Mauritius closer to exiting grey list as FATF sees progress on action plan

Inter-governmental body has now authorised its delegates to visit the island nation for an on-site inspection of the progress made

Mauritius has moved a step closer towards exiting the Financial Action Task Force’s (FATF’s) grey list, with the inter-governmental body — which sets anti-money laundering standards — acknowledging the progress the island nation has made in its fight against money laundering and terrorist financing.

At its plenary this month, the FATF observed that Mauritius had substantially completed its action plan.

It has now authorised its delegates to visit the island nation for an on-site inspection of the progress made, with the objective of assessing the effectiveness and sustainability of the reforms implemented in light of the FATF recommendations.

"The FATF will continue to monitor the Covid-19 situation and conduct an on-site visit at the earliest possible date," said FATF in a note on Friday.

FATF has listed four key reforms initiated by the island nation. This includes conducting outreach to promote understanding of money laundering and terror financing risks and obligations, as well as ensuring access to accurate basic and beneficial ownership information by competent authorities in a timely manner. The country has developed risk-based supervision plans for the Financial Services Commission and provided training for law enforcement authorities to ensure that they have the capability to conduct money laundering investigations.

"All measures taken so far demonstrate the underlying unflinching commitment of the Government of Mauritius to ensure the sustainability and effectiveness of our efforts to combat money laundering, terrorism financing and proliferation financing in the future," said Mauritius' Ministry of Financial Services and Good Governance in a note last week.  

In February 2020, Mauritius was put on the list of jurisdictions that required increased monitoring. This list is often referred to as the “grey list”.

Jurisdictions under increased monitoring actively work with the FATF to address strategic deficiencies in their regimes. These are done to counter money-laundering, terrorist financing, and proliferation financing in a more efficient manner. Accordingly, Mauritius had made a high-level political commitment to work with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group to strengthen the effectiveness of its AML/CFT regime.

"Since its grey-listing by the FATF back in February 2020, the Mauritius International Financial Centre (MIFC) has put in extraordinary efforts to cure all the strategic deficiencies highlighted by the FATF.  In the two previous plenary sessions, the FATF had commended the exceptional pace and determination by the MIFC to get out of the grey-list. This June 2021 FATF plenary session has marked a milestone in Mauritius’ progress towards exiting the list with the FATF recognising that Mauritius has substantially completed the action plan at a technical level," said Rama Sithanen, Chairman of Sanne Mauritius.

Sithanen expects the FATF delegation to table its recommendations for an exit of the grey list at the next plenary session of the FATF scheduled for October this year. "Given the extent of reforms and increased regulatory scrutiny in the jurisdiction, we remain confident that the FATF delegation would validate the progress made by the MIFC in the past months and grant the jurisdiction an exit from the list during the October plenary. The exit of the FATF grey-list would also be synonymous with an exit of the EU black-list shortly after,” he said.

The inclusion in the grey list may have created a negative perception towards Mauritius globally, especially among large investors such as pension, endowment, and sovereign wealth funds, said experts. The Reserve Bank of India, too, rejected a few applications for NBFC licences last year as the investments were routed through Mauritius.