FRAUD

Regulatory provisions and authorities

1. What are the main regulatory provisions and legislation relevant to corporate fraud?  

In Mauritius, there is no offence of corporate fraud. There are, however, offences in which there is an element of fraud. The main laws relevant to corporate fraud are as follows:

  • Mauritius Criminal Code (Criminal Code). This contains provisions on criminal offences relating to fraud.
  • Companies Act 2001 (Companies Act). This contains specific provisions dealing with corporate fraudulent activities.
  • Other laws dealing with offences that involve an element of fraud. These include the Prevention of Corruption Act 2002 (POCA) (see Question 7 to Question 16) and the Financial Intelligence and Anti-Money Laundering Act 2002 (FIAMLA).
  • Mauritius Civil Code (Civil Code). This contains provisions on fraud-related acts and conduct.

Offences

2. What are the specific offences relevant to corporate fraud?

The specific offences relevant to corporate fraud apply in relation to the following laws:

  • Criminal Code. Under the Criminal Code, fraud may occur in the form of:
    • larceny (section 301). This involves the fraudulent abstraction of property not belonging to the person, which is punishable with imprisonment and a fine of up to MUR100,000;
    • swindling (section 330). This involves the use of a fictitious name, a false character, or fraudulent pretences, to establish the belief of the existence of any fictitious operation, or is punishable by a penal servitude of up to 20 years, and by a fine of up to MUR150,000; and
    • embezzlement (section 333). This involves the embezzlement of any goods, money, valuables, security, bill, acquittance or other document containing or creating an obligation or discharge, which has been delivered in pursuance of any lease or hiring, deposit, agency, pledge, loan for use or for any work with or without a promise of remuneration with the condition that the same be returned or produced or be used or employed for a specific purpose, is punished by imprisonment and a fine of up to MUR100,000.
  • Companies Act. Fraud in the context of a company includes activities committed knowingly by a person who is party to a company with the intent to defraud the company’s creditors or any other person. Conduct that amounts to corporate fraud by a director of a company under the Companies Act includes (among others):
    • the use of false pretences to induce a person to give credit to the company;
    • the dishonest transfer of property; and
    • the fraudulent assignment of charge to a property of the company.
  • Other acts which also amount to corporate fraud by directors, employees or shareholders are:
    • the destruction, falsification, alteration or participation in the destruction, falsification of any register, accounting records, book, paper or other relevant documents or information which relates to the company; or
    • the making or participation in the making of false entries in any register, accounting records, books, paper or other relevant documents or information which relates to the company.
  • Civil Code. Under the Civil Code, conduct that involves an element of fraud are:
    • dol. This is where a person uses fraudulent acts in order to induce a party into doing something;
    • enrichissement sans cause. This is where a party is enriched without justification at the expense of another person.

ENFORCEMENT

3. Which authorities have the powers of prosecution, investigation and enforcement in cases of corporate or business fraud? What are these powers and what are the consequences of non-compliance? Please identify any differences between criminal and regulatory investigations.

Authorities

The authorities relevant to corporate fraud in Mauritius are the:

  • Mauritius Police Force. This is the national investigatory and law enforcement body for criminal offences in Mauritius.
  • Director of Public Prosecutions (DPP). The DPP has powers to prosecute criminal offences in Mauritius.
  • Financial Services Commission of Mauritius (FSC). See Question 20.
  • Mauritius Revenue Authority (MRA). The MRA administers and collects taxes due in Mauritius within an integrated organisational structure.
  • Independent Commission against Corruption (ICAC). See Question 12.
  • Financial Intelligence Unit of Mauritius (FIU). See Question 27.
  • Other regulatory bodies as identified under the FIAMLA. See Question 24.

Prosecution powers

The Criminal Procedure Act 1853 provides the DPP with the sole power to prosecute criminal offence in Mauritius (including for crimes of fraud).

Powers of interview

Police officers have the power to conduct interviews with suspected offenders or any witnesses or witnesses that appear to be involved in the alleged offence. Interviews are conducted at the police station and recorded in the form of statements. Interviews must be conducted in accordance with the Judges Rules (that is, guidelines that must be followed by police officers conducting investigations).

Powers of search/to compel disclosure

Police officers also have the power to conduct searches on property or articles used, or likely to have been used, in the commission of an offence (among other things).

Powers to obtain evidence

Evidence may be collected by police officers at the interview stage whereby the deponent may be required to communicate documentary evidence in his/her possession. Evidence can also be gathered by the police officer conducting the interview in the course of his/her inquiry into the alleged offence.

Further to their search powers, police officers can seize any incriminating articles which they believe has been obtained by means of an offence or used in the commission of an offence. Such articles must be produced in court at trial.

Power of arrest

The Police Act confers police officers with the power of arrest. A police officer may exercise his/her power of arrest, without warrant, where a person has committed an offence within his/her view and whose name and address cannot be immediately ascertained. Alternately, a police officer can arrest a person where he/she has reasonable grounds to believe a person has committed an offence, or is about to commit an offence, which is a danger to public safety or order.

4. Which authority makes the decision to charge and on what basis is that decision made? Are there any alternative methods of disposal and what are the conditions of such disposal?

The DPP makes the decision of whether to prosecute or not in cases involving corporate fraud. The process of prosecution requires the prosecutor to engage in a series of tasks.

First, the DPP must decide whether a particular act or omission by a defendant might reasonably be said to fall within the ambit of the criminal law. The DPP will have to consider (among other things):

  • The evidence on file and assess the reliability of such evidence in court.
  • The credibility of witnesses who will be called by the prosecution.
  • The persuasiveness of any potential lines of defence likely to be raised on behalf of the defendant.

Once this exercise is over, the DPP must decide whether to prosecute, or whether the case would be more appropriately dealt with by means of a caution or by taking no further action at all.

There is no written code that must be applied when making a decision to charge. However, the DPP must be consistent, fair, independent and objective. It must not let any personal views about the ethnic or national origin, gender, disability, age, religion, victim or any witness influence their decision. Members of the DPP must not be in any way affected by improper or undue pressure from any source, as the prosecutor has a duty to act in the public interest, not just in the interests of any one individual.

5. What are the sanctions for participating in corporate fraud?

Civil/administrative proceedings or sanctions

Corporate fraud under the Companies Act carries a fine of up to MUR1 million and a term of imprisonment of up to five years.

Criminal proceedings

Right to bail. The right to bail will apply to directors/officers of the company.

Penalties. The following sanctions apply to fraud offences under the Criminal Code:

  • Swindling is punishable with penal servitude for a term of up to 20 years, and a fine of up to MUR150,000.
  • Embezzlement is punishable with imprisonment and a fine of up to MUR100,000. If the embezzlement is 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, the punishment will be penal servitude for a term of up to 20 years.

Civil suits

For the tort of dol and enrichissement sans cause, the party may be sued for damages under the Civil Code.

SAFEGUARDS

6. Are there any measures in place to safeguard the conduct of investigations? Is there a process of appeal? Is there a process of judicial review?

Safeguards are in place under the Mauritius Constitution to ensure investigations are conducted properly.

The rights of the alleged offender must be respected at all times in the course of investigations to the extent required by the Constitution. These rights include (among others):

  • The right to be informed as soon as reasonably practicable of the nature of the charge.
  • The right to silence.
  • The right to retain the services of a barrister of his/her choice.
  • The right to be brought in a timely manner before a court of law.

Where there has been a violation of the fundamental rights of the alleged offender during investigation, the alleged offender can apply to the Supreme Court of Mauritius on the ground that his/her constitutional rights have been infringed. For instance, where a person is being detained for an unduly long period of time and is not being tried within a reasonable time, he/she may apply to the Supreme Court of Mauritius on the ground that his/her constitutional right to be tried within a reasonable time under section 5(3) of the Constitution has been or is being violated.

The writ of habeas corpus is another safeguard in the conduct of investigation. This is a procedure to secure the release of a person who has been unlawfully detained by the police. In the case of Kistoo v Commissioner of Prisons (1967) MR 1, the court described habeas corpus as “a safeguard for the subject against illegal detention”. The writ is made before the Judge in Chambers of the Supreme Court of Mauritius by way of an application. Victims who have been unlawfully arrested or detained by the police are entitled to compensation.

Another safeguard is a stay of proceedings for abuse of process. The offender can challenge the conduct of a trial on grounds that there has been an abuse of process based on delay or the methods used to investigate an offence. For instance, unfairness of an enquiry may lead to a stay of proceedings. If the enquiry has various irregularities or signs of arbitrariness against the offender, the court may conclude that there has been abuse of process and may accordingly order a stay of administrative decisions by the public bodies

However, the decision-making process of the DPP to prosecute the offender can only be challenged by way of judicial review before the Supreme Court of Mauritius.

Another course of action which may be taken is to appeal against the conviction and/or the sentence imposed by the court.

Bribery and corruption

Regulatory provisions and authorities

7. What are the main regulatory provisions and legislation relevant to bribery and corruption?

The main regulatory provision relevant to bribery and corruption is the POCA.

8. What international anti-corruption conventions apply in your jurisdiction?

Mauritius is signatory to the UN Convention against Corruption 2003 (Corruption Convention).

Offences

9. What are the specific bribery and corruption offences in your jurisdiction? 

Foreign public officials

The explanation below also applies to foreign public officials (see below, Domestic public officials).

Domestic public officials

POCA sets out the following list of offences relating to domestic bribery and corruption:

  • Bribery by a public official (section 4, POCA). This involves the use of gratification by a public official in the execution of his/her functions and duties. Any public official who solicits, accepts or obtains from another person, for himself/herself or for any other person, a gratification commits an offence punishable with penal servitude for a term of up to ten years.
  • Bribery of a public official (section 5, POCA). This involves the use of gratification with a public official in the execution of his/her functions and duties. Any person who gives, agrees to give, or offers a gratification to a public official, commits an offence punishable with penal servitude of up to ten years.
  • Taking of gratification to screen offender from punishment (section 6, POCA). This involves the use of gratification to conceal an offence or to screen the offender from legal proceedings for an offence. The applicable sentence would be as follows:
    • where the offence is a crime, the offender will be liable to imprisonment of up to five years;
    • where the offence is a misdemeanour, the offender will be liable to imprisonment of up to one year; and
    • where the offence is a contravention, the offender will be liable to imprisonment of up to six months.
  • Public official using his/her office for gratification (section 7, POCA). This involves the use by a public official of his/her office or position for a gratification for himself/herself or another person. The offender in that case will commit an offence punishable with penal servitude of up to ten years.
  • Bribery of or by public official to influence the decision of a public body (section 8, POCA). A person who gives, or agrees to give, or offers, to a public official, a gratification and/or a public official who solicits or accepts a gratification to exercise his/her power as a public official in a certain manner will be liable to a penal servitude of up to ten years.
  • Influencing a public official (section 9, POCA). This involves a person who exerts violence or pressure on a public official with a view to influence the performance of an act in the execution of his/her functions or duties. The offender will, on conviction, be liable to penal servitude of up to ten years.
  • Trafic D’influence (section 10, POCA). This involves a person offering a gratification to a public official to cause that public official to use his/her influence (whether real or fictitious) to obtain any benefit from a public body and also includes the public official who accepts such gratification. The offender will, on conviction, be liable to penal servitude of up to ten years.
  • Public official taking gratification (section 11, POCA). This involves the use of gratification by a public official for himself/herself or for any other person, to make use of his/her influence (whether real or fictitious) to obtain any benefit from a public body. The offender will, on conviction be, liable to penal servitude of up to ten years.
  • Bribery for procuring contracts (section 12, POCA). This concerns the use of bribery for the purpose of procuring a contract with a public body. The offender will, on conviction, be liable to penal servitude of up to ten years.
  • Conflict of interests (section 13, POCA). This involves a public official taking part in a decision with a party, without disclosing the direct or indirect interest that the public official has with that party. The public official will, on conviction, be liable to a penal servitude of up to ten years.
  • Treating of public official (section 14, POCA). This involves offering gratification to a public official who is a member, director or employee of that public body while a person is dealing with the public official in that capacity. The offender will, on conviction, be liable to penal servitude of up to ten years.
  • Receiving gift for a corrupt purpose (section 15, POCA). This offence involves a public official accepting or soliciting a gift for a corrupt purpose and the offender will, on conviction, be liable to penal servitude of up to ten years.
  • Corruption of agent (section 16, POCA). Any agent who, without the consent of his/her principal, solicits, accepts or obtains from any other person for himself/herself or for any other person, a gratification for doing or abstaining from doing an act in the execution of his/her functions or duties or in relation to his/her principal’s affairs or business, will commit an offence and be liable on conviction to penal servitude of up to ten years.
  • Corruption to provoke a serious offence (section 17, POCA). This involves the performance of an act of corruption to facilitate the commission of a crime and the offender will, on conviction be sentenced to penal servitude.
  • Making false statement during ICAC hearing (section 47(4), POCA). This involves a person knowingly making a misleading or false statement during a hearing whereby the ICAC is conduct an investigation. The offender will on conviction be liable to a fine of up to MUR500,000 and imprisonment of up to five years.
  • Victimisation of witnesses (section 49(5), POCA). Any person who commits an act of victimisation against a person who has reported an act of corruption will, on conviction, be liable to pay a fine of up to MUR50,000 and imprisonment of up to one year.

Private commercial bribery

Any person who accepts, or obtains or agrees to accept, a bribe for himself/herself, or on behalf of any other person, with a view to concealing an offence or screening another person from legal proceedings for an offence, will commit an offence (POCA).

DEFENCES

10. What defences, safe harbours or exemptions are available and who can qualify?

If a person discloses an act of corruption and reasonably believes that the information is true, such person will not incur any civil or criminal liability because of the disclosure.

11. Can associated persons (such as spouses) and agents be liable for these offences and in what circumstances?

Associated persons may be liable if they have a direct or indirect interest in the offence.

ENFORCEMENT

12. Which authorities have the powers of prosecution, investigation and enforcement in cases of bribery and corruption? What are these powers and what are the consequences of non-compliance? Please identify any differences between criminal and regulatory investigations.

Authorities

ICAC is the main authority for bribery and corruption offences.

Prosecution powers

Prosecutions can only be instituted with the DPP’s authorisation. The Director-General, the Director of the Corruption Investigation Division, or any other officer as designated by the ICAC may swear information and conduct the prosecution of any offence under the POCA.

Powers of interview

The ICAC may refer a corruption offence to the Director of the Corruption Investigation Division to make a preliminary investigation. Within 21 days of the referral, the Director of the Corruption Investigation Division will report back to the ICAC on the matter. Once the ICAC receives the report, it will decide whether to proceed with the investigation. The ICAC may conduct hearings as it considers appropriate.

The ICAC has the power to carry out further investigations and can order:

  • Any person to be examined orally in relation to any matter.
  • Any person to disclose any book, document, record or article.
  • Information stored in a computer, disc, cassette or on microfilm or any other device to be disclosed in a way or form which is visible and legible.

Powers of search/to compel disclosure

If the ICAC has reasonable grounds to believe that there is evidence, on certain premises or place of business, which may assist with the investigation, it may issue a warrant authorising an officer to enter and search premises at reasonable times.

During the search, the officer conducting the search can:

  • Seize and take possession of any book, document, computer disk or other article.
  • Inspect, make copies of, or take extracts from, any book, record or document.
  • Search any person who is on the premises, and detain him/her for the purpose of the search.
  • Seize any article found on such person.
  • Break open, examine, and search any article, safe, container or receptacle.

If the ICAC has reasonable grounds to believe that any book, document, record or article may provide evidence relevant to an investigation being conducted, it can make certified copies of, or take records from, the book, document or record.

Powers to obtain evidence

See above, Powers of search/to compel disclosure.

Power of arrest

The ICAC may, in writing, direct an officer to make an arrest if it is established (and the Director-General is satisfied) that a person who may be of assistance in an investigation:

  • Is about to leave Mauritius.
  • Has interfered with a potential witness.
  • Intends to destroy documentary evidence which is in his possession and which he/she has refused to give to the ICAC.

If the person is arrested, he/she must:

  • Be brought to the office of the ICAC.
  • Have his/her constitutional rights explained to him and given the right to contact his lawyer.
  • Be allowed prompt access to his/her lawyer.
  • Not be questioned unless a video recording is made of the proceedings.
  • Be released immediately upon furnishing such surety (bail) in a reasonable amount as the Director-General may determine, unless the ICAC is satisfied that it is necessary for his/her detention to be prolonged.
  • Be brought before a Magistrate, who may impose such conditions as he/she considers necessary for his/her release.

Court orders or injunctions

Property tracking and monitoring order. The ICAC may issue a directive to the Director of the Corruption Investigation Division when it either:

  • Makes a determination in relation to whether any property belongs to or is in the possession or control of a person.
  • Has reasonable grounds to believe that a person has or is about to commit an offence for which the ICAC has the right to investigate.

The directive may be one or more of the following:

  • A request for any relevant information relating to the identification, location or quantification of any property from the person in control or in possession of the property.
  • A request for the identification or location of any relevant document with respect to the transfer of any property.

This information must be delivered to the Director of the Corruption Investigation Division.

The ICAC can direct a bank, financial institution, cash dealer or member of a relevant profession or occupation to produce to the Director of the Corruption Investigation Division all relevant information with respect to any business transaction carried out by or for that person for such period as the judge may direct in the order.

Enforcement of property tracking and monitoring order. If a person fails to comply with, or delays or obstructs any of the aforementioned directives, a judge may order the ICAC (or any officer authorised by it) to enter any premises of the bank, financial institution, cash dealer or member of a relevant profession or occupation, to search the premises and remove any relevant document, material or other information for the purposes of executing such order.

Application for attachment order. If the ICAC has submitted an application and the judge is satisfied that that there are reasonable grounds to suspect that a person has committed an offence under the POCA or FIAMLA, the judge may make an attachment order. The attachment order will have the following effect:

  • Attach in the hands of any person whose name appears in the order, all money and other property due or owing, or belonging to or held on behalf of the suspect.
  • Require the person whose name appears in the order to disclose, within 48 hours and in writing, the source and nature of funds and property attached.
  • Prohibit any transfer, pledge or disposal of the funds or other property so attached, unless otherwise stated in the order.

If the judge has made an attachment order, the ICAC must:

  • Publish the notice of the order in the next issue of the Gazette and in at least two other daily newspapers published in Mauritius.
  • Give notice of the order to:
  • all notaries;
  • all banks, 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.

Seizure of movable property. The Director-General can make an order for the seizure of property if he/she is satisfied that the movable property relates to an offence. Following seizure, the property must remain under the custody of such person and such place as determined by the Director-General. If it is not possible to remove the property, it may be left at the premises. However, it must remain under the custody of a person as directed by the Director-General. If the property is in the custody of a third party, the Director-General may give such directions so that the third party does not dispose of the property without his/her written consent.

Disclosure of transactions. The ICAC can apply for an order for the disclosure of suspected transactions into which a person may be allegedly involved. The order for disclosure may include disclosure on movables, immovables, bank accounts, shares and interests, insurance policies, deposits, financial instruments, derivatives and transfers. In the case of ICAC v ID Somauroo 2011 SCJ 299, the court confirmed that ICAC could even enquire into the facts which occurred even prior to the coming into force of the POCA in view of the ICAC’s power to conduct investigations into money laundering offences.

13. Which authority makes the decision to charge and on what basis is that decision made? Are there any alternative methods of disposal and what are the conditions of such disposal?

The Director-General of the ICAC will submit a report on the investigation to the DPP who will then, based on the report, make the decision of whether to prosecute or not. Where it does not advise prosecution, it may require the ICAC to conduct further investigations as it deems fit.

CONVICTIONS AND SANCTIONS

14. What are the sanctions for participating in bribery and corruption? 

Civil/administrative proceedings or penalties

Businesses that are regulated by the FSC and subject to certain licensing conditions must, depending on the nature of the business, comply with the FSC’s guidelines. If the businesses fail to comply, penalties will be incurred depending on the nature of the offence.

Criminal proceedings or penalties

Right to bail. There is a right to bail for offences relating to bribery and corruption.

Penalties. See Question 9.

SAFEGUARDS

15. Are there any measures in place to safeguard the conduct of investigations? Is there a process of appeal? Is there a process of judicial review?

See Question 6.

Tax Treatment

16. Are there any circumstances under which payments such as bribes, ransoms or other payments arising from blackmail or extortion are tax-deductible as a business expense?

There are no circumstances under which payments such as bribes, ransoms or other payments arising from blackmail or extortion are tax-deductible as a business expense.

17. What are the main regulatory provisions and legislation relevant to insider dealing and market abuse?

The main regulatory legislations relevant to insider dealing and market abuse are the:

  • Securities Act 2005 (Securities Act).
  • Companies Act.

OFFENCES

18. What are the specific offences that can be used to prosecute insider dealing and market abuse?

Securities Act

The specific offences under the Securities Act are as follows:

  • Insider dealing (section 111, Securities Act). A person who has inside information about securities of a reporting issuer must not do any of the following where he/she knows, or ought to have known, that the information was inside information:
    • relying on such information, buy, sell or otherwise deal in securities of that reporting issuer, or in securities that give a right to buy, sell or exchange the securities of the reporting issuer;
    • counsel, procure or cause another person to deal in the securities mentioned above;
    • disclose the information, otherwise than in the proper performance of that person’s employment, office or profession, to another person,
    • A person informed of an investment programme established by a collective investment scheme (CIS) by a CIS manager of that scheme, or an investment adviser acting for that scheme will act in contravention of the laws if he/she uses such information for his/her own benefit in trading securities of a reporting issuer included in the programme.
  • False trading in securities (section 113, Securities Act). A person must not create a false or misleading appearance on a securities exchange:
    • of active trading in securities;
    • in relation to the market for securities; or
    • in relation to the price of securities.
    • A person makes a false or misleading appearance of active trading in securities when a he/she directly or indirectly sells, offers to sell or purchases, or offers to purchase securities that does not involve a change in the beneficial ownership of the securities.
  • Market rigging (section 114, Securities Act). A person must not, directly or indirectly, engage in transactions (either solely or together with another transaction) that would create, or likely create, an artificial price for securities on a securities exchange in Mauritius. Furthermore, a person must not enter into or participate in any fictitious or artificial transaction or device that will influence the price of securities on a securities market in Mauritius.
  • Fraud involving securities (section 115, Securities Act). A person must not, either directly or indirectly, use a device, scheme or artifice to defraud another person with respect to a securities transaction or proposed securities transaction. In addition, a person must not become involved in any act, practice or course of business that operates as a fraud or deception, or is likely to operate as a fraud or deception, on another person.
  • False or misleading conduct (section 116, Securities Act). A person will commit an offence if he/she participates in activities involving securities which he/she knows are misleading or deceptive, or are likely to mislead or deceive, or recklessly conducts himself/herself in a way that would mislead or deceive another. The term “conduct” also means making a statement that is false or misleading or omitting a material fact.

Companies Act

Interest in transaction (section 148(1), Companies Act). A director who has an interest in a transaction must disclose the interest upon becoming aware of the fact. The disclosure of interest must be recorded in the interest register (if the company has one). The duty of disclosure includes disclosure on:

  • The monetary value of the interest (if quantifiable).
  • The nature and extent of the interest.

Interest in shares issued by company (section 156(2), Companies Act). If a director of a public company has a relevant interest in any shares issued by the company, he/she must disclose any of the following to the board of the directors (board):

  • The number and class of the shares in which such interest in held.
  • The nature of such interest.
  • The consideration paid or received.
  • The date of the acquisition or disposition.

He/she must also ensure that the information disclosed to the board is entered into the interest register. The duty of disclosure is incumbent upon the director where he/he acquires or disposes of shares in which he/she has an interest. In addition to disclosing the number and class of the shares, the nature of his/her interest, he/she must disclose the consideration paid or received out of the transaction and the date of such transaction.

In both cases, the director may be liable to civil damages or criminal prosecutions.

DEFENCES

19. What defences, safe harbours or exemptions are available and who can qualify? 

If a person can establish that he/she reasonably believed that the information was already known to the general public, he/she may rely on it as a defence.

Another defence is that the person charged did not know, or could not reasonably have known, that the relevant act or omission would have the effect, or would likely have the effect, of constituting an offence as set out in Question 18.

ENFORCEMENT

20. Which authorities have the powers of prosecution, investigation and enforcement in cases of insider dealing and market abuse? What are these powers and what are the consequences of non-compliance? Please identify any differences between criminal and regulatory investigations.

Authorities

The FSC and the Stock Exchange of Mauritius are the relevant authorities in relation to insider dealing and market abuse.

Prosecution powers

The FSC does not have a power of arrest. However, arrests on behalf of the FSC are carried out by the police.

Powers of interview

See below, Powers of search/to compel disclosure.

Powers of search/to compel disclosure

Part VIII of the Financial Services Act 2007 (Financial Services Act) gives the FSC wide powers to request information, records or documents at such time and place as may be required of the licensee. The Chief Executive may require any information or document provided to the FSC to be verified or authenticated as specified and at the cost of the person supplying the information or documents.

If the Chief Executive of the Commission has reasonable grounds to believe that a licensee has committed, or is about to commit, a breach of any relevant Acts and/or the conditions of the license, authorisation or registration of the licensee and/or any direction issued by the FSC, the Chief Executive may order that an investigation be conducted into the business or any part of the business of the licensee or its associate.

For the purposes of investigation, the investigator authorised by the Chief Executive of the FSC has the power to:

  • Enter any premises, at any reasonable time, that is used or has been used by the licensee for business purposes.
  • Search for any document or any other thing incidental to the investigation and which is relevant to the investigation.
  • Administer an oath, affirmation or declaration.
  • Seize any document (including electronically-stored information), article or other thing and/or object that is incidental or relevant to the investigation.
  • Summon any licensee, or its officers, employees and associates, or any witness necessary for the conduct of the investigation.

To carry out the investigation, the investigator must show his/her authorisation to the person being investigated, and as soon as practicable after having completed the investigation, the investigator must submit his/her report to the Chief Executive.

Powers to obtain evidence

See above, Powers of search/to compel disclosure.

Power of arrest

The FSC does not have a power of arrest. However, arrests on behalf of the Commission are carried out by the police.

Court orders or injunctions

If, on application by the FSC, the court finds that a person has done an act of insider dealing, the court may make an order requesting payment to the Commission of an amount to be determined by the court. The court may order a maximum amount which is equal to the amount found by the Court to be the amount of profit that may have been realised or loss avoided by the offender because of the offence. The amount recovered goes into a compensation fund to compensate investors who suffered a loss by the insider dealing.

21. Which authority makes the decision to charge and on what basis is that decision made? Are there any alternative methods of disposal and what are the conditions of such disposal?

The FSC makes the decision to charges in cases of insider dealing and market abuse.

CONVICTIONS AND SANCTIONS

22. What are the sanctions for participating in insider trading and market abuse?

Civil/administrative proceedings or penalties

The FSC is empowered to give directions where there is reasonable case to believe that:

  • The Securities Act has been, or is likely to be, contravened.
  • A licensee is conducting its affairs in an improper or financially unsound way.
  • A licensee is involved in financial crime.
  • A direction is necessary or desirable to protect the interests of consumers of financial services and clients of a licensee.

With respect to a present or past licensee of the FSC, or any person who is a present or past officer, partner, shareholder, or controller of a licensee, the FSC is also empowered to:

  • Issue a private warning.
  • Issue a public censure.
  • Disqualify a licensee from holding a licence or a licence of a specified kind for a specified period.
  • In the case of an officer of a licensee, disqualify the officer from a specified office or position in a licensee for a specified period.
  • Impose an administrative penalty.
  • Revoke a licence.

Criminal proceedings

Where a person is convicted of insider dealing, he/she will, on conviction, be liable to a fine of between MUR500,000 and MUR1 million, or a fine of up to three times the amount of any profit gained or loss avoided by any person as a result of the offence (whichever is higher) together with imprisonment of up to ten years.

Where a person engages in conduct in relation to securities that the person knows is misleading or deceptive or is likely to mislead or deceive, or where the person is reckless as to whether the conduct is misleading or deceptive or is likely to mislead or deceive, he/she shall commit an offence and will, on conviction, be liable to a fine of not less than MUR500,000 together with imprisonment of up to one year.

Under any other offences as provided under Securities Act in Question 18 above, the applicable penalty will be a fine of up to MUR1 million together with imprisonment of up to five years.

Civil suits

A person may commence proceedings in any court for damages.

SAFEGUARDS

23. Are there any measures in place to safeguard the conduct of investigations? Is there a process of appeal? Is there a process of judicial review?

See Question 5.

24. What is the main legislation and regulatory provisions relevant to money laundering, terrorist financing and/or breach of financial/trade sanctions?

Money laundering

The main piece of legislation in relation to money laundering offences is the FIAMLA.

The FIAMLA provides for the establishment and management of the FIU and Review Committee to supervise its activities and facilitate the following:

  • Offences of money laundering.
  • The reporting of suspicious transactions.
  • The exchange of information with respect to money laundering with any international group of overseas financial intelligence units on the basis of reciprocity and mutual agreement.
  • Mutual assistance with overseas bodies with respect to money laundering.
  • Other matters connected to the above.

Terrorist financing

The Prevention of Terrorism Act 2002 (POTA) provides for measures to combat terrorism and related matters.

Financial/trade sanctions

The sanctions set out in the Corruption Convention, Office of Foreign Assets Control and UN Security Council are applicable to breaches of financial/trade sanctions.

OFFENCES

25. What are the specific offences that can be used to prosecute money laundering, terrorist financing and breach of financial/trade sanctions?

Money laundering

A person will commit an offence if he/she suspects or has grounds to reasonably suspect that property is derived in whole or in part and/or directly or indirectly from any crime and he/she either:

  • Directly or indirectly engages himself/herself in a transaction that involves property which is, in whole or in part, the proceeds of any crime.
  • Directly or indirectly receives, conceals, disguises, transfers, converts, disposes of, remove from or brings to Mauritius any property which is, in whole or in part, the proceeds of crime.

(Section 3(1), FIAMLA.)

Also, if a bank, financial institution, cash dealer or member of a relevant profession or occupation, commits or facilitates the commission of money laundering offence or the financing of terrorism, and fails to take any reasonable measures, it will commit an offence (section 3(2), FIAMLA).

Conspiracy to commit the offence of money laundering (section 4, FIAMLA). Without prejudice to section 109 of the Criminal Code (Supplementary) Act, it is an offence if a person agrees with one or more persons to commit an offence. (Section 109 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, will commit an offence and on conviction will be liable to penal servitude of up to ten years and to a fine of up to MUR100,000.)

Limitation of payment in cash. Notwithstanding section 37 of the Bank of Mauritius Act 2004 (which details the rules on legal tender in Mauritius), any person who makes or accepts any payment in cash which exceeds MUR500,000 or the equivalent amount in foreign currency, will commit an offence.

Duty to report suspicious transaction. Banks, financial institutions, cash dealers and members of relevant professions must report any transaction to the FIU if they have reason to believe the transaction is suspicious.

Terrorist financing

The FIAMLA also covers terrorist financing and the offences under money laundering also apply to terrorist financing.

Financial/trade sanctions

The offences provided under section 3 of the FIAMLA are punishable with a fine of up to MUR2 million and penal servitude of up to ten years.

DEFENCES

26. What defences, safe harbours or exemptions are available and who can qualify?

Money laundering

If the accused can show that he/she took all reasonable steps and exercised all due diligence so as not to commit the offence of money laundering, he/she may not be liable. The accused also bears the burden of proving that the property does not derive from any crime.

Terrorist financing

A person will not incur any civil or criminal liability for terrorist financing if:

  • He/she discloses to a member of the board or an officer that a person, public official, body corporate or public body is involved or has been involved in an act of corruption.
  • When he/she makes the disclosure, he/she has reasonable grounds to believe that the information disclosed is true and therefore requires investigation.

FINANCIAL/TRADE SANCTIONS

Enforcement

27. Which authorities have the powers of prosecution, investigation and enforcement in cases of money laundering? What are these powers and what are the consequences of non-compliance? Please identify any differences between criminal and regulatory investigations.

Authorities

The relevant authorities are the:

  • The FSC is responsible for the supervision and regulation of the non-banking institutions in Mauritius. The FSC has a statutory duty to supervise and enforce compliance by global business with the requirements imposed under the FIAMLA and the regulations or guidelines made under the FIAMLA.
  • The FIU is the central agency in Mauritius responsible for the disclosures of relevant information on suspected proceeds of crime and alleged money laundering offences (among other things) to the investigatory and supervisory authorities.
  • Bank of Mauritius (BOM). The BOM acts as a supervisory authority and monitors whether financial institutions have taken the appropriate measures to prevent their institutions from being used to commit or facilitate the commission of money laundering and that they are complying with the requirements under the FIAMLA.
  • Mauritius Police Force. This is the national investigatory and law enforcement body for criminal offences in Mauritius.

Prosecution powers

The various authorities’ prosecution powers are as follows:

  • The FSC has an enforcement committee which is responsible for exercising the FSC’s disciplinary powers under section 7(1)(c) of the Financial Services Act. This includes the power to impose an administrative sanction on a licensee/officer. The Chief Executive of the FSC may refer a matter to the committee pursuant to section 53 of the Financial Services Act, when he/she has reasonable cause to believe that a licensee:
    • has contravened any relevant laws, directions or orders issued under a relevant Act, or any condition of the licence;
    • is carrying out his/her business in a manner which threatens the integrity of the financial system of Mauritius or is contrary or detrimental to the interest of the public;
    • has committed a financial crime;
    • no longer fulfils any condition or criteria specified under the relevant legislation for the grant of a licence;
    • no longer carries out the business activity for which it is licensed;
    • has failed to commence business within six months from the date on which it is licensed; or
    • is not a fit and proper person.
  • Any person aggrieved by the decision of the committee may have his/her decision reviewed before the Financial Services Review Panel (FSRP). If the party is dissatisfied with the decision of the FSRP, he/she may seek redress by application to the Supreme Court of Mauritius by way of a judicial review.
  • The FIU does not have the power to prosecute and to require reporting institutions to block or freeze funds or accounts, where money laundering is suspected.
  • The BOM has the power to revoke a banking licence where both:
    • a financial institution has, without reasonable excuse, failed to comply with any of the requirements of FIAMLA; and
    • such failure resulted from negligence, omission, or serious defect on the part of the financial institution.
  • Mauritius Police Force. Criminal prosecution for non-compliance with reporting requirements lies with the police.

Powers of interview

The FSC and the FIU do not have the powers to conduct interviews. Generally, interviews are conducted by the police as part of their investigation.

Powers of search/to compel disclosure

See Powers of search/to compel disclosure.

Powers to obtain evidence

The various entities’ powers to obtain evidence are as follows:

  • See Powers of search/to compel disclosure.
  • Bank of Mauritius. The BOM does not need a court order to obtain information from financial institutions. Section 51 of the Bank of Mauritius Act 2004 provides that the bank may require any financial institution to furnish, at such time and in such manner and form as may be approved by the Bank, such information and data as the Bank may require for the proper discharge of its functions and responsibilities under the banking laws.The BOM also has the power to examine all books, minutes, accounts, records, cash, securities, vouchers, and any other document in the possession or custody of the financial institution or of its affiliates in Mauritius or its branches and affiliates outside Mauritius verify the institution’s compliance with any requirement under the banking laws.
  • The FIU has the power 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).

Power of arrest

The FSC and the FIU does not have a power of arrest. However, arrests on behalf of these bodies are carried out by the police.

Powers of search/to compel disclosure

The FSC can conduct on-site inspections on the business premises of the licensees in order to ascertain whether they are compliant with regulatory and supervisory framework. For the purposes of the investigation, the investigator of the FSC can (among other things):

  • Enter any premises used or apparently used by the licensee for business purposes, at any reasonable time.
  • Search for any document or other thing that he/she considers relevant to the investigation.
  • Administer oath, affirmation or declaration.
  • Seize any document, article, object or any electronically stored information which the investigator deems necessary.
  • Summon any licensee, or its officers, employees and associates, or any witness necessary for the conduct of the investigation.

The BOM also has the power to conduct on-site inspections with a view to assess whether the financial instructions are complying with the banking laws, the FIAMLA, the relevant regulations and the relevant guidance notes.

Court orders or injunctions

The FSC may apply to the Judge in Chambers or any court of Mauritius for an injunction, freezing order or attachment order.

Protections available

28. Which authority makes the decision to charge and on what basis is that decision made? Are there any alternative methods of disposal and what are the conditions of such disposal?

The DPP makes the decision to prosecute for money laundering/terrorist offences.

Where there are grounds to suspect money laundering, predicate offences or terrorism financing, the Director of the FIU will disseminate information and the results of the analysis of the FIU to the relevant investigatory authority (Commissioner of Police), supervisory authority (Bank of Mauritius or the FSC), overseas financial intelligence unit or comparable body for appropriate action.

Convictions and sanctions

29. What are the sanctions for participating in money laundering, terrorist financing offences and/or for breaches of financial/trade sanctions?

Non-compliance with relevant Acts

Where a company fails to comply with the provisions of a relevant Act, the FSC may take regulatory action against the non-compliant company. The FSC may issue a direction pursuant to section 7(1)(b) or section 46 of the Financial Services Act, or section 93 of the Insurance Act 2005, requiring the company to comply with the relevant Act.

If the company fails to comply with the direction, it will commit an offence under section 91 of the Financial Services Act. The enforcement committee of the FSC may take further sanctions against the company pursuant to section 53 of the Financial Services Act. These sanctions include:

  • Issuing a private warning.
  • Issuing a public censure.
  • Disqualification of a licensee or disqualification from holding a certain type of licence for a specified period.
  • Disqualification of an officer of a licensee entity from a specified office or position in a licensee entity for a specified period.
  • Imposition of an administrative penalty.
  • Revocation of licence.

Money laundering

A person who commits a money laundering offence will be subject to a fine of up to MUR2 million and penal servitude of up to ten years.

Terrorist financing

Depending on the type of terrorism offence committed, the penal servitude ranges from two years to 35 years upon conviction, and carries a fine of up to MUR50,000.

Safeguards

30. Are there any measures in place to safeguard the conduct of investigations? Is there a process of appeal? Is there a process of judicial review?

See Question 6.

31. What are the general requirements for financial record keeping and disclosure?

The Companies Act governs how and where accounting records should be kept. Companies have a duty to keep accounting records and ensure that:

  • Transactions of the company are correctly recorded and explained.
  • The financial position of the company is at all times determined with reasonable accuracy.
  • The company’s accounting records allow its directors to prepare financial statements that comply with the Companies Act.
  • The company keeps accounting records in good order, so that they are readily and properly audited.

Accounting records must be in written form and in either the English or French language.

If the accounting records are not kept in English or French:

  • The directors must arrange for the true translation into English or French language to be made at intervals of no more than seven days.
  • The translations must be kept with the original accounting records for so long as is required by the Companies Act.

Accounting records must be kept for the current accounting period and for the last seven completed accounting periods of the company or such lesser number of accounting periods as approved in writing by the Registrar.

Accounting records must be kept in Mauritius, unless otherwise determined by the directors that the accounting records can be kept outside of Mauritius. If the records are not kept in Mauritius, the company must ensure that the accounts and returns for the operations of the company are disclosed with reasonable accuracy at intervals not exceeding six months, and such records that enable the company’s financial statements to be prepared are sent and kept at a place in Mauritius. In addition, notice as to where the accounting records and returns are kept must be sent to the Registrar.

32. What are the penalties for failure to keep or disclose accurate financial records?

The company will commit an offence if it fails to keep or disclose accurate financial records and will be liable to a fine of up to MUR100,000.

33. Are the financial record keeping rules used to prosecute white-collar crimes?

Financial record keeping rules may be used to prosecute white-collar crimes. Prosecution for the financial record keeping offences will result in a fine being imposed upon conviction.

34. What are the general due diligence requirements and procedures in relation to corruption, fraud or money laundering when contracting with external parties?

The following measures and/or documents are requested to carry out an enhanced due diligence on all high-risk business relationships, customers and transactions:

  • Seek further information from the customer or third-party sources to clarify, update or obtain the customer’s Know-Your-Customer (KYC) information, clarify the nature of the customer’s ongoing business or consider any suspicion that may be reportable.
  • Undertake more detailed analysis of the KYC information.
  • Verify and re-verify KYC information.
  • Analyse the customer’s past transactions and possibly monitoring future transactions.
  • Obtain further customer due diligence information (identification and relationship information) from either the customer or independent sources (such as the internet, public or commercially available databases).
  • Obtain additional information necessary to understand the purpose and intended nature of such a business relationship.
  • Take appropriate and reasonable measures to establish the source of the funds and the wealth of the customer, any beneficial owner and underlying principal.
  • Carry out more frequent and more extensive ongoing monitoring on such business relationships, and setting lower monitoring thresholds from transactions connected with such business relationships.

The documents requested to carry out due diligence are as follows:

  • Certificate of incorporation or registration.
  • Certificate of current standing.
  • Copy of latest report and accounts, if available (audited, where possible).
  • Confirmation of the list of directors, list of shareholders (including their percentage holdings), business activity, registered office and place of business (note: the confirmation can be signed by an authorised signatory of the company).

35. Are cartels prohibited in your jurisdiction? How are cartel offences defined? Under what circumstances can a corporate body be subject to criminal liability for cartel offences?

Under the laws of Mauritius, a cartel is defined as a “collusive agreement”. Cartels are governed by the Competition Act 2007 (Competition Act). Sections 41, 42 and 43 of the Competition Act specifically addresses cartels, which are prohibited in Mauritius.

Section 41 provides for horizontal agreements and states that an agreement will be deemed collusive if, in any way, it aims at or has the effect of significantly preventing, restricting or distorting competition by:

  • Fixing the selling or purchased prices of the goods or services.
  • Sharing markets or sources of the supply of the goods or services.
  • Restricting the supply of the goods or services to, or the acquisition of them from, any person.

Section 42 provides for bid rigging and states that an agreement will be collusive if one party to the agreement either:

  • Agrees not to submit a bid or tender in response to an invitation for bids or tenders.
  • Agrees upon the price, terms or conditions of a bid or tender to be submitted in response to such a call or request.

Section 43 provides for vertical agreements involving resale price maintenance. Resale price maintenance is considered to be collusive and is therefore prohibited under the Competition Act.

The agreements or provisions of agreements set out above will be void and prohibited and will therefore have no legal effect. The participating enterprises may also be subject to fines, notwithstanding (and without prejudice to) any other non-financial sanctions.

Type

Legal Guide

Locations

Mauritius

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