Back from Black: Mauritius poised to exit Financial Action Task Force (FATF) list

This is the third in a series of posts around the ‘blacklisting’ of Mauritius by the European Union (EU) in 2020 and the steps that the jurisdiction is taking to ensure its removal from the list at the earliest opportunity. We are tracking the progress made by the Mauritian government in reversing this decision and any related developments.

A Financial Action Task Force (FATF) Africa/Middle East Joint Group (AME JG) delegation conducted an on-site assessment of Mauritius’s AML-CFT Framework from 13 to 15 September 2021. It met with the relevant representatives of ministries and authorities and visited the premises of a number of institutions.

Mauritius was placed on the FATF’s ‘grey list’ of jurisdictions subject to increased monitoring in February 2020 as a result of strategic deficiencies identified by the FATF in its AML/CFT system. As a consequence, it was also included (along with 11 other countries) on the EU’s revised list of high-risk countries that have ‘strategic deficiencies in their anti-money laundering and counter terrorist financing frameworks’ (AML-CFT Framework). The EU ‘blacklist’ became applicable on 1 October 2020.

Mauritius made a high-level political commitment to the FATF to address the strategic deficiencies identified and a committee headed by the Prime Minister was assembled to accelerate implementation of its FATF Action Plan and secure removal from the FATF list by September 2021.

The good news for Mauritius is that the FATF made a determination at its Plenary meeting in June that Mauritius had “substantially completed” its Action Plan. The FATF commended Mauritius for the progress achieved in addressing its strategic deficiencies, especially under difficult circumstances caused by the COVID-19 pandemic. Specifically, the FATF said Mauritius had made the following key reforms:

• Conducting outreach to promote understanding of ML and TF risks and obligations
• Developing risk-based supervision plans effectively for the Financial Services Commission
• Ensuring access to accurate basic and beneficial ownership information by competent authorities in a timely manner
• Providing training for law enforcement authorities to ensure that they have the capability to conduct money laundering investigations.

The AME JG assessment was to verify that implementation of its AML/CFT reforms had begun and was being sustained, and that the necessary political commitment remained in place to sustain implementation in the future.

In parallel, the applications made by Mauritius for an upgrading against FATF Recommendations 8, 24 and 33 were considered during the 21st Council of Ministers Meeting and 42nd Task Force of Senior Officials’ Meeting of the Eastern & Southern Africa Anti-Money Laundering Group (ESAAMLG), for 26 August to 7 September, and the island was re-rated as follows:

• ‘Non-Compliant’ to ‘Largely Compliant’ for Recommendation 8 (Non-Profit Organisations)
• ‘Partially Compliant’ to ‘Largely Compliant’ for Recommendation 24 (Transparency and Beneficial Ownership of Legal Persons)
• ‘Partially Compliant’ to ‘Compliant’ for Recommendation 33 (Statistics).

This means that Mauritius is now ‘Compliant’ or ‘Largely Compliant’ with 39 out of the 40 FATF Recommendations and is only now rated as ‘Partially Compliant’ in respect of Recommendation 15 (New Technologies).

All the measures taken so far demonstrate the unflinching commitment of the government of Mauritius to ensure the sustainability and effectiveness of its efforts to combat money laundering, terrorism financing and proliferation financing in the future and has further consolidated the local legislative and regulatory framework.

It is anticipated that Mauritius will now exit the FATF ‘grey list’ at the next FATF plenary meeting in October. When this is confirmed, the European Commission should then start the administrative process to remove Mauritius from its ‘blacklist’ of high-risk third countries.

Mauritius ranks first amongst the African countries and 13th globally in the World Bank’s Ease of Doing Business 2020 report and remains a domicile of choice for structuring cross-border investments into Africa and Asia.