ESAAMLG: The Report Commends Mauritius For The Efforts Done

The September 2021 Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) 4^th Enhanced Follow-Up Report & Technical Compliance Re-Rating placed Mauritius under enhanced follow-up process. The Report commends Mauritius for the efforts done. However, it is also highly critical of its remaining deficiencies in Non-Profit Organizations (Recommendation 8), Transparency, and Beneficial Ownership of Legal Persons (Recommendation 24). It spares Statistics (Recommendation 33), where Mauritius has now been re-rated compliant.

Since the adoption of the Mutual Evaluation Report (MER) in 2018 by the Council of Ministers of the 19 member countries, Mauritius has taken measures to address the technical compliance deficiencies identified in its MER. Out of the 40 areas subject to recommendations, 26 were re-rated (upgraded) to largely compliant and compliant.

Mauritius was initially rated non-compliant in the abovementioned 3 areas, referred to in the MER as Recommendations 8, 24, and 33. The September 2021 MER states that Mauritius has been re-rated compliant with recommendation 33 and largely compliant with recommendations 8 and 24.

However, although the report highlights the efforts done by public sector stakeholders to meet ESSAMLG standards, it is also very critical of Mauritius’ shortcomings in areas 8 and 24.

Here is a list of some of the criticisms made by the Technical Committee that assessed Mauritius and the initiatives taken:

Recommendation 8

Original Criticisms:

1. Mauritius has not reviewed the NPO sector to identify the subsectors vulnerable to abuses and adequate measures to address the identified risks.
2. Mauritius had not encouraged or undertaken outreach programmes to raise awareness among NPOs at the risk of abuse and the donor community.
3. Mauritius had now worked with the NPOs to develop best practices to address risks and vulnerabilities.
4. Mauritius does not apply risk-based measures to monitor compliance with the requirements of Recommendation 8.
5. Absence of measures to ensure practical cooperation, coordination, and information sharing among the authorities.

Initiatives Taken by Mauritius:

1. Mauritius has identified associations, charitable organizations, charitable trusts, and companies limited by guarantee as to the sub-set of organizations that falls within the FATF definition of NPOs.
2. Mauritius has also carried out an NPO risk assessment which involved a survey administered to 879 NPOs, a questionnaire to 9 law enforcement agencies, and a review of relevant laws. The authorities found that NPOs engaged in the following activities are at increased risk of terrorist abuse. Overall, the Terrorist Financing risk of NPOs in Mauritius was determined to low-medium.
3. Although Mauritius has not shared a report to demonstrate how it reviewed the adequacy of measures, the Technical Committee has considered the legislative amendments made. The amendment to the Registration of Associations Act to strengthen record-keeping requirements, including source and destination of funds and the identities of their donors, for example.
4. Mauritius undertook its first comprehensive review of its NPO sector in August 2020, and the next review is due in 2 years under Section 19 (D) of the FIAMLA.

Current Criticisms:

1. Mauritius does not have specific policies to promote accountability, integrity, and public confidence in the administration and management of NPOs. On the other hand, Mauritius has legal and operational frameworks that touch on this sub-criterion’s elements.
2. Mauritian authorities have developed a vast outreach and educational programme among NPOS involving associations, foundations, trusts, and companies limited by guarantee to raise and deepen awareness. An example is a booklet on NPOs on how to protect themselves from the threat of Terrorist Financing. However, the Technical Committee notes that the plan does not comprise outreach to the donor community.
3. Mauritius held consultations with NPOs to develop best practices and policies to address Terrorist Financing risks. Nonetheless, the Technical Committee highlighted that there is no indication that the NPOs participated in the preparation of the booklets or review what was issued.

Recommendation 24

Original Criticisms:

1. Money Laundering and Terrorist Financing posed by legal persons had not been assessed.
2. Except for institutions under FSC, there was no provision in law or other enforceable means which required companies, financial institutions, and company registry to obtain information on beneficial ownership.
3. There was no legal requirement to ensure the information on beneficial ownership was accurate and up-to-date.

Initiatives taken by Mauritius and criticisms:

1. Mauritius carried out a Money Laundering Risk Assessment to identify risks associated with all types of legal persons created in Mauritius. However, the risk of legal persons did not include Terrorist Financing.
2. Mauritius has taken a range of sanctions to enforce compliance with legal persons’ transparency obligations. However, the scope of the sanctions is limited for most violations. Criminal sanctions and the application of the principle of ‘compounding offenses’ render it challenging to determine whether or not the sanctions are proportionate and dissuasive.
3. In relation to limited liability partnerships, if the applicants do not provide all the requirements for the registration of a Limited Liability Partnership, then the entity will not be registered. If it is found that a limited liability company has committed an offense by not filing changes in its name, partners, or registered office, it may be liable to criminal sanctions. However, the Technical Committee highlighted that apart from administrative penalties under the principle of ‘compounding offenses,’ the Limited Liability Partnership Act does not provide for administrative sanctions on violation of individual requirements.

The full report is available here.