special Measures) (Amendments) Regulations 2003), which provide the framework for freezing measures.

216. It is worth mentioning from the outset that, at the time of the assessment mission, no funds in Mauritius had been linked with terrorism, terrorist groups or terrorist individuals. The legislative and regulatory framework had, therefore, never been implemented and tested before the courts.

Freezing Assets under S/Res/1267 (c. III.1):

217. Section 10(1) and (4) of the POTA provide the legal basis that enables the Minister to declare a person or group or entity as a suspected international terrorist or suspected international terrorist organization. Section 10(1) provides that “the Minister may declare any person to be a suspected international terrorist where:

  • (a) he reasonably suspects that that the person:

    • (i) is or has been concerned in the commission, preparation, or instigation of acts of international terrorism;

    • (ii) is a member of, or belongs to, an international terrorist group; or

    • (iii) has links with an international terrorist group; and,

    • (iv) he reasonably believes that the person is a risk to national security.

  • (b) the person is listed as a person involved in terrorist acts in any Resolutions of the UNSC or in any instruments of the Council of the European Union; or

  • (c) the person is considered as a person involved in terrorists acts by such State or other organization as the Minister may approve.

218. The Prime Minister may also declare a group to be an international terrorist group if the group:

  • (a) is subject to the control or influence of persons outside Mauritius, and the Minister reasonably suspects that it is concerned in the commission, preparation or instigation of acts of international terrorism; or

  • (b) is listed as a group or entity involved in terrorist acts in any UNSCR or any instrument of the Council of the European Union; or

  • (c) is considered as a group or entity involved in terrorist acts by such competent authority of such States as the Minister may approve.

219. Pursuant to Section 10(7) of the POTA, once he has made such a declaration, the Minister must give notice of it in the Gazette and in such other manner as he deems fit. On publication of the declaration, the BOM or the FSC, as the case may be, must, by notice, direct that any account, property or funds held by financial institutions under its regulatory authority on behalf of any listed terrorist is frozen and that a report be made to the regulator (Regulation 3 of the Prevention of Terrorism (Special Measures) Regulations 2003).

220. Section 10(6) of the POTA makes provision for the general framework for freezing measures and for the Prime Minister to issue implementing regulations (which, as mentioned above, he did in 2003). The freezing envisaged under the POTA covers the person’s or organization’s funds, financial assets, or other economic resources, including funds derived from property, owned or controlled directly or indirectly by the person of the organization, or by any person acting in his or its behalf or at his or its direction.

221. The consolidated list of designation made pursuant to UNSCR 1267 and its updates are sent to Mauritius through its Ministry of Foreign Affairs (MoFA). The MoFA then forwards them to the Prime Minister’s Office, with copy to Ministry of Finance (MoF). The Prime Minister’s office in turn sends the lists and updates to the Commissioner of the Police, the National Security Service, the Passport and Immigration Office, Customs and the FIU, while the MoF sends them to the BOM and the FSC. This dissemination procedure is not set in law or regulation but is merely the result of the authorities’ practice.

222. Further dissemination to the private sector differs from one regulator to the other:

  • The BOM forwards all amendments to the list to the financial institutions under its purview via email addressed to the institutions’ compliance officers. It also sends the full updated consolidated list where the latest amendments are highlighted. Ultimately, the lists and updates are sent to the financial institutions between a few days to up to three weeks after the UNSC updated the consolidated list. In its communication, the BOM requests the financial institutions to report back to the central bank, within one week, whether the persons and entities mentioned in the updates hold any account with the financial institution, and to seek the approval of the BOM before executing any request for transactions in respect of those persons and entities.

  • The FSC initially sent the consolidated list and its updates to its licensees, with a request to review their files against the lists and to inform the Commission of the result of their review, but subsequently considered that this was not cost effective and decided instead to include a link, on its own website, to the UN website. No mention is made with respect to the freezing requirements under Regulation 3 of the Prevention of Terrorism (Special Measures) Regulations 2003.

223. While the Conventions and the Regulations provide the legal framework for the freezing measures, in practice, the latter may only be ordered after a bank or another financial institution has identified a designated person among its customers: The freezing mechanism can only be initiated by the BOM and the FSC upon publication in the Gazette of the Prime Minister’s declaration (Regulation 3 of the Prevention of Terrorism (Special Measures) Regulations 2003) and Section 10 of the POTA leaves it to the Prime Minister’s discretion whether to make a declaration or not (“the Minister may declare …”). At the time of the assessment, no such declaration has been made. The authorities informed the mission that it is only if and when one of the designated person’s or entity’s name appears within one of the institutions, and duly informs the regulator who, in turn, will inform the Prime Minister’s Office, that the Minister would consider declaring that person or entity as a terrorist or a terrorist organization.

224. While the freezing measures can only be initiated upon the Prime Minister’s declaration, they may be revoked at any time by either of the regulators (Regulation 6).

225. The recently enacted Financial Services Act provides an additional option for the FSC by enabling the latter to apply to the Judge in Chambers for a freezing order when it has reasonable grounds to suspect that a financial crime (which, according to the authorities, includes terrorism financing) has been committed. The Act was enacted during the assessment team’s on site visit and the new freezing mechanism had, therefore, not been tested.

Freezing Assets under S/Res/1373 (c. III.2) and Freezing Actions Taken by Other Countries (c. III.3):

226. The mechanisms described above apply to all relevant UNSCR (Section 10(1) (b) of the POTA), including UNSCR 1373. The procedure to give effect to designations made pursuant to UNSCR 1373 and to the actions initiated by another country should, according to the authorities, therefore be similar as the one applied in implementation of UNSCR 1267.

227. The situation is, nevertheless, entirely different in practice because the authorities maintained that no request had ever been made to Mauritius and no names were ever circulated under UNSCR 1373 or as a consequence of another country’s freezing actions.

228. Consequently, no measures have been taken to examine and, if appropriate, give effect to actions initiated under the freezing mechanisms of other countries.

229. While it is difficult for the assessment team to establish precisely whether this is indeed the case, considering other countries’ experience, including that of other small jurisdictions around the world, it is possible that no request was ever made to Mauritius to freeze terrorist funds targeted under UNSCR 1373 or under another country’s actions.

Extension of c. III.1-III.3 to funds or assets controlled by designated persons (c. III.4):

230. Pursuant to Section 10(6) POTA, the Minister may make regulations to provide for the freezing of any suspect international terrorist’s or international terrorist group’s funds, financial assets or other economic resources, including funds derived from property, owned or controlled directly or indirectly, by the terrorist or the terrorist group, by persons acting on his or its behalf or at his or its direction.

231. The Prevention of Terrorism (Special measures) Regulations of 2003 and their Amendments further define funds as “assets of any kind, whether tangible or intangible, movable or immovable, however acquired, and legal documents or instruments in any form including electronic or digital, including title to or interest in, such asserts, including but not limited to, bank credit, travelers cheques, bank cheques, money orders, shares, securities, bonds, drafts, letters of credit.”

232. These provisions do not, however, cover the funds and other financial assets of those who finance terrorism.

Communication to the Financial Sector (c. III.5):

233. As mentioned above in the description of the implementation of UNSCR 1267, the designations made by the UNSC 1267 Committee are circulated, through the MoFA, to the Prime Minister’s Office and to the MoF and then to the law enforcement agencies and regulators, before being passed on to the financial institutions under the purview of the BOM. Communications from the BOM to the financial institutions are slow and take between a few days to up to three weeks after updates to the consolidated list. The designations are no longer communicated to the institutions under the regulatory control of the FSC other than through a link to the list on the FSC’s website, and are not circulated at all to the DNFBPs that are not regulated.

234. As also mentioned above, under the Regulations, any action taken with a view to freezing a terrorist individual or a terrorist organization’s funds would necessitate prior declaration of the Prime Minister and would be published in the Mauritius Gazette, thus ensuring some form of communication to the financial sector.

235. The Financial Services Act provides that where a freezing order is made in application of Section 50, the FSC may:

  • (a) give notice of the order, (court order), unless the FSC reasonably believes that such notice is likely to obstruct the conduct of any investigation under the Act;

  • (b) give notice of the order to all branches and to the head office of all banks and branches, investment dealers, cash dealers and financial institutions belonging to or held on behalf of the suspect (Section 50(2)).

Guidance to Financial Institutions (c. III.6):

236. In July 2005, the BOM issued Guidance Notes on AML/CFT for the financial institutions under its purview. The Guidance Notes bring together the texts of the various pieces of legislation that deal with the fight against terrorism and its financing (POTA, the CSFT Act, and the 2003 Regulations). They also provide some guidance by expounding on the designation process and the BOM’s powers as follows: “A listed terrorist has been defined in the regulations as an international terrorist group or a suspected international terrorist. In this respect, the Bank is, on the publication in the Government Gazette of a declaration by the Prime Minister listing those suspected international terrorists or international terrorist groups, empowered to direct by notice that funds and property held by financial institutions for those listed terrorists be frozen and to subsequently refer the matter to the police for investigation.” The Notes do not provide additional and more practical guidance as to the financial institutions’ obligations in taking action under the freezing mechanism.

237. During the same month, the FSC issued three Codes on AML/CFT, respectively for the insurance entities, investments business, and management companies. The Codes provide general information on money laundering and terrorist financing as well as on the Mauritian legislative framework, but like the BOM Guidance Notes, do not provide specific practical guidance on the obligations with respect to freezing of funds.

238. No guidance at all has been issued to the attention of the DNFBPs that are not under the purview of the BOM or the FSC.

De-Listing Requests and Unfreezing Funds of De-Listed Persons (c. III.7):

239. There are no procedures in place for considering de-listing requests or unfreezing the funds or other assets of de-listed persons. The authorities mentioned that pursuant to Regulation 3, the BOM and the FSC may revoke a freezing directive given on the basis of a declaration by the Prime Minister that a particular person or organization is a terrorist. They did not, however, specify the procedure by which a request for de-listing could be made. Furthermore and more importantly, while Regulation 3 could be of some relevance under UNSCR 1373, it is not sufficient under UNSCR 1267 whereby any de-listing procedure would necessarily entail authorities other than the regulator, including the UNSC.

Unfreezing Procedures of Funds of Persons Inadvertently Affected by Freezing Mechanism (c. III.8):

240. Similarly, there are no measures in place to unfreeze, in a timely manner, the funds and other assets of persons or entities inadvertently affected by a freezing mechanism.

Access to frozen funds for expenses and other purposes (c. III.9):

241. The Prevention of terrorism (Special Measures)(Amendments) Regulations exclude from the definition of funds those funds and other financial assets or economic resources that are necessary for basic expenses (including payments for food, mortgages, medical treatment, taxes, etc.) as well as those necessary for extraordinary expenses. This implies that a decision as to the amount of funds that may escape the freezing measure has to be taken from the outset, namely, when the freezing is ordered. How this would apply in practice is unclear. In particular, there is no indication as to how these amounts would be estimated and by whom.

Review of Freezing Decisions (c. III.10):

242. The specific procedure that would enable a person or entity whose funds and assets have been frozen to challenge the freezing order is unclear.

Freezing, Seizing and Confiscation in Other Circumstances (applying c. 3.1-3.4 and 3.6 in R.3, c. III.11)

243. Provisional and confiscation measures may be taken in other contexts as described under Recommendation 3 – Terrorist financing offense.

Protection of Rights of Third Parties (c. III.12):

244. Measures are in place to provide for the protection of bona fide third parties only in the context of freezing mechanisms initiated under a criminal investigation led in Mauritius as described under Recommendation 3.

Enforcing the Obligations under SR III (c. III.13):

245. The only obligation that the financial institutions have had in the context of SRIII at the time of the assessment was to check the consolidated list issued pursuant to UNSCR 1267 against their list of customers. However, the monitoring of their compliance with these requirements is unclear.

Additional Element (SR III) - Implementation of Measures in Best Practices Paper for SR III (c. III.14):

246. The measures set out in the FATF Best Practices Paper for SR III have not been implemented in Mauritius.

Additional Element (SR III) - Implementation of Procedures to Access Frozen Funds (c. III.15):

247. Provision was made in the Regulations to allow for the payment of basic expenses as described above, but the procedure by which it can be implemented has not been defined.

2.4.2 Recommendations and Comments

248. The current freezing mechanism suffers from a number of shortcomings and the assessment team considered that the overall implementation of the measures provided for under the laws and regulations was ineffective.

249. The mere fact that the freezing measures under UNSCR 1267 necessitate a declaration which the Prime Minister may make at his own discretion before they can be implemented contravenes the requirements under UNSCR 1267. So does the Regulation which enables the regulators to revoke a freezing order made under USCR 1267. UN member countries are afforded no discretion in the qualification as terrorists of the persons and entities listed under UNSCR 1267 and the freezing mechanism must be able to operate as soon as the amendments to the consolidated list are made. This entails that all the relevant persons and entities must be made aware of the amendments as soon as the latter have been adopted. Communication of the amendments should be made to all the relevant parts of the private sector and not only to the industries under the purview of the BOM. A link to the UN website on the FSC’s homepage is not sufficient in this respect. Furthermore, the fact that, in Mauritius, the amendments to the consolidated list are sent to the private sector (regulated by the BOM) several days and up to several weeks after their adoption raises concerns because it entails that the authorities are not in a position to act with the expediency required to fight effectively against terrorism.

250. The authorities do not seem to have given sufficient thought to the procedure that should apply when requests are made by other countries acting under UNSCR 1373 or as a result of their own freezing mechanisms.

251. Although it has never been applied, the provision made for the payment of basic expenses is another matter for concern: Considering that the duration of the freezing measures cannot be specified from the outset (by the UNSC or else) and that, in practice, measures such as those undertaken in application of UNSCR 1267 may remain in place for several years before a final decision is taken, estimating the amount necessary to cover basic expenses would be close to impossible. Furthermore, should such an estimate be made, the estimated (and potentially large) amounts of funds would escape the freezing measures and, consequently, remain at the disposal of persons and entities who have been designated as potential, which entirely defeats the overarching goal of the freezing measures.

252. As for the lack of measures taken under UNSCR 1373 or in response to another country’s freezing mechanism, while it is difficult for the assessment team to establish precisely whether Mauritius’s assistance was requested or not, considering other countries’ experience, including that of other small jurisdictions around the world, it seems very unlikely that no request was ever made to freeze terrorist funds under UNSCR 1373 or under another country’s actions.

253. Overall, the freezing measures adopted in the laws and regulations do not cater for the situations covered under SR III and lack adequate procedures.

254. The Mauritian authorities are recommended to:

  • Reconsider the mechanisms set out to implement UNSCR 1267;

  • Ensure that all financial institutions under the purview of the FSC are immediately informed of all changes to the consolidated list of terrorists under UNSCR 1267;

  • Ensure that all persons and entities designated by the UN SC 1267 Committee are considered as terrorists and their funds and other assets are immediately frozen upon identification;

  • Establish clear mechanisms for the implementation of UNSCR 1373;

  • Establish clear mechanisms to examine and, where appropriate, give effect to the actions initiated under the freezing procedures of other jurisdictions;

  • Ensure effective communication of all actions taken under the freezing mechanism to all the financial sector, including in cases other than the circulation of the 1267 lists;

  • Provide adequate guidance to the financial institutions and other persons or entities that may be holding targeted funds or other assets concerning their obligations under the freezing mechanisms;

  • Set out effective procedures for considering de-listing request and make the public;

  • Set out procedures for unfreezing in a timely manner the funds or other assets inadvertently affected by the freezing measures and make the public;

  • Set out procedures for access to funds in accordance with UNSCR 1452;

  • Set out procedures to challenge freezing measures;

  • Take measures to ensure protection of the rights of bona fide third parties; and

  • Ensure effective monitoring of compliance with the obligations under SR III.

2.4.3 Compliance with Special Recommendation III

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Authorities

2.5 The Financial Intelligence Unit and its functions (R.26)

2.5.1 Description and Analysis

Legal Framework:

255. Section 9 of FIAMLA established the Mauritian Financial Intelligence Unit (the “FIU”) on June 19, 2002. The AML Miscellaneous Provisions Act (AMLMP) 2003 amended the original powers and functions given to the FIU, in particular, converting the previous role of the External Review Committee to a Board structure, limiting the previous wide scope of the FIU’s guidance issuing power to the more specific area of “manner of reporting of STRs,” confirming the Director’s power to request further information in relation to a reported STR, and assigning the power to supervise and enforce AML/CFT compliance in the financial sector to the designated supervisory authorities (BOM and FSC). The AMLMP also amended the legal framework for FIU’s operating environment through addressing the issue of confidentiality of reporting by banks and establishing an obligation for the BOM and FSC to report relevant suspicions to the FIU.

256. The FIAMLA Regulations 2003 (FIAMLR) No. 10 also authorizes the FIU to issue guidelines for the purposes of the FIAMLA and the regulations. The mission was advised of a legal opinion from the Solicitor-General that confirms that this power to issue guidance extends only to the manner of STR reporting as set out in section 10(2) of FIAMLA.

257. The FIU is an administrative style FIU which receives STRs and further information from the reporting institutions defined in section 14 of FIAMLA.13 It performs operational and strategic analysis, disseminates disclosures of STR related cases indicating possible ML/TF offenses to designated investigatory and supervisory authorities and also disseminates strategic and operational intelligence to a wider range of authorities determined, at the Director’s discretion, in accordance with S21 and 30(2) of FIAMLA.14

258. The reporting institutions obliged to report STRS are banks; nonbank financial institutions; cash dealers (money exchangers); and those designated nonfinancial businesses and professions which are currently defined as accountants, attorneys, barristers, chartered secretaries, notaries, and persons carrying on business of a casino, bookmaker, or totalisator under the Gambling Regulatory Act.15 Trust and Company Service Providers (TCSPs) are covered by the FIAMLA reporting obligation as they fall within the domestic definition of Management Companies which are licensed under the Financial Services Act as a financial institution.16 The two financial sector supervisors also provide information to the FIU where their regulatory work (usually through on site examinations) identifies possible suspicious transactions relating to ML/TF (S22 FIAMLA).

259. The FIU’s analytical process involves an initial evaluation phase to grade and rate, and the subsequent use of appropriate analytical techniques to support or disprove indications of suspicion. The FIU obtains and uses information from a variety of closed and open information sources, including law enforcement and various commercial and public authority database holdings and records. Further information is requested from financial institutions which make the initial disclosure or from institutions that the FIU considers may have a connection to the reported transaction. This is legally authorized by Section 13(2) of FIAMLA. The FIU has an electronic reporting and storage system for the STRs, although to date, most STRs have been provided on the FIU’s paper form.

260. Dissemination under S13(1) is achieved through a controlled process. When the Director considers that information on any matter should be disseminated to an investigatory or supervisory authority, the information is referred to the Board. . The FIU’s Board, which under FIAMLA S12 administers the FIU, has a role in providing consent to disseminations of statutory reports, including proactive disseminations to overseas FIUs. A fuller assessment of the respective roles of the Director of the FIU and the Board is included at R26.6 (operational autonomy). Cases reports (statutory reports) where ML is suspected are disseminated to ICAC. Disseminations involving ML are also disseminated to the Police where there is knowledge of an active police investigation or where the suspected underlying offense is drugs related. Cases involving terrorist financing would be disseminated to the Police who have the power and responsibility to investigate such cases. To date the FIU has received one “FT” related STR.

261. The FIU continues to monitor cases it has disseminated to the relevant authorities. Any additional information is disseminated as a further statutory report. The FIU also provides Intelligence Reports based on their research and strategic analysis of STRs and other information sources to which it has access. Where the FIU becomes aware of any information which may be relevant to the functions of any supervisory authority or to an investigation or prosecution being conducted by an investigatory authority, the FIU passes on the information to the relevant authorities under S21 of FIAMLA. The FIU also discloses information under S30(2) where it considers that the disclosure to be necessary in the interests of the prevention or detection of crime; in connection with the discharge of any international obligation to which Mauritius is subject: or pursuant to an order of a Judge. . The FIU provides information to the financial sector supervisory authorities (FSC and BOM) when it becomes aware of any information that may be relevant to their regulatory role, for example, issues of possible noncompliance with reporting requirements or “fit and proper” considerations.

262. The FIU has a technical department and the Assistant Director is the Head of the Technical Department. The Technical Department comprises of the Financial Investigative Analysis, Research & Monitoring, Information Technology & Security and Legal. The Financial Investigative Analysis Division receives, processes, analyzes, and interprets suspicious activities relating to money laundering and terrorist financing. The Information Technology & Security Division focuses on the implementation of IT strategies, control, and security of the information and IT systems. Core staff operating in the Financial Investigative Analysis Department includes a Senior Financial Intelligence Analyst (not filled at the time of mission), three Financial Intelligence Analysts, three Assistant Financial Intelligence Analysts, two Research Intelligence Officers, three Field Intelligence Officers and one Police Liaison Officer. The staff in the Information Technology & Security Division includes one IT Security Officer, one Information Control Officer and two IT Assistants. Legal support is provided by the Legal Officer. The FIU’s field intelligence officer’s role is two fold. They perform field-based nonobtrusive observation regarding the activity identified in disclosures and also obtain information from the various off line sources that the FIU uses to support its analytical function.

263. The Corporate Affairs Division deals with the finance and general administration, office security, procurement, and human resources management. Its staff includes one Finance and Administrative Manager, one Administrative and Accounting Assistant, two Office Secretaries, one Receptionist, one Driver/General Assistant, and two General Assistants.

264. To support its core FIU functions, S10 of FIAMLA also empowers the FIU to obtain and use additional information, consult and share information with the Commissioner of Drugs, Police, ICAC and the supervisory authorities designated by the FIAMLA (the BOM and FSC), issue guidelines to financial institutions, cash dealers and members of the relevant professions or occupations on the manner and requirements for the reporting of STR and related further information, exchange information with overseas FIUs and “comparable bodies” and undertake research17 to identify the causes and consequences of ML and TF. Since the 2003 amendments, the FIU’s previous powers with respect to monitoring for compliance for nonreporting have been assigned to the BOM and FSC for the financial and nonbank financial institutions which they regulate. Criminal prosecution for noncompliance with reporting requirements lies with the Police. The FIU does not have power to require reporting institutions to block or freeze funds or accounts, where money laundering is suspected. Such action involves a lengthier process involving the Police and ICAC. The process to freeze funds is analyzed further at Recommendation 3.

Establishment of FIU as National Centre (c. 26.1):

265. The FIU is an administrative style FIU and its functions and powers are provided solely within the FIAMLA.

266. The FIAMLA S9 and S10 establish the FIU as:

  • “a Financial Intelligence Unit which shall have all the powers necessary to administer, and exercise its functions under, this Act

  • and

  • “the central agency in Mauritius responsible for receiving, requesting, analyzing and disseminating to the investigatory and supervisory authorities disclosures of financial information:

  • (a) concerning suspected proceeds of crime and alleged money laundering offenses;

  • (b) required by or under any enactment in order to counter money laundering; or

  • (c) concerning the financing of any activities or transactions related to terrorism.

267. The FIU is established as the central agency to process STRs from financial institutions and DNFBPs obliged by the provisions of FIAMLA to report to the FIU. The Assessors were also advised of legal advice from the Solicitor General (but did not sight the same) that restricts the ability of the FIU to seek further information from reporting institutions where the initial information does not come from reporting institutions designated by the FIAMLA. Notwithstanding this limitation, the FIU is able and has, in fact, provided a level of in-house analysis on such non-STR sourced information and in some cases made disclosures of information under S21 to the BOM and FSC, and to other bodies under Section 30(2) (b).

Guidelines to Financial Institutions on Reporting STR (c. 26.2):

268. S10 (2) (c) of FIAMLA allows the FIU to issue guidelines to reporting institutions on the manner in which STRs and further information relating to such reports should be provided to the FIU. A Guidance Note for paper-based reporting was issued in January 2003 which provides guidance for the institutions obliged to report pursuant to FIAMLA on the manner in which they should report. The detail of its guidance was appropriate for the early educational stages of the reporting regime where the emphasis was placed appropriately on ‘culture change and awareness raising for the reporting institutions.”

269. At the time of the mission, a number of the references needed updating. For example, the large cash threshold and the list of Reporting Institutions/Persons obliged to make STRs does not fully accord with the specific categories designated in FIAMLA. Subsequent to the mission, the threshold reference was updated. Together with the STR paper-based reporting form, the guidance, however, does provide adequate assistance as to the manner (form and content) in which reports should be made to the FIU. The assessors were advised that an expected upgrade of the Guidance Note has currently been placed on hold. Separately, an on-line, secure web-based reporting system was recently established for designated MLRO’s in reporting institutions and will be progressively implemented. The on-line reporting application provides an excellent mechanism for efficient STR reporting and is user friendly.

270. The 2003 amendments to the FIAMLA restricted the FIU’s authority to provide guidance to the “manner” in which the reporting institutions are required to provide reports of suspicion and additional information to the FIU. The FIAMLA Regulations 2003 Regulation No. 10 also authorizes the FIU to issue guidelines for the purposes of the FIAMLA and the regulations; however, the mission was advised of a legal opinion from the Solicitor-General that confirms that this power to issue guidance extends only to the manner of STR reporting as set out in Section 10(2) of FIAMLA. Under the FIAMLA S18, the responsibility for issuing guidance on all other AML/CFT matters resides with the designated supervisory authorities: namely the BOM, FSC, and the GRA. The mission was advised that the FIU has subsequently restricted its guidance to purely providing written guidance on the modality of reporting, although it does provide annual outreach workshops to the reporting sector and exchanges information on typologies with the designated supervisors in the financial sector.

271. It appears that responsibility for providing guidance on indicators to assist reporting institutions to identify potentially suspicious transactions is now considered to lie with the supervisory authorities (BOM, FSC, and GRA) designated in FIAMLA S18. The assessment team considers that the quality and quantity of reports to the FIU could be enhanced through the FIU’s guidance being wider in scope to include up to date, sector specific indicators. The need for such guidance is especially relevant to the DNFBP sectors such as, accountants, and law practitioners that do not have a designated supervisory or monitoring authority for the purposes of issuing AML/CFT guidance.

Access to Information on Timely Basis by FIU (c. 26.3):

272. The FIU produces a high-quality analytical product for dissemination. The FIU has developed its own in-house Data Management system and uses the I2 Link software packages. All STRs and information that the FIU receives are subject to evaluation and grading by an experienced analyst or the Assistant Director based on appropriate criteria, before those considered to be of interest are subjected to fuller in-depth analysis.

273. The FIU uses the powers under S13(2), 14, and 22 for the collection of financial information through the STR process including information obtained from the BOM and FSC. The broad S11(2) “consult and seek assistance” authorizes the FIU to obtain access to a wide range of information sources, both closed and open source, including those from Customs, the Police, the FSC and BOM, and the National Transport Authority. The open sources include the Civil Status Office (national I.D. card), Passport and Immigration, the Registrar General for Land Titles, the Registrar of Companies, the Registrar of Associations, Social Security, commercial databases such as Dunn and Bradstreet and World Check, press and internet monitoring, and the EU/UN terrorism lists. The FIU is active in seeking information from international FIUs directly. The FIU seeks information from Interpol through the Police. The assessors were advised that the FIU currently does not have access to any currency and monetary disclosures made to Customs, due to the restrictions within the Customs Act (s131A). The FIU does not have access to tax data.

274. In terms of timely access, the FIU only has on-line access to its own holdings. The FIU has access to nondisclosure-based information held by Customs, via uploading of CD replication of the Customs database. The CD is renewed on a fortnightly basis. The field intelligence officers undertake the searching and information gathering on site at many of the other authorities named above. The Police Liaison Officer seconded to the FIU is used to confirm whether persons of interest are under active investigation by the Police and to collect criminal histories from police databases.

275. The FIU also uses formal letter arrangements to seek information from the Commissioner of the Police for driver’s licenses and criminal convictions. Similarly, the FIU writes to the registrar of associations for information. The timing for providing such information can take four weeks on average.

276. The FIU advised the mission that STRs are often received only after a couple of months and, in some cases, up to a year after the suspected transactions occurred. A key obstacle to improving the timeliness of STR reporting lies with the current interpretation of FIAMLA in respect to specifying the timeframe in which reporting institutions must provide reports to the FIU. S14(1) states that reports should be made “forthwith” to the FIU. The FIU’s current Guidance interprets this to be 30 days following the determination of the suspicion. This prescription, while perhaps appropriate in the early stages of the Mauritian AML/CFT regime, is not in line with international standards.

277. The FIU provided the assessors with the following tables which indicate the scale, trend, and incidence of STRs it has received in the last 5 years.

Table 14.

STRs Received from 2002 to 2007

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Table 15.

Breakdown of STRs Filed by Reporting Institutions under Section 14 of FIAML Act

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Table 16.

Request for Information to/from Overseas Counterparts

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Table 17.

Feedback Received

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278. The FIU accesses a wide range of information sources which assists it to provide quality analytical reports.

279. The relatively small number of STRs does, however, raise doubts as to whether the FIU has access to sufficient financial information. Areas which indicate that the FIU possibly receives an inadequate number of STRs include the significant downward trend and volume of STRs from the Management Companies and Registered Agents (TCSPs) that service the rapidly expanding global business company market, the paucity of reports from the NBFIs, relevant professions or legal practitioners, accountants and chartered secretaries, and the gambling sector. The comparatively low level of STRs available can affect an FIU’s analysis of the STRs it does receive as it limits the linkages that can flow from access to a wider pool of STRs.

280. From an intelligence gathering standpoint, the FIU has shown considerable initiative in the way it has applied the general powers contained in the FIAMLA s11(2). However, there is concern that the legal basis for this use of the section may require strengthening through more specific clarification.

281. On balance, the FIU has access to a wide range of information to enable it to analyze the STRs it receives, although there are questions on the low volume of STRS and time in which it can access such information. The quality of analysis while commendable, would benefit from creating more effective electronic gateways to access the information to which it already has access and establishing a non-STR related gateway with the BOM. The lack of effective oversight for AML/CFT responsibilities within the sectors not regulated by the BOM and FSC has potentially created a degree of nonchalance, disinterest, and lack of awareness in these sectors.

282. The lack of meaningful feedback on the value of the product the FIU disseminates is a further concern. The assessors were advised that POCA S81 prevents ICAC from providing specific feedback on the value and end use made of the FIU’s disclosures. Similarly, the feedback from the other designated investigatory authorities, Customs, and the Police while legally permitted, could be improved.

Additional Information from Reporting Parties (c. 26.4):

283. Under FIAMLA, the FIU may request additional information directly from the reporting institutions, namely banks, financial institutions, cash dealers and members of relevant professions or occupations. Where a suspicious transaction has been reported to the FIU, it may request additional information directly from reporting institutions pursuant to Section 13 (2) of the FIAMLA. S13(2) also provides the FIU with the power to seek additional information from “any other bank, financial institution, cash dealer or member of the relevant profession or occupation who is, or appears to be, involved in the transaction.”

284. Under the 2003 amendments made in the AMLMP, the BOM is obliged to make reports of suspicious activity to the FIU and also provide additional information on that report should the FIU so request. In practice, the FIU writes to the relevant reporting party and requests the information to be provided within seven days and S19 of the FIAMLA provides the offense for noncompliance with such request. To date, the FIU considers it has not had major difficulty with compliance, although it is concerned that it lacks the powers to enforce compliance with the reporting provisions of the FIAMLA and the FIU is heavily reliant on the willingness, resources, and priorities of the designated supervisory (BOM, FSC) and investigatory authorities (ICAC, Police) to undertake appropriate regulatory or investigation. The current lack of effective AML/CFT oversight for the sectors not supervised by the BOM or FSC accentuates the problem.

285. The FIU considers that the power to request information under S13(2) of FIAMLA is restricted to the institution which filed a STR under S 14(1). Furthermore for requests received from local investigatory authorities, overseas FIUs and other government agencies, the FIU has no power to request further information from reporting institutions. The assessors were advised of, but did not sight legal advice from the Solicitor– General that confirmed this interpretation.

Dissemination of Information (c. 26.5):

286. S10(1) of FIAMLA authorizes the FIU, as the central agency in Mauritius responsible for disseminating to the investigatory and supervisory authorities disclosures of financial information concerning suspected proceeds of crime, alleged money laundering offenses and the financing of any activities or transactions related to terrorism. Information-based intelligence, including financial information, grounds for suspicion, and the alleged money laundering process, are disseminated to the investigatory or supervisory authorities after obtaining the consent of its Board under Section 13 (1) of the FIAMLA Act.

287. The FIU disseminates information relating to suspected money laundering or financing of terrorism offenses to:

  • (i) investigatory authorities to determine the criminal liability and prosecution of person alleged to be involved; and

  • (ii) supervisory authorities for them to conduct the necessary inspection and take any appropriate regulatory action against the person that might be involved.

288. One STR regarding suspected terrorist financing have been received. No disseminations have been made.

289. FIAMLA S15(2)(f) also provides for the inclusion of information by the reporting institution as to the impact of the suspicious activity on the “financial soundness of the reporting institution or person.” Not unexpectedly, the FIU advised that this information is rarely self disclosed and if it occurs, would be provided immediately to the relevant regulatory authority if it concerns an institution supervised by the FSC or BOM.

290. Where the FIU becomes aware of any information which it has acquired in the course of carrying out its functions and which may be relevant to the functions of any of the designated supervisory authorities (at the time of mission the BOM and FSC)the FIU passes on such information under S21of FIAMLA. The FIU also provides information to a wider range of noninvestigatory or supervisory authorities under 30 (2) of the FIAML Act. Information is disclosed under S30(2)where it “appears to the FIU” to be necessary to enable the FIU to carry out its functions; b) in the interests of the prevention or detection of crime; c) in connection with the discharge of any international obligation to which Mauritius is subject; or d) pursuant to an order of a Judge. In practice, the FIU has disseminated strategic-based intelligence to government bodies, in addition to those authorities that receive the STR based disclosures.

291. The following table provides details of the disseminations made by the FIU:

Table 18.

(c) Number of Reports Disseminated

(These reports includes STRs, cases generated by the FIU, Intelligence collected from overseas FIUs and other intelligence which may not be related to STRs disseminated)

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Operational Independence (c. 26.6):

292. The FIU is an independent body under the aegis of the Ministry of Finance and Economic Development and is administered by a Board (comprising a Chairperson and two other members). The Board members are paid on fee basis from the FIU’s budget. Section 10 of FIAMLA provides that the Director may exercise all the functions of the FIU, but the Act also gives the Board a role in this process. The FIU is funded through the annual Parliamentary budgetary process. FIAMLA s33 also provides for funding to be met from government grants and donations following the consent of the Minister. The Director may appoint such persons to assist him. The FIU’s annual budget for the latest year is 19,325,966 Rupees (approximately US$651,494, as of October 9, 2007). In practice, donations are restricted to external assistance from public international organizations for conducting and participating in seminars and training. The Chairperson and members of the Board are appointed by the President on the recommendation of the Prime Minister made in consultation with the Leader of the Opposition. The FIU Director is appointed using the same process.

293. The operational independence of the FIU was raised in the previous AML/CFT assessment in 2003, in particular the role of the then review committee in providing approval for the Director to carry out his functions and exercise his powers for any action envisaged by the FIU. The authorities considered the AMLPA 2003 and provided a legislative remedy through replacing the Committee with a Board.

294. The wording of FIAMLA and observed practice still gives cause for some concern as to the operational autonomy of the Director, and hence, the FIU to make decisions regarding dissemination of disclosures of financial information. FIAMLA S13 requires the Director to refer potential disseminations to the Board which shall consider the information and either: “consent to the director referring the information” to the appropriate investigatory or supervisory authority, or request the Director to determine “whether supporting information” is available that would justify subsequent dissemination. The assessors were advised that, in practice, the Board’s consent is also sought for proactive dissemination of intelligence to overseas FIUs, but not in cases responding to requests from overseas FIUs made in accordance with the Egmont principles of information sharing.

295. The Board and Director usually meet to consider potential disseminations on a regular or when required basis. Where dissemination is considered a priority by the Director, for example, when there is a concern about flight of funds or where the suspected activity and transactions involves a person or entity that the FIU understands is already under investigation, or in response to a request from an overseas FIU, the Board will meet to decide the best course of action in the matter. The operational arrangements agreed with the Board allow the Director to disseminate and seek consent at subsequent Board meetings or through earlier liaison with the Chairman. It is unclear what implications arise if the Director or persons appointed by him step outside this arrangement. The arrangements are within the scope of the Board’s power to determine its own arrangements pursuant to FIAMLA S12(5). The assessors were advised that no disseminations have ever failed to receive Board consent and it is only on rare occasions that the Board has referred it back for further information.

296. The arrangements with the current Board appear to work in practice in that the assessors were advised of no instances where the Board has failed to give consent. Also, no evidence was provided to the assessors that indicate that the Board’s involvement adversely affects the timing of disseminations. However, it is arguable that the director’s operational independence to disseminate could be compromised should a future Board, or even the current one, wish to change the current arrangements which the Board has not documented.

297. In assessing the operational autonomy of the FIU, a key factor is whether the Board is considered part of the FIU. This view can be defended as FIAMLA defines the Board’s role to “administering the FIU” and FIAMLA S9 in establishing the FIU provides that the FIU should have “all the powers necessary to administer and exercise its functions” and these include the function of disseminating. The contrary argument is that the Board is not part of the FIU. FIAMLA S11 (1) also states that the functions of the FIU, including disseminations and staff appointments, shall be exercised by the Director or such persons appointed by the Director. The Board’s part-time members are not appointed by the Director. The assessors did not have sight the Terms and Conditions of the Boards’ appointment; however, it is understood that such conditions do not specifically prevent Board members from concurrently being engaged in an employment or advisory role with the reporting institutions, which may represent a conflict of interest situation. In this regard, a previous potential conflict of interest situation was resolved in an appropriate, public, and transparent manner. Further, the Board’s current administrative role includes the appointment of staff to the FIU based on the recommendation of the Director. This again seems inconsistent with the powers given to the Director under S11 and S9(3) to appoint staff to assist him.

298. The assessors consider that the existing operational arrangements are currently effective in that they do not appear to have adversely affected the dissemination of STR-related disclosures to date, and in effect provide the Director with a useful additional source of legal and industry knowledge to exercise the analytical and dissemination function. However, the undocumented nature of the arrangements, the potential conflict of interest, and the apparent internal consistency in FIAMLA in assigning functional and administrative powers to the Director and the Board, respectively, do represent a significant risk to a Director’s future capacity and authority to make such decisions on dissemination. In the assessors’ opinion, the current Director’s experience in the position effectively mitigates the risk to his operational independence; however, such latitude may not be as forthcoming to a future Director or should a new Board wish to take a more operational role, as is permitted under the FIAMLA. The assessors consider that the role of the Board should be revised to advisory rather than consent. The responsibility to appoint staff should also lie with the Director.

Protection of Information Held by FIU (c. 26.7):

Security of Information

299. All information received by the FIU is classified as confidential and is protected by the provision in Section 30 (1) of the FIAML Act. The Director, every officer of the FIU, and the Chairperson and members of the Board shall take the oath of confidentiality before they begin to perform any duties under the Act. They are also required to maintain the confidentiality of any matter relating to the relevant enactments during and after their relationship with the FIU. Noncompliance with the oath would subject the offender to criminal offense charges.

300. To ensure protection of the information, the FIU has created a dedicated environment with the following systems:

  • (i) Access Control (physical office and secure storage of confidential materials);

  • (ii) Screening of employees and screening of individuals in and out of the office;

  • (iii) System to track down movement of information;

  • (iv) Segregation of duties;

  • (v) Dedicated IT System with respect to database;

  • (vi) Encryption of information;

  • (vii) Network monitoring;

  • (ix) Email and use of Internet monitoring;

  • (x) Centralized system of telephone; and

  • (xi) Dedicated business system and operations.

301. A new on-line STR reporting service, known as the Online Secured STR (OSS), provides added security to the STR reporting process through use of login and password protection and use of suitably encrypted https service.

302. The FIU has also a set of procedures relating to the following:

  • (i) Request for information to and from overseas FIUs;

  • (ii) Procedures for collection of information;

  • (iii) Procedures for dissemination of information;

  • (iv) Procedures for access to information.

303. The FIU staffing includes an IT security officer with direct access to the Assistant Director, and breaches of security are subject to formal internal investigation and report to the Director.

304. All exchanges of information with members of the Egmont Group are conducted through the Egmont Secure Web (ESW). The ESW is accessed by the Research Intelligence Officers directly from their workstation.

Dissemination in accordance with the law

305. As noted in R26.5 financial information acquired by the FIU in the course of its function under the FIAML Act is disseminated under Section 13 (1), after approval of the Board, to relevant investigatory and/or supervisory authorities, with a view to the determination of any criminal liability and the prosecution of or action against, the persons accordingly. Strategic information may be disclosed under Section 30 (2) of the Act if the disclosure appears to the FIU to be necessary to enable the FIU to carry out its functions; in the interests of the prevention or detection of crime; in connection with the discharge of any international obligation to which Mauritius is subject; or pursuant to an order of a Judge. The FIU may also pass on information to investigatory or supervisory authorities under Section 21, where it becomes aware of any information which may be relevant to their respective functions.

306. The FIU has documented procedures that include provision for separate higher level authorization which acts as a guard to ensure that disseminations are not only of the appropriate quality and justified, but are in accordance with the aforementioned avenues for dissemination. The assessors were made aware of concern as to the speed in which the FIU makes disseminations. However, review of the FIU’s procedures and statistics indicates that there are appropriate benchmarks in place so that high priority disseminations are made within 24 hours in appropriate defined circumstances and in other cases involving less complex disseminations within an appropriate timeframe. Complex cases naturally take longer to develop; however, the assessors consider the benchmark and statistics indicate that appropriate turnaround times are achieved. Notwithstanding the FIU’s internal processes, ICAC has a perception that there is undue delay in receiving STRs from the FIU. There is a need to differentiate between the often lengthy delay in STRs being provided to the FIU and the FIU’s turnaround time after it has received a report. The assessors consider the FIU to have an efficient internal process.

307. Regarding the security of information specifically provided to the FIU from international sources, S21(4) of the FIAMLA provides appropriate coverage as follows:

(4) “If any information was provided to the FIU by a body outside Mauritius on terms of confidentiality, the information shall not be passed on as specified in those subsections without the consent of the body by which it was provided.”

308. Concern was expressed to the assessors that the current wording of the S30 confidentiality provisions may allow for information held by the FIU, including STRs, to be used as evidence in open court. Section 30 states that:

  • (2) “No information from which an individual or body can be identified and which is acquired by the FIU in the course of carrying out its functions shall be disclosed except where the disclosure appears to the FIU to be necessary:

  • (a) to enable the FIU to carry out its functions;

  • (b) in the interests of the prevention or detection of crime;

  • (c) in connection with the discharge of any international obligation to which Mauritius is subject; or

  • (d) pursuant to an order of a Judge.”

309. The assessors were advised that the provision is a cause of concern for some in the reporting sector, and it may be an underlying factor in the apparent reluctance of certain businesses or professions to report. There has also been a previous instance of the naming in Court of a staff member involved in the reporting of an STR. While the current wording of section 30(2) of FIAMLA appears to leave the discretion to the Director, legal advice may be necessary to clarify the admissibility of an STR or the existence of same in court proceedings.

Publication of Periodic Reports (c. 26.8):

310. Under the FIAMLA S34, the FIU is required to provide an:

“annual report on its activities to the Minister, containing such statistical and other information as the Minister may require.”

311. Furthermore, the new research function provided to the FIU in 2006 requires the FIU to:

“undertake, and assist in, research projects in order to identify the causes of money laundering and terrorist financing and its consequences.”

312. The FIU publishes an Annual Report which includes statistics on the number of STRs received and disseminations made as well as information on the activities of the FIU. The FIU released its Annual Reports in 2003, 2004, 2005, and 2006. The 2006 report contains a good variety of statistics showing dissemination and reporting trends for STRs. The latest report lacks information on sanitized typologies of ML or FT scenarios, even though replication of typologies is available through the Egmont and FATF-sourced information or through sanitized generalizations based on Mauritian examples. The assessors were advised that the lack of feedback from the investigative authorities has hindered the preparation of typologies based on domestic scenarios. The 2006 annual report mentions that one of the priorities for 2007 is to “produce typological reports based on STRs received as well as feedback from investigators.” However, it is not clear how and when such information will be made available to the reporting institutions, given the delay in upgrading the 2003 Guidance Note.

313. A National Survey on the Risks, Extent and Trend of Money Laundering and Financing of Terrorism in Mauritius was conducted by the FIU and a report was published in May 2006. Copies of the Annual Reports and National Survey Report on the Risks, Extent and Trend of Money Laundering and Financing of Terrorism in Mauritius are available on the FIU’s website.

Membership of Egmont Group (c. 26.9):

314. The FIU has been a member of the Egmont Group since July 2003 and is the African representative on the Egmont Committee. Under FIAMLA S20(1), the FIU is the only body in Mauritius which may seek recognition by any international group of overseas financial intelligence units which exchange financial intelligence information on the basis of reciprocity and mutual agreement.

315. The FIU has been very active in fostering the development of FIUs and information sharing and awareness raising in the ESAAMLG region and has sponsored the Indian FIU in its application for Egmont status. It has played an active role in the sponsoring the Bangladeshi FIU and other countries in the African region and is assisting the FIUs of Malawi and the Seychelles in joining the Egmont Group.

Egmont Principles of Exchange of Information Among FIUs (c. 26.10):

316. The FIU takes account of the Egmont principles in fulfilling its core functions as well as when exchanging information with its overseas counterparts.

317. With respect to the exchange of information with other members of the Egmont Group, the FIU does not require a Memorandum of Understanding (MOU). The FIU will enter an MOU should the other FIU require one to support information sharing. The MOU signed by the FIU sets out the principles on which financial information would be exchanged and it is modeled on the Principles of Information Exchange between FIUs set by the Egmont Group.

318. Regardless of the existence or otherwise of a formal MOU, the FIU places written conditions to require that information it provides can only be used for intelligence purposes and not for judicial or evidential purposes. Also, the FIU in Mauritius requires that it is informed if this information is further disseminated to other FIUs. These conditions embrace the Statement of Purpose and the Principles for Information Exchange prescribed by the Egmont Group.

319. The FIU also exchanges information with other FIUs which are not members of the Egmont Group on the basis of reciprocity or under MOUs signed with these countries. The FIU has signed a number of MOUs with countries which domestic legislation requires that an MOU be signed prior to exchange of information. Eleven MOUs have been signed by the FIU in Mauritius:

  • Financial Intelligence Centre (FIC) of South Africa in August 2003.

  • Australian Transaction Reports & Analysis Centre (Austrac) of Australia in October 2003.

  • Service d’Information et de Controle sur les Circuits Financiers (SICCFIN) of Principality of Monaco in June 2004.

  • Anti-Money Laundering Office (AMLO) of Kingdom of Thailand in October 2004.

  • Financial Intelligence Processing Unit (CTIF-CFI) of Belgium in November 2005.

  • Financial Transactions and Reports Analysis Centre (Fintrac) of Canada in June 2006.

  • Cellule Traitement Du Renseignement et Action Contre Les Circuits Financiers Clandestins (TRACFIN) of France in October 2006.

  • Financial Reporting Authority (Cayfin) of Cayman Islands in December 2006.

  • Serious Organised Crime Agency of the United Kingdom of Great Britain (SOCA- the UK FIU) in June 2007.

  • Indonesian Financial Transaction Reports and Analysis Centre of the Republic of Indonesia in June 2007.

  • Meldpunt Ongebruikelijke Transacties van of Netherlands Antilles in June 2007.

320. Members of the Egmont Group are required to have the minimum IT infrastructure to connect with the Egmont Secure Web to facilitate the exchange of information. In some circumstances, where administrative FIUs cannot provide law enforcement information due to the limitation in their powers, the FIU in Mauritius will at times contact the law enforcement agencies in those countries with the approval of its Board in order to access such information. This would be accomplished with the knowledge of the local FIU.

Adequacy of Resources to FIU (c. 30.1):

321. The current FIU staff is 25. The organizational structure is shown below: Chart

Chart 1.
Chart 1.

Financial Intelligence Unit, Organizational Chart

Citation: IMF Staff Country Reports 2008, 319; 10.5089/9781451933598.002.A001

322. A full description of the staffing breakdown for the different functions is provided in the description section of Rec 26.

323. The FIU’s funding is represented by the following table:

Table 19.

The FIU’s Funding

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324. The FIU’s commitment to improving its long-term capacity in staff expertise and IT functionality is evidenced by the following table which shows the significant allocation of the total FIU budget to these two key areas.

Table 20.

The FIU’s funding allocation to Training & IT

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325. The FIU, like other authorities in Mauritius, has difficulty in retaining skilled staff that can command significantly higher remuneration in the private sector, especially in the burgeoning financial services sector. This situation is likely to remain and possibly be exacerbated in the near future as the government’s drive to encourage the growth and diversification of the Mauritian economy places an increasing premium on retaining employees or attracting potentially skilled recruits in the private sector. At the time of the assessment, the FIU was actively recruiting to fill seven of its 25 staffing positions. The FIU is fortunate to have considerable longterm institutional memory in its executive ranks, as both the current Director and Assistant Director have been with the FIU since its inception.

326. Despite the current staffing squeeze, the FIU’s previous investment in the efficiencies provided through IT and training serve it well, as evidenced by the observed quality of its analytical product.

Integrity of FIU Authorities (c. 30.2):

327. The staff of the FIU and the Board are required by FIAMLA to answer an Oath of Confidentiality in the Supreme Court of Mauritius and to provide a written declaration of assets and liabilities. The Act also requires all officers of the FIU, the Director, and the Board to declare any future material changes to the original declaration of financial position. Common with many countries, the FIU adheres to an Equal Opportunity Policy. In doing so, the FIU does not compromise on the minimum professional standards considered necessary to work in its various areas, and this is especially so in the areas of analysis and IT.

328. The recruitment process is quite intensive with successful applicants being screened by the executive management team and then separately by the Board comprising of the chairman of the FIU Board and the executive management team. The selected applicants are required to complete a comprehensive preemployment form which contains considerable information on personal details, criminal or civil records, and memberships, political or otherwise. The staffing profile and examples of recent advertisements demonstrate that the FIU places a premium on recruiting graduate qualified staff.

Training for FIU Staff (c. 30.3):

329. Considerable training is provided to FIU staff. All new staff are required to undertake a comprehensive induction course which was developed internally. The contents include:

  • The Role of the FIU in fighting Money Laundering/Terrorist Financing

  • Behavior and Conduct of an FIU’s Officer

  • Use of Computer and Security of Files on Computer at the FIU

  • What is intelligence and Grading of Information

  • Focusing on the FIAML Act 2002 and other Legal Tools to fight ML/FT

  • Investigative Analysis Techniques

  • Building up Professional Competency

  • Managing cases

  • Reporting obligations & customers’ identification by reporting institutions

  • Staff is also requested to read the FIU in action, Egmont 100 cases, the FATF 40 + 9 Recommendations, and the Mauritian AML/CFT legislation.

330. Technical staff receives continuous on the job training, as well as appropriate external courses. The pre-assessment questionnaire also noted considerable participation by FIU staff in targeted training courses across a range of topics which the assessors consider relevant to the work undertaken by FIU staff. Statistics (applying R.32 to FIU):

331. The FIU’s data management system keeps, and is able to produce, statistics on the following:

  1. Number of STRs received by sector, institutions whether locally or from branches of international institutions incorporated in Mauritius;

  2. STRs giving rise to dissemination, connected STRs;

  3. Dissemination to investigatory and supervisory authorities;

  4. Dissemination to overseas FIUs and to overseas law enforcement agencies;

  5. Dissemination to government ministries;

  6. Number of reporting institutions traced as a result of an STR;

  7. Number of times particular reporting institutions would be contacted for additional information under section 13 (2) of the FIAML Act;

  8. Amount of money disclosed in an STR;

  9. Classification of the indication of money laundering in terms of:

    • (a) external or incoming money laundering i.e., crime committed overseas;

    • (b) outgoing money laundering i.e., crime committed locally and money leaving the country;

    • (c) internal money laundering, i.e., crime committed locally and money laundered locally.

  10. Classification of alleged predicate offenses after analysis of an STR by category;

  11. Set aside cases by sector and by reporting institutions;

  12. Request for information received from overseas FIUs;

  13. Request for information made to overseas FIUs;

  14. Further statistics on cases disseminated:

    • (a) types of instruments used;

    • (b) techniques of laundering;

    • (c) number of international jurisdiction involved;

    • (d) nationality of subject involved.

332. The more sensitive statistics naturally are not provided for public scrutiny, but are available to the appropriate AML/CFT stakeholders in Mauritius, including the AML/CFT Committee and the government. Reports involving large cash transactions are not relevant as large cash transactions above 500,000 rupee are prohibited in the FIAMLA. FIAMLA does not provide for the reporting of cross-transport transportation of currency or bearer negotiable instruments or international wire transfers.

333. While the statistical capability of the FIU is impressive, the overall ability of the FIU and the authorities to assess the effectiveness of the STR regime in Mauritius is compromised by the lack of consolidated analysis that is able to demonstrate the value added by the STR-related disseminations provided by the FIU to the investigatory and supervisory authorities. In particular, whether the disseminated information resulted in investigation, prosecution, or conviction for money laundering. The FIU is restricted in its ability to compile such statistics due to the lack of feedback from the Customs, ICAC, and the Police. The assessors were advised that ICAC is prevented from providing feedback on the use it makes of the FIU’s disseminations pursuant to the confidentiality provisions of POCA S81.

2.5.2 Recommendations and Comments

  • Address the current administrative role of the Board so that the Director has the ultimate authority to undertake all actions in the exercise of all the functions provided to him under the FIAMLA, including final authority to appoint staff and make disseminations in all cases. Possibilities to consider include: amending FIAMLA to remove the consent provisions and replace this role to advisory, or making the Board a formal part of the FIU answerable to or appointed by the Director, or permanently delegating the Board’s ‘consent’ role to the Director. The working arrangements of the Board should be documented.

  • Review and amend, where necessary, s. 81 of POCA to allow ICAC to provide feedback to the FIU on the value of disseminations in a manner that does not compromise ICAC investigations.

  • Clarify whether the scope of FIAMLA S10(2)(c) legally provides for the FIU to issue guidance on indicators of suspicious transactions to assist financial institutions and DNFBPs to meet their reporting obligations. The ability of the FIU to provide such guidance should be seen as complementing, rather than replacing, guidance issued by the FSC, BOM, or GRA. In the absence of supervisory or monitoring authority being assigned for the remaining DNFBP sectors, the FIU should be assigned the responsibility for providing guidance on indicators and typologies as part of its responsibility in providing guidance on the manner of reporting

  • Provide all reporting sectors with more specific indicators of ML/TF based on sector and Mauritian characteristics. This will require close cooperation between the FIU and relevant authorities designated to provide such guidance to the financial and DNFBP sectors. This encompasses the BOM, FSC, GRA, and any authority(s) or SROs designated in future to provide AML/CFT Guidance to the non-FSC supervised DNFBP businesses and professions.

  • Implement ways to improve the FIU’s access to timely information by providing outreach in order to improve the reporting performance of reporting institutions in those sectors and institutions considered to be under reporting or displaying poor reporting performance. This should include providing feedback to the disciplinary bodies referred to in S18(4) of FIAMLA and requiring them to take a more proactive role, in partnership with the FIU, to monitor and act on issues of noncompliance.

  • The FIU should seek to provide information to reporting institutions when it makes a dissemination based on an STR(s).

  • Clarify the legal position on the admissibility of STRs in court proceedings, including the adequacy of the provisions to protect the identity of persons who report STRs to the FIU in good faith.

  • Encourage further use of appropriate tactical enforcement, regulatory, or disciplinary action by supervisory authorities and police. Cases of long-term systemic and unresolved reporting performance should be brought to the attention of the AML/CFT committee to encourage appropriate action.

  • Determine and make known the extent to which legal privilege applies for the law practitioners.

  • Develop more appropriate gateways for the FIU to have on-line, real time access to information from databases, where possible and cost efficient..

  • Clarify the current FIAMLA S11(2) “consult powers and seek assistance” power are sufficient to enable the Director to obtain further information from other authorities in those cases where the suspicion of ML/TF has arisen from disclosures made by the investigatory or supervisory authorities.

  • For the wider efficiency perspective, consider providing the FIU with an administrative power to block transactions and accounts suspected of ML/TF and provide the Mauritian AML/CFT system with a more responsive framework.

  • Provide the FIU with access to the disclosures of cash and monetary instrument disclosures received by Customs.

2.5.3 Compliance with Recommendation 26

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2.6 Law enforcement, prosecution and other competent authorities – the framework for the investigation and prosecution of offenses, and for confiscation and freezing (R.27, & 28)

2.6.1 Description and Analysis

Legal Framework:
Designation of Authorities ML/FT Investigations (c. 27.1):

334. The authorities responsible for the investigation and prosecution of the money laundering offenses (both under the FIAMLA and DDA) are the Independent Commission Against Corruption (ICAC), the Police and the Attorney General’s Office (AGO). A Drug Assets Forfeiture Office (DAFO) was also established to identify all assets subject to confiscation after a conviction has been pronounced under the DDA.

335. The authorities responsible for the fight against terrorist financing are the Police, in particular the National Security Service, and the AGO.

336. The ICAC was established in 2002 with the enactment of the Prevention of Corruption Act (POCA; Section 19). It is the primary authority responsible for the investigation into corruption and money laundering cases. It is a body corporate consisting of three members, namely the Commissioner and 2 Deputy Commissioners. The ICAC is structured as follows:

Chart 2.
Chart 2.

ICAC Structure

Citation: IMF Staff Country Reports 2008, 319; 10.5089/9781451933598.002.A001

337. It has a total staff of 150, 65 within the Corruption Investigation Division, 20 of which are dedicated to the investigation into money laundering cases. Most of the current ICAC staff was hired in the course of last year, after the contracts of the previous staff came to an end. The professional staff have banking, economic, legal, or police backgrounds. Some have benefited from punctual training provided by international organizations and foreign countries, but there is no standard AML training for staff.

338. Most of the ICAC’s statutory functions under the POCA relate to the fight against corruption. The bulk of the ICAC’s work is, therefore, dedicated to the prevention of corruption and the investigation into alleged cases of corruption. Some of the statutory functions, however, specifically refer to the fight against money laundering: The ICAC is empowered to cooperate and collaborate with international institutions, agencies, or organizations in the fight against money laundering; detect and investigate money laundering cases; execute any request for assistance referred to ICAC by the FIU; take such measures as may be necessary to counter money laundering in consultation with the FIU; and cooperate and collaborate with the FIU in fulfilling common objectives (Section 20(1l) (o), (p), (q) and (r) POCA).

339. The text of POCA is somewhat inconsistent with respect to the initiation of an investigation by the ICAC: the list of functions under Section 19 POCA indicates that the ICAC may only initiate an investigation on the basis of a prior referral from the FIU (Section 19(1) (o)). The POCA was amended in 2006 to provide for two further cases, namely, to enable the initiation of an ICAC investigate money laundering after referral from the Commissioner of the Police (Sections 45(2) a), as well as on the ICAC’s own initiative (Section 46(1) (a)), but the list of functions in Section 19 was not updated accordingly. A reading of Section 19 could only therefore, give rise to misinterpretation.

340. The ICAC may, with the approval of the DPP, lead the prosecution of the cases that it has investigated when the cases are lodged before the Magistrate’s Court or the Intermediate Court.

341. The Mauritius police force has a total of 12,469 officers which includes some 4,000 to 5,000 police officers in uniforms (see organizational chart annexed).18 Two branches may investigate money laundering cases, the Central Crime Investigation Division (CID) and the Anti-Drugs and Smuggling Unit (ADSU):

  • The Central CID is a specialized unit of the Mauritius Police Force, which deals with sensitive cases and cases involving larger public interest. It deals with all the cases of bribery, fraud, homicides and, to some extent, money laundering. It has several separate units, two of which may be called upon for an investigation into money laundering: the Special Cell (which deals with large or complex cases and has a staff of 10) and the Fiscal unit (which investigates tax evasion and has a staff of 12 who may be called to assist the Special Cell with the investigation of money laundering cases). Most of the police officers in the Special Cell have received some form of training in AML/CFT on an ad hoc basis. It is unclear whether investigators from the Fiscal Unit have received any training in AML matters. There is no general training on AML/CFT. In complex money laundering cases, the CID either calls upon external experts to help with the investigation (such as experts from the Bank of Mauritius when complex banking records are collected), or, as in most cases, refers the matter to the ICAC.

  • The ADSU’s main responsibilities are to suppress the supply of illicit drugs, arrest drug offenders (Consumers and Traffickers) and have them prosecuted, locate and destroy illicit cannabis plantations, prevent the entry of illicit drugs at the airport/seaport and through Postal Services, and prevent and detect smuggling. It is also responsible for the investigation of money laundering offenses under the Dangerous Drugs Act. Other functions include the enforcement of laws relating to other crimes which have a bearing on the drugs network, such as larcenies, gambling and prostitution.

342. Overall, the police’s role in the investigation into money laundering cases is marginal; most of the cases are investigated by the ICAC and the police only investigate the (few) cases that are referred by the FIU and those that are part of an investigation into drug offenses under the DDA.

343. As is the case for the ICAC, the DPP may, in certain cases, delegate to the Police the prosecution of cases brought before the magistrate’s Court and the Intermediate Court. The Central CID has a team of “prosecutors,” in other words police officers who underwent a specific training that enables them to handle cases in court.

344. A National Security Service was established under Section 18 of the Police Act (although under a different name), mainly to obtain, correlate and evaluate intelligence relevant to national security, and communicate to the relevant law enforcement agencies and to the Prime Minister such intelligence that may be considered in the interest of national security. Should a case of terrorism or terrorism financing arise, it would be investigated by the National Security Service.

345. The Attorney General is the principal legal adviser to the Government of Mauritius. All actions made by or against the government are made in the name of the Attorney General. Most of the Attorney General’s functions are exercised by the Solicitor General’s and the Director of Public Prosecution’s departments.

  • a) The Solicitor General is the highest public officer of the AGO after the Attorney General. He advises the State and the various departments; handles major litigation in which the State, its agencies, or officers, is a party. This includes defending the State in the different courts as well as filing suits on behalf of the State. His main roles are to handle civil matters, tender legal advice to government departments and ministries in an independent and impartial manner, and work in close collaboration with the Parliamentary Counsel and other law officers in the drafting of all legislations. He also defends the interests of the State in the superior courts including the Privy Council.

  • b) The Director of Public Prosecution (DPP), assisted by a number of Law Officers, advises on criminal cases and represents the State in major criminal matters before the Courts. He may also offer advice to the various law enforcement agencies with respect to the conduct of enquiries. Pursuant to Section 72 of the Constitution, the DPP exercises its function in full independence and is not subject to the direction or control of any other person or authority. The office of the DPP, therefore, effectively operates independently of the Attorney-General and of the politicians in the exercise of its powers.

  • Pursuant to Section 72(3) of the Constitution, one of the DPP’s main powers is to institute and undertake criminal proceedings before any Court of law (not being a Court instituted by a disciplinary law). These powers may be exercised by the DPP in person or through other persons acting with his general or specific instructions. In practice, most cases are prosecuted by the AGO’s Senior Officers. In a number of cases, however, including money laundering cases, the DPP may delegate the prosecution “externally” and may authorize public authorities, such as the Police and the ICAC, to lead the prosecution of the cases that they have investigated.

346. Although the Solicitor General’s and the DPP’s functions are entirely separate, the AGO officers cumulate functions in both. In other words, they may be called upon to prosecute civil matters on a specific day and criminal matters on another19. No specific AML/CFT training is provided but some of the staff have been to various workshops organized overseas.

347. The Commissioner of the Drug Assets Forfeiture Office (DAFO) is responsible for inquiring into the funds and other assets of persons convicted under the DDA and referred for enquiry by the DPP. After completion of the enquiry, it is his duty to send a report to the DPP. He may either recommend the revocation of the freezing order made the Court, or an application for forfeiture of the assets. He is appointed under the DDA by the Prime Minister and acts independently addition to the Commissioner, the DAFO currently has a staff of 11 investigators, many of whom have worked for the police (and the ADSU in particular).

Ability to Postpone/Waive Arrest of Suspects or Seizure of Property (c. 27.2):

348. Only the police may arrest suspects and seize property without a court order. Both CID and ADSU Police officers may postpone or waive the arrest of suspected persons and/or the seizure of the money for the purposes of identifying persons involved in such activities or for evidence gathering. They may use their own discretion in the matter and suspend the arrest or the seizure on the merits of the case. The ICAC does have seizing powers, but they are limited and do not extend to seizing the proceeds of crime.

Additional Element - Ability to Use Special Investigative Techniques (c. 27.3):

349. Section 55 of the DDA specifically makes provision for the recourse, by the police, to controlled delivery (and, by extension, related undercover investigations) for the purposes of an investigation led by the ADSU. A police officer not below the rank of superintendent of police may authorize the passage or entry into Mauritius of any consignment of dangerous drugs suspected of being dispatched with a view to the commission of an offense under the DDA, for the purpose of identifying the persons involved in the commission of the offense. The police officer may, in addition, cause the consignments to be lawfully intercepted and allowed to proceed upon its way either intact or after seizure of the dangerous drugs contained therein and may also direct their replacement by substances other than dangerous drugs.

350. The POCA does not provide the ICAC with similar powers to use special investigative techniques.

351. Terrorist financing: The Police Act enables the National Security Service “to do all such other things as may be necessary” for the proper performance of its functions (Section 18). Provision is made for intelligence gathering under Section 25 POTA, but it relates to investigations into acts of terrorism and not terrorism financing.

Additional Element - Use of Special Investigative Techniques for ML/FT Techniques (c. 27.4):

352. Controlled deliveries and undercover operations are undertaken by the ADSU but their extent remained undisclosed.

Additional Element - Specialized Investigation Groups - Conducting Multi-National Cooperative Investigations (c. 27.5):

353. There are no permanent or temporary groups in place that specialize in investigating the proceeds of crime other than the ICAC and the Police. “Horizontal groups” are not a common feature of the Mauritian government, although the police has, in some instances, required the help of experts from the central bank to assist in police investigations.

Additional Elements - Review of ML & FT Trends by Law Enforcement Authorities (c. 27.6):

354. No review of the money laundering trends has been conducted so far. The same applies for terrorist financing since no elements of the offense have been detected in Mauritius.

Ability to Compel Production of and Searches for Documents and Information (c. 28.1):

355. All authorities responsible for the investigation of money laundering and terrorist financing cases have the necessary powers to compel production of transaction records and any other relevant documents, either on their own initiative (ICAC, in certain circumstances) or, more generally, with the necessary court order.

356. Pursuant to Section 52 of the POCA, the ICAC may, where it has reasonable grounds to believe that there is, on specified premises or in any place of business, evidence which may assist in its investigation, issue a warrant authorizing its officers to enter and search the premises and remove therefrom any document or material which may provide evidence relevant to the investigation conducted by ICAC. Although the wording of the law does not specifically say so, the premises that the ICAC is empowered to search include all premises and places of business with exception of banks. This limitation is a result of the confidentiality requirements set out in Section 64 of the Banking Act.

357. For the disclosure of information from financial institutions such as banks, the ICAC must apply for a court order under Section 54 of the POCA 2002. This particular section and section 39 (now repealed) of Banking Act 1988, created some level of confusion as to the procedure to be adopted for such disclosures during the first years following the establishment of ICAC. This confusion was especially due to the lack of precision in the wording of Section 54 of the POCA 2002. It gave rise to two possible interpretations of the said Section, one of which contended that the ICAC should apply to the Judge in Chambers before it could gain access to such financial information, while the other suggested that Section 39 (now repealed) of the Banking Act 1988 expressly permitted the ICAC to have access to such financial information without the need to go before a Judge in Chambers. According to ICAC’s 2003–04 annual report, this confusion in the law created many obstacles in the investigations carried out by the ICAC inasmuch as banks were refusing to comply with the orders for disclosure issued by ICAC under Section 54. The legislator intervened by enacting Section 64 of the Banking Act 2004 which made it clear that the ICAC should apply to the Judge in Chambers for an order of disclosure in all the cases where information from financial institutions was required for the purposes of an investigation under the POCA. Since then, several such applications have been made. Orders for disclosure have been granted upon the Judge in Chambers being satisfied that there existed reasonable suspicion in each case that warranted the application.

358. Police officers investigating a money laundering offense under the FIAMLA must also apply for a court order for disclosure in order to lift the confidentiality requirement of the Banking Act.

359. All information obtained in application of Sections 52 and 54 may be used as evidence in the prosecution of the money laundering offense or the predicate offenses, as well as in related actions such as freezing and confiscation measures.

360. On the orders for disclosure: the ICAC expressed some concerns about the value of the FIU report for the purposes of its own investigation and about the difficulty to obtain orders for disclosure of financial records held by banks. As mentioned above, pursuant to the Banking Act, banking records may only be provided on the basis of a Court order for disclosure. To obtain the order, the ICAC must show sufficient evidence to enable the Judge to form an opinion on the validity of the application. According to the ICAC, the information provided by the FIU is not sufficient to satisfy the Judge that the application is legitimate and does not constitute a “fishing expedition.” This is in particular the case when the dissemination reports refer to money transfers initiated outside Mauritius without providing any information on the nature of the suspicious transaction or the predicate offense. The ICAC, therefore, claimed that it finds itself in a “Catch 22” situation whereby it must gather sufficient information to apply successfully for an order, but cannot provide the necessary information in the absence of a court order. The assessors found, however, that the information gathered and disseminated by the FIU was adequate and relevant (see write up under Recommendation 26). It seems, therefore, that the problem lies more in the authorities’ (including the judges’) understanding and perception of the purpose of the FIU’s disseminated reports rather than in the quality of the reports themselves. It is common practice for disseminations from administrative-style FIUs, such as the one in Mauritius, to be used purely as intelligence vehicles rather than as evidence. Their purpose is to provide leads and to enable the investigative authorities to focus, and not to provide hard evidence. The problem raised by the ICAC seems to call for additional training and education of the authorities involved, and the judges in particular, rather than for a change in the FIU’s practice.

361. Under the DDA, the police may apply for a court order granting access to all relevant documents. Where the Judge in Chambers is satisfied by information on oath that there are reasonable grounds to suspect that a money laundering offense (and others under the Act) has been or is likely to be committed, he may issue a warrant authorizing any police officer to have access to all bank, financial, and commercial records that may reasonably concern transactions related to the offense (Section 56 (d) DDA). The Judge may also place a bank account under surveillance when it is suspected of being used for operations related to the offense, and may authorize the police officer to tap or place under surveillance the telephone lines used by the person suspected of participation in the offense, for a period not exceeding 6 months, and to have access to, or place under surveillance, the computer system used by the suspect (Section 56 (a) and (b) DDA). All information obtained in application of Section 56 may be used as evidence.

362. The Commissioner of the Drugs Assets Forfeiture Office, the DAFO, also has specific powers to gather the necessary information. He may summon any person, including any bank or other body or organization, to give evidence or to produce any record, book, document, or other article or to make any disclosure relating to the possessions of the convicted person or his family (Section 45 subsection 4 of the DDA). These powers are vested in the Commissioner himself and do not require prior application for a court order. All provisional measures are taken by the Judge (cf write-up under Recommendation 3). The information obtained will be used in the Commissioner’s report to the DPP.

363. There are no specific provisions that would apply to investigations into a terrorist financing offense. The powers vested upon the police are, therefore, the same as under the FIAMLA and a court order is necessary to obtain information from and search the premises of banking institutions.

  • c) seize and obtain records, etc.

364. The ICAC may apply for an attachment order under Section 56 of the POCA 2002 when it has reasonable grounds to suspect that a person has committed a money laundering (or corruption) offense. Attachment orders are granted by the Judge in Chambers provided that the latter is satisfied that the suspicion of the Commission is reasonable. The consequence of the order being granted is the temporary attachment in the hands of third parties money or property belonging to a suspect and the prohibition of the transfer or disposal of such money or property so attached, except in such manner as may be specified in the order. The ICAC is responsible for ensuring that the order of attachment is made public, in the Gazette and in at least two daily newspapers, and to give notice of the order to all notaries, banks, financial institutions, and cash dealers, as well as any other person who may hold or be vested with the property belonging to or held in behalf of the suspect (Section 56(3) of the POCA). Unless revoked by the Judge before then, the order remains in force for 60 days and may be renewed for successive periods of 60 days on application made by the ICAC (Section 57 of the POCA).

Power to Take Witnesses’ Statement (c. 28.2):

365. Unlike the police, the Director-General of the ICAC may (without the need for a prior application to the Court):

  • (a) order any person to attend before him for the purpose of being examined;

  • (b) order any person to produce before him any book, document, record or article;

  • (c) order that information which is stored in a computer, disc, cassette, or on microfilm, or preserved by any mechanical or electronic device, be communicated in a form which is visible and legible;

  • (d) by written notice, order a person to furnish a statement in writing made on oath or affirmation setting out all information which may be required under the notice. (Section 50 of the POCA as amended in 2005).

366. In carrying out his investigation, the Director-General of the ICAC may conduct such hearings as he considers appropriate and has discretion as to whether to conduct the hearings in public or in private (Section 50 of the POCA).

367. No such hearings have been conducted since the inception of the ICAC because their procedural aspects have not yet been defined. Pursuant to Section 87 of the POCA, it is the Prime Minister’s prerogative to issue the necessary regulation. At the time of the assessment, the ICAC was working on a proposal for such regulation.

368. The other authorities involved in money laundering investigations do not have the powers to take witness statements.

Adequacy of Resources to Law Enforcement and Other AML/CFT Investigative or Prosecutorial Agencies(c. 30.1):

369. The number of officers in charge of money laundering investigations in the police is not high but overall nevertheless seemed sufficient considering the fact that most cases are investigated by the ICAC. While it makes sense for the ADSU to investigate money laundering offenses under the DDA, the need for a division of labor within the CID (i.e., between the Special Cell and the Fiscal Unit) is less obvious and the actual role of the Fiscal unit in money laundering cases was not made entirely clear. The number of police officers who may conduct prosecutions is unclear, so is their training: while it is clear that they receive general prosecutorial training, the mission was not aware of that training addressing the prosecution of money laundering cases under the FIAMLA and the DDA.

370. The ICAC has a large number of staff, most of which is, however, dedicated to the fight against corruption.

371. The fact that the AGO’s senior officers deal both with civil and criminal work, as opposed to being specialized in one type or the other, does not necessarily raise concerns in the sense that money laundering cases are usually prosecuted by the same persons who have become specialized in the matter through practice20.

372. The delays observed in the issuance of court orders necessary for the purposes of the investigations led by the ICAC or the Police would tend to indicate that the resources of the Courts are not sufficient to absorb all aspects of their work.

Integrity of Competent Authorities (c. 30.2):

373. The “Principles of Police Ethics” require all police officer to act with fairness and to carry out their functions with integrity and impartiality. They also upon them to perform their duties with diligence, making proper use of their discretion and set out the circumstances under which they may, if necessary, have recourse to the use of force.

374. The employment of ICAC staff is governed by the ICAC “General Conditions of Service, Code of Conduct and Procedure for Discipline”. Upon signing a contract of employment, any new staff must accept in writing the terms of the General Conditions and must take an oath of secrecy for all matters relating to his or her employment. Under the General Conditions, he or she must also ensure that none of his or her assets bring him or her into conflict with his or her duties. There is however no additional requirements dealing with staff integrity and ethics.

375. No information was provided for the other relevant authorities.

Training for Competent Authorities (c. 30.3):

376. The ICAC has organized a training for its staff on AML measures with the assistance of the Office of Technical Assistance (OTA) of the United States’ Government. A two-week course was provided in early 2007 and regular visits from the OTA mentor to the ICAC have been scheduled over a period of two years. None of the other authorities responsible for the investigation and the prosecution have been provided or have organized comprehensive AML training for their staff, but several of the persons met had participated in ad hoc seminars and workshops conducted overseas by other countries or international organizations.

377. Some authorities have explicitly expressed the wish for further training in anti-money laundering measures and procedures, as well as in money laundering trends. The assessors found that further training and education would be beneficial overall.

Additional Element (Rec 30) - Special Training for Judges (c. 30.4):

378. No AML training is provided to judges of the Intermediate and Supreme Courts who try money laundering cases lodged before them under the FIAMLA and the DDA and the mission was not made aware of their participation in ad hoc seminars abroad.

Implementation and Statistics (applying R.32):

379. The police officers and the ICAC regularly make use of the powers vested upon them by the various acts and regularly apply for court orders granting them access to the necessary documents, or allowing them to search and seize as necessary. According to the authorities, the delivery of the court order is usually fairly swift, but can take up to one month depending on the judge’s availability.

380. The ICAC issued some 40 search warrants in money laundering investigations. The number of court orders that it requested are set out below:

Table 21.

Applications made by the ICAC to the Judge in Chambers for ML investigation

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381. See also the statistics under Recommendations 1 and 2 for the number of ML investigations conducted.

382. It seems that in some instances, the need of the investigative authorities is not particularly well understood by the Judges in Chambers, in particular with respect to the disclosure of financial records. Further training, not only on money laundering techniques but also on the functioning of the overall framework and the respective roles of the various authorities involved seems particularly

383. Overall, the authorities appear to have sufficient powers to conduct their respective functions in an appropriate fashion, but the need for AML/CFT training was perceived by the assessors as important in a number of instances and in particular within the police, ICAC, and the judiciary.

2.6.2 Recommendations and Comments

  • The authorities are recommended to reconsider the division of money laundering cases (other than drug-related cases) within the Central CID and, if the division is maintained, ensure that the respective roles, functions, and powers of both units are clearly defined;

  • They are further recommended to ensure that attachment orders may be provided on a timely basis;

  • In order to facilitate the investigations of money laundering cases initiated on the basis of an STR, it is recommended that the authorities ensure that all the relevant authorities involved in the investigation, prosecution, and trial of money laundering cases have a common understanding of the purpose and the use of the FIU reports as intelligence (as opposed to evidence) which should provide sufficient grounds to initiate and focus subsequent investigations, as well as to obtain the necessary court orders for disclosure of any necessary records, including bank records.

  • It is also recommended that further training on Mauritius’s AML/CFT framework and on money laundering as well as terrorist financing trends and typologies is provided to all authorities involved in the fight against money laundering and terrorist financing.

  • On a minor point and in order to avoid any confusion as to the initiation of ICAC-led investigations into money laundering cases, it is also recommended that the authorities bring the wording of Section 19(1) (0) of the POCA in line with the possibilities offered by Sections 45(2) (a) and 46(1) (a) of that same act.

2.6.3 Compliance with Recommendations 27 & 28

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2.7 Cross Border Declaration or Disclosure (SR.IX)

2.7.1 Description and Analysis

Mechanisms to Monitor Cross-border Physical Transportation of Currency (c. IX.1, IX.2, IX. 4):

384. In 2006, the Customs Act 1988 (the “Customs Act”) was amended to include a provision on cash couriers set out in Section 131A. In February 2007, a disclosure system was implemented by the Customs Authority (which, since July 2006, has been a part of the Revenue Authority). Section 131A(1) of the Customs Act allows the Director General of Customs (defined by Section 4 of the Mauritius Revenue Act to include any customs officer) to, “on reasonable grounds, require any person making a physical cross-border transportation to make a written truthful disclosure on a form approved by the Director-General, of the amount of currency or bearer negotiable instruments in his possession, their origin and their intended use.” Such disclosures are kept by the Customs Authority at their headquarters.

False Disclosure of Currency (IX.2)

385. Section 131A(2) states that “any person making a disclosure under subsection (1) may be questioned by an officer on the particulars of the disclosure and in the course of any questioning, the officer may inspect the person’s travel documents including passport or laissez-passer and tickets.” Section 131A(3) states that “where an officer has reasonable cause to believe that the disclosure made by a persons under subsection (1) is false or misleading in any material particular, the officer may detain and search the person in accordance with section 132.” Section 132 allows a customs officer to detain and search a person whom the officer believes is unlawfully carrying any goods subject to the control of Customs or any prohibited goods. Banknotes are classified under the “H.S. Code,” heading 49 07.003 in the first schedule of the Customs Tariff Art 1969 and are therefore subject to customs control. This allows Customs to detain currency where there is a false disclosure.

386. While the Customs Act provides that the disclosure provisions apply to both inbound and outbound transportation of cash in that “physical cross-border transportation” is defined to mean in-bound or out-bound physical transportation of currency or bearer negotiable instruments from one country to another country, in practice, the Customs Authority only has a presence in the arrivals hall of the airport and at the arrivals area for ferries which come in from Madagascar, Reunion Island and Rodrigues. Customs officers are only available in the departure area of the airport if they receive credible information in advance that someone of interest is leaving Mauritius. After the onsite visit, the Customs Authority indicated that they are now present on a more regular basis in the departure area of the airport21. Customs have indicated that they will be present in all departure halls at the ports in 2008. Containers are x-rayed with large container x-ray machines on a sampling basis. Approximately 10 percent of containers are x-rayed. A smaller x-ray machine will be in service by the end of 2007 at the new courier facility located near the airport. DHL has the largest amount of courier business in Mauritius. Customs officers will be present at this facility in 2008.

387. Inbound suitcases at the airport are x-rayed on a random basis by a private local security company employed by the airports authority. All departing suitcases are x-rayed but the private local security company is looking for weapons and explosives and not for cash or bearer instruments. There is currently no screening of hand luggage although the Customs Authority is in the final stages of seeking tenders for four hand screening machines which will be placed at the arrivals hall at the airport, the main post office, a new courier facility which is located at the airport for parcels, and at the ferry terminal for ferry passengers coming in from Madagascar, Reunion Island, and Rodrigues. These machines should be in place at the above locations by mid 2008.

388. Note also that only inbound and outbound persons can be stopped and searched. The law does not apply to transit passengers.

Restraint of Currency (c. IX.3):

389. Under Section 131A(4), if the customs officer suspects that the money or bearer negotiable instrument disclosed is involved with money laundering or terrorist financing, the officer must refer the matter to the police. In this case, the currency will be restrained.

390. After the on site visit, the authorities advised the mission that in the case under Section 131A(3), where the officer has detained the person because the officer believes that there is a false or misleading disclosure, the currency will be restrained. This is legally possible under Section 151(a) of the Customs Act which states that: “the following goods may be seized by an officer (a) all goods imported into Mauritius, including but not limited to those listed below in relation to which an offense under the customs laws is reasonably suspected to have been committed by any person.” Section 131(5) creates an offense for a person making a false or misleading disclosure, fails to answer questions under Section 131A(2) or who refuses to make a disclosure. Therefore, the Customs Authority has the power to restrain the currency. Large amounts of currency will be transferred by the Customs Authority to the Central Bank for safekeeping until the matter is disposed of. Smaller amounts are kept in the Customs safe at the Port or the Airport.

Access of Information to FIU (c. IX.5):

391. While the Customs Authority keep the written disclosures made by passengers, the FIU has no direct access to them. The Customs Authority advised the mission after the on site meeting of cases where there have been detentions of currency through false or misleading disclosures. There is, however, no legal provision which authorizes the Custom’s Authority to make such disclosures to the FIU22.

Domestic Cooperation between Customs, Immigration and Related Authorities (c. IX.6):

392. There is coordination to some degree with the drugs police. When hard drugs (usually heroin) are detected, usually in small amounts of one kilo, the drugs are seized by the Customs Authority and turned over to the ADSU group of the police (who are responsible for drugs interdiction) who use the drugs to conduct controlled delivery operations). The Customs Authority have contacted the police in relation to two cases of cross boarder transport of cash or precious metals. After the onsite mission, the authorities advised that one case has already been prosecuted and another is underway. No case of money laundering or terrorist financing has been reported to the police by customs to date.

393. There is a legal gateway for this cooperation under Section 131A(4) where the Customs Authority suspect money laundering or terrorist financing. Section 10(2) of FIAMLA also allows the Customs Authority to cooperate with the FIU regarding AML/CFT matters. While the Customs authority will advise the FIU about areas of concern as well as specific cases, it does not always do so in a timely manner. Recent possible cases of money laundering are currently being investigated by customs but they will not advise the FIU or the police until they have completed their investigations.

International Cooperation between Competent Authorities relating to Cross-border Physical Transportation of Currency (c. IX.7):

394. Mauritius has entered into Customs Mutual Administrative Agreements (CMAAs) with a number of countries. Mauritius has signed CMAAs with The Kingdom of Belgium, the Islamic Republic of Pakistan, the Republic of Madagascar, France, the United States and the Netherlands. The Customs Authority is also a member of the WCO.

Sanctions for Making False Declarations / Disclosures (applying c. 17.1-17.4 in R.17, c. IX.8 and Sanctions for Cross-border Physical Transportation of Currency for Purposes of ML or TF (applying c. 17.1-17.4 in R.17, c. IX.9):

395. Section 131A(5) creates an offense for making false disclosures, refusing to answer questions or refusing to make a disclosure under Section 131A. Sanctions for conviction of this offense include a fine not exceeding 500,000 rupees and imprisonment for a term not exceeding three years. In practice, if a passenger is convicted of a false statement, the person would be free to leave Mauritius when that person has paid their fine. For example, in one case, the person was fined 50,000 rupees by the Supreme Court but had the seized money restituted to him under the same court order.

396. There is no specific offense or sanction in the Customs Act for persons who carry out a physical cross-boarder transportation of cash for money laundering or terrorist financing purposes. For this, the authorities rely on the money laundering and terrorist financing offenses in the FIAMLA and the terrorist financing legislation, respectively.

Confiscation of Currency Related to ML/FT (applying c. 3.1–3.6 in R.3, c. IX.10):

397. Currency seized at the border cannot be confiscated under the provisions of the Customs Act. The police would need to investigate the matter as a money laundering or terrorist financing case. Only after conviction could the money be confiscated. There have been three cases so far regarding seizure of cash or precious metals at the border where Customs has detained currency or precious metals from passengers coming from directly from Madagascar to Mauritius. In two of the cases, the customs authority in Madagascar have asked for the currency (cash amount of approximately $113,300 US in one case and 15,400 Euros and $10,000 US in another case) to be restituted to Madagascar pending legal proceedings in that jurisdiction. See paragraph 399 for a discussion of the third case.

Confiscation of Currency Pursuant to UN SCRs (applying c. III.1–III.10 in SR III, c. IX.11):

398. While the Customs Authority receives the 1267 UN list, it has no means to implement the list until it is able to purchase an upgraded computer system. The Customs Authority does not receive any lists under UNSCR 1373.

Notification of Foreign Agency of Unusual Movement of Precious Metal and Stones (c. IX.12):

399. Customs has seized 28 kilograms of gold as well as approximately US$40,000 and approximately 83,000 Euros from a passenger in transit from Madagascar to Dubai. The matter is before the Supreme Court but unless there is a separate case brought regarding the gold being the proceeds of crime, the gold will be returned to the passenger. As gold is a “good subject to the control of customs,” seizure is available to the customs authority. After the on site mission, the authorities advised the mission that proceedings for restitution of the gold and cash have been initiated by the passenger in the Supreme Court of Mauritius. The case is ongoing.

400. Safeguards for Proper Use of Information (c. IX.13): the disclosures which have been made since the inception of the disclosure system are retained by the Customs Authority but are shared with the FIU. There is no legal gateway for the sharing of this information.

2.7.2 Recommendations and Comments

  • Apply the disclosure system to outbound cross-border transport of currency;

  • Adopt a coordinated approach to passenger profiling using an intelligence led model in conjunction with other law enforcement agencies and develop better intelligence though implementation of Advance Passenger Information;

  • Revise the Customs law or regulations in order to provide legal gateways for information sharing with the FIU and international customs authorities;

  • Add “transit passengers” within the ambit of Section 131 of the Customs Law to cover this specific risk; and

  • Ensure there are proper legal gateways for coordination with the FIU, other enforcement agencies at both the local and international levels and implement such coordination.

Compliance with Special Recommendation IX
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3 Preventive Measures—Financial Institutions

Customer Due Diligence & Record Keeping

3.1 Risk of money laundering or terrorist financing

401. As the Mauritius economy becomes more global, the risk of money laundering increases. For example, as the International Resorts Schemes program increases, more foreign high net worth individuals will be buying expensive resort property in Mauritius and settling the transactions through the Mauritius banking sector. The Bank of Mauritius is well placed to monitor this increased business risk. With regard to the balance of risk of money laundering and terrorist financing to financial institutions, the mission concluded that the potential risk was greater in the banking sector—the sector regulated by the Bank of Mauritius—than the other sectors. The banking sector is the largest sector, it appears to be more international in its outlook and it is actively seeking to attract customers from outside Mauritius. The customer bases of the insurance and investment sectors—regulated by the FSC—are generally domestic, although some investment firms are successfully attracting foreign customers. The mission has taken account of this balance of risk in the ratings it has issued for section three.

402. Historically, the FSC has concentrated its focus on management companies, which administer legal persons and legal arrangements which it considers to have a higher risk of money laundering than other sectors that it regulates.

3.2 Customer due diligence, including enhanced or reduced measures (R.5 to 8)

3.2.1 Description and Analysis

403. The Financial Intelligence and Anti-Money Laundering Act 2002 and the Financial Intelligence and Anti-Money Laundering Regulations 2003 (as amended in 2005) are the primary legislations that impose the adoption of preventive AML/CFT measures on financial institutions. Section 17 of the FIAMLA lays down the requirement for a financial institution to undertake verification of identity of all customers and other persons with whom they conduct transactions and to keep records. These requirements are bolstered by Section 55 of the Banking Act 2004, which provides that only persons whose true identity has been established may open an account for deposits of money.

404. Two regulatory bodies are particularly relevant when considering the AML/CFT measures required of financial institutions. The Bank of Mauritius is responsible for banks, nonbank deposit taking institutions (mainly leasing companies which are regulated by the Bank of Mauritius for deposit-taking activities and also by the FSC for their leasing activities) and cash dealers. It has issued Guidance Notes on Anti-Money Laundering and Combating the Financing of Terrorism. Until the mission, the FSC operated under the Financial Services Development Act 2001. This Act was replaced by the Financial Services Act 2007 during the mission. Until the mission the FSC regulated investment and insurance institutions under the Insurance Act, the Securities (Central Depositary, Clearing and Settlement) Act, the Stock Exchange Act, the Unit Trust Act and any trustee managing a unit trust established under the Unit Trust Act. During the evaluation, a new Insurance Act 2005 and a new Securities Act 2005 came into force, which repealed the Stock Exchange and Unit Trust Acts, although there are savings provisions. The FSC has issued a Code on the Prevention of Money Laundering and Terrorist Financing intended for Investment Businesses and a Code on the Prevention of Money Laundering and Terrorist Financing intended for Insurance Entities.

405. The Bank of Mauritius is a long-established supervisory body. It was clear to the mission from meetings with the Bank and with institutions it regulates and supervises that the central bank has a thorough and professional grip on institutions. It knows its institutions and treats breaches of standards seriously.

406. Section 50(5) of the Bank of Mauritius Act 2004 specifies that any person who does not comply with guidance issued under Section 50(4) (for example, the Bank of Mauritius Guidance Notes on AML/CFT) shall commit an offense and shall, on conviction, be liable to a fine not exceeding 500,000 rupees and to imprisonment for a term not exceeding five years. Similarly, Section 100(4) of the Banking Act 2004 provides that any person who fails to comply with guidelines issued under Section 100 (for example, the Bank of Mauritius Guidance Notes on AML/CFT) shall commit an offense and shall, on conviction, be liable to a fine not exceeding 100,000 rupees and to imprisonment not exceeding 2 years. These two laws provide strong penalties for breaches of the Bank of Mauritius Guidance Notes on AML/CFT. A number of the FATF Criteria in the methodology are required to be in law or regulation issued or authorized by a legislative body. As the Bank of Mauritius Guidance Notes are not law or regulation under the FATF’s Methodology (notwithstanding the criminal penalties that apply to breaches of the Guidance Notes), they cannot be treated as law or regulation when considering the asterisked Criteria in the Methodology.

407. Under the Methodology, a number of the Criteria may be met by “other enforceable means” rather than by law or regulation. Other enforceable means refers to guidelines, instructions, or other documents or mechanisms that set out enforceable requirements with sanctions for noncompliance and which are issued by a competent authority (e.g., a supervisory body) or an SRO. Implementation of the framework is a key element in assessing enforceability. The sanctions for noncompliance should be effective, proportionate, and dissuasive.

408. The Bank of Mauritius has issued detailed Guidance Notes on AML/CFT which generally appear to be implemented by financial institutions. The Guidance Notes are subject to sanction and the Bank of Mauritius has applied sanctions for failures of their licensees regarding AML/CFT measures. For the purposes of this report, the Guidance Notes are treated as enforceable.

409. Following its meetings with executives of the Bank of Mauritius and representatives of financial institutions that it licenses, the mission concluded that the Bank of Mauritius has adopted a very serious and professional approach to countering money laundering and terrorist financing, and that it has made strong efforts to supervise and monitor its licensees in this regard.

410. The FSC has issued AML/CFT Codes to its various members. Until the enactment of the new Financial Services Act during the evaluation, the FSC had a comparatively limited range of sanctions in respect of AML/CFT. Administrative enforcement action was limited to the issue of directions to comply with the Codes and the revocation of licenses. In discussions during the evaluation some FSC executives advised that they felt they would have had difficulties in applying sanctions for breaches of the Codes due to possible lack of legal authority. In March 2008, the FSC’s Chief Executive indicated to the mission that he was of the view that the FSC had the regulatory powers at the time of the onsite mission to impose sanctions. Therefore, there was a reluctance to apply sanctions except where there had been a court determination of a case or the licensee in question approached the FSC with a concern about their own operation. Examples of sanctions which had been issued were not provided during the evaluation. Nevertheless, after the mission, the FSC provided examples of directions issued to insurance companies in respect of poor AML/CFT measures. In light of this, the mission considers the Codes to be enforceable. The mission found that some institutions subject to supervision by the FSC had sound AML/CFT measures in place, while other licensees were either not subject to Codes or compliance with the Codes was not complete (see the paragraphs on implementation below). Some licensees not subject to one of the Codes, such as leasing and factoring businesses, are subject to licensing conditions which require, inter alia, that such licensees should adopt, enforce and re-assess on an annual basis their AML/CFT frameworks.

411. The FSC has advised the mission that, where the risk of ML/FT was perceived to be relatively high, namely, with respect to investment businesses, the definition of Investment Businesses under the Code for Investment Businesses was extended by FSC to capture all operators within that sector. With regard to the other financial institutions it licenses, the FSC has advised that, for those not captured by the definition of financial institution under the FIAMLA, the risk of money laundering was perceived to be low and, therefore, no AML/CFT measures were issued by the FSC. Until the introduction of the new Financial Services Act, the statutory on-site inspection powers were limited.

412. The introduction of the Financial Services Act 2007 during the mission means that the FSC now has a much greater arsenal of powers of sanction and explicit on-site inspection provisions. Based on meetings with FSC staff, it was clear to the mission that, going forward, the FSC intends to use the tools in the new Act to enforce the AML/CFT framework it administers.

413. The foregoing should not detract from the significant efforts made by the FSC to conduct on-site inspections and to encourage a culture of AML/CFT compliance among institutions in the years prior to the mission.

414. Implementation of AML/CFT Measures across the Required Financial Institutions

415. A number of the types of financial institution as defined by the FATF are not covered by the Bank of Mauritius Guidance Notes or the FSC’s Codes. The Bank of Mauritius regulates deposit takers (banks and other deposit takers) and cash dealers (defined as persons licensed by the Bank to carry on the business of foreign exchange dealer or money-changer). The Banking Act 2004 includes in the definition of banking business such services as are incidental and necessary to banking. The Bank of Mauritius has successfully used this definition to license wire transfer service providers in Mauritius and consider the definition covers money and value transfer services. Nevertheless, the mission has concerns that in the absence of an explicit and clear provision bringing wire transfer providers into the Mauritius AML/CFT framework means the interpretation of the banking legislation by the Bank and the successful resolution of a challenge to that interpretation may be problematic. The mission has concerns that value transfer services are not covered by the legislation. Explicit provisions in legislation also do not cover the issuing and means to payment and trading in money market instruments.

416. The coverage of the supervisory framework of the FSC regarding nonbank institutions is demonstrated in the table below which specifies whether nonbank institutions in the FATF definition of financial institutions are covered by the AML/CFT legislative framework and the regulatory laws and license conditions issued by the FSC. As three new laws (the Financial Services Act 2007, the Securities Act 2005, and the Insurance Act (2005) came into force during the mission, the table demonstrates the position prior to the mission and during the mission (Y indicates that a type of institution is covered, X indicates that a type of institution is not covered).

Table 22.

Non-Bank Financial Institutions Licensed by the FSC

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FIAMLA - Financial Intelligence and Anti Money Laundering Act 2002

FSDA – Financial Services Development Act 2001 (repealed by FSA)

IA 87 – Insurance Act 1987 (repealed by Insurance Act 2005)

SEA 88 – Stock Exchange Act 1988

AML LC – AML Requirements imposed by FSC by way of Licensing of Conditions

FSC Codes – FSC Codes on the Prevention of ML and TF intended for Insurance Entities and Investment Business

FSA – Financial Services Act 2007

IA 05 – Insurance Act 2005

SA 05 – Securities Act 2005

Licensed under section 14 of the FSD Act.

These financial institutions will be either licensed under the FSA (Asset Managers – non securities) or under the Securities Act 2005 (Investment Advisers) depending on whether the assets will be non-securities or securities.

To be licensed under the Securities Act 2005.