This article discusses the enhanced measures implemented to strengthen the anti-money laundering legislative framework through the Financial Intelligence and Anti-Money Laundering Act (FIAMLA). The most noteworthy change is the replacement of the FIAMLA Regulations 2003 with a new version (Regulations 2018), which came into force on 1 October 2018.
A highlight of the key changes is provided below and a comprehensive summary of all changes to FIAMLA is set out in the Annex and below.
THE CHANGES
The Regulations 2018 have refined or introduced the following key definitions:
“Customer” & “Competent Authorities” (Regulation 2)
Customer
The term ‘customer’ means a natural person or a legal person or a legal arrangement for whom a transaction or account is arranged, opened or undertaken. Its definition now captures ‘an applicant for business’ in the list of designated persons who meet with this definition.
Competent Authorities
This is a new definition which has been introduced. It means ‘a public authority to which responsibility to combat money laundering or terrorist financing is designated; and includes a supervisory authority, regulatory body and an investigatory authority’.
“Close Associates” & “Family Members (Regulation 15)
These are new definitions and mean the following:
‘Close Associates’
an individual closely connected to a PEP, either socially or professionally; and
any other person, as may be specified by a supervisory authority or regulatory body, after consultation with the National Committee.
‘Family Members’
an individual related to an PEP either directly through consanguinity, or through marriage or similar civil forms of partnership; and
any other person, as may be specified by a supervisory authority or regulatory body, after consultation with the National Committee.
“Ownership Interest” (Regulation 6)
This phrase now designates ‘a controlling ownership interest’ instead of “an ownership interest of 20 per cent or more”.
“Reporting Person” (Regulations 9 & 21)
The Regulations 2018 have repealed the existing provisions on the question of undertaking verifications on the identity of customers and beneficial owners.
Accordingly, under the new regime, the relevant supervisory authority or regulatory body has a discretion to allow a reporting person to complete the verification of the identity of a customer and beneficial owner once the business relationship has been established. However, this is subject to the following conditions:
this is essential not to interrupt the normal conduct of business;
the verification of identity occurs as soon as reasonably practicable; and
the money laundering and terrorism financing risks are effectively managed by the reporting person.
An important caveat to this new regime is that once a reporting person has been allowed to establish the business relationship before the completion of the verification exercise, s/he has an obligation to adopt and implement risk management procedures concerning the conditions under which a customer may use the business relationship prior to verification.
Furthermore, the new regime is to the effect that where a reporting person relies on a third party that is part of the same financial group, the host or home supervisors may consider that the requirements of paragraphs (1), (2) and (3) in Regulation 21 are met, where –
the group applies CDD and record-keeping requirements and programmes against money laundering and terrorism financing, in accordance with FIAMLA and these regulations;
the implementation of those CDD and record-keeping requirements and programmes against money laundering and terrorism financing is supervised at a group level by a competent authority; and
any higher country risk is adequately mitigated by the group’s policies to combat money laundering and terrorism financing.
CONCLUSION
The impact of the measures adopted in the National Budget 2018/2019 remains to be seen in the long term. However, it cannot be disputed that the strengthening of anti-money laundering measures in a jurisdiction which focuses significantly on cross-border and other offshore transactions is a hallmark of the Mauritian Government’s continuing efforts to position Mauritius as a sound and reliable international jurisdiction for global business.
