After FATF, Mauritius exits European Union tax blacklist

The European Commission, the executive branch of the European Union (EU), has deleted Mauritius from its list of high-risk jurisdictions, also referred to as the EU blacklist.

This comes on the back of the island nation's exit from the Financial Action Task Force, or FATF's grey list, in October last year.

FATF is an intergovernmental body that aims to combat money laundering and terrorism financing.

The Commission's analysis concluded that the Bahamas, Botswana, Ghana, Iraq, and Mauritius do not have strategic deficiencies in their anti-money laundering/combating the financing of terrorism (AML/CFT) regime anymore, considering the available information. 

"The Bahamas, Botswana, Ghana, Iraq, and Mauritius have strengthened the effectiveness of their AML/CFT regime and addressed related technical deficiencies to meet the commitments in their action plan regarding the strategic deficiencies that the FATF identified and the additional benchmarks or preliminary concerns set by the Commission," observed a note put out by the Commission last week. 

On May 7, 2020, the European Commission had adopted a new delegated regulation in relation to Third World countries which have strategic deficiencies in their AML/CFT regimes that pose significant threats to the financial system of the EU. Accordingly, the Commission included Mauritius, along with 11 other countries, on its revised list of high-risk nations.  

The EU blacklist became applicable on October 1, 2020, although its economic impact has been difficult to assess in the backdrop of the Covid-19 pandemic, said experts. Globally, however, the FATF and EU lists had created a negative perception towards Mauritius, especially among large investors, such as pension, endowment, and sovereign wealth funds.

"The addition of Mauritius to the EU list of high-risk third countries had raised some concerns among a few institutional users of the Mauritius International Financial Centre (MIFC) – mostly those having EU nexus. The country's removal from the list vindicates a series of timely, bold, and in-depth measures adopted by the jurisdiction to enhance its regulatory regimes to global standards. These will undoubtedly help boost investor confidence in using the MIFC as a trusted platform for cross-border investments," said Varounen Goinden, director and head of business development, Mauritius & India, Sanne.

He added that the MIFC has been fast-tracking a number of reforms in line with evolving norms and best practices introduced by multilateral standard-setting organisations, placing Mauritius ahead of the curve in terms of global requirements from a tax compliance and AML/CFT perspective.

"As we see an uptick in the growth momentum in our principal target markets, Mauritius has timeously reinforced its position as a cost-effective and attractive hub for financial services through a robust and sound ecosystem, rich skill base, and broad service offerings," said Goinden.

Timely Exit

• Mauritius had been included on European Commission's revised list of high-risk nations on May 7, 2020
• The island nation does not have strategic deficiencies in its anti-money laundering and counter-terrorist financing regime anymore
• The Financial Action Task Force and European Union lists had created negative perception towards Mauritius, especially among large investors, such as pension, endowment, and sovereign wealth funds
• Its removal will help boost investor confidence in using the Mauritius International Financial Centre as a trusted platform for cross-border investments