The Mauritian financial services sector does not have the same reputation in the eyes of Europeans as its tourism.

The Mauritian jurisdiction is considered uncooperative in terms of combating money laundering and the financing of terrorism-related activities. On October 1, the inclusion of Mauritius on the blacklist of the European Union (EU) officially takes effect. While waiting to get out of it, which the authorities are hoping for, the competing countries are taking advantage of it.

It is doubtful that operators operating in financial services welcome the first day of October with a broad smile. Even less the government of Mauritius. The presence of the Mauritian jurisdiction on the EU blacklist officially takes effect today.

Since May, the reputation of our jurisdiction as an area where not enough importance is attached that EU countries wish to the fight against the laundering of dirty money and the financing of terrorism has taken a knock. Two phenomena which, together, constitute one of the biggest threats to the stability of the global financial system.

The evaluation of the performance of the Mauritian jurisdiction has earned it to be placed on a gray list of the Financial Action Task Force (FATF) and on the black list of the EU. The FATF is an intergovernmental organization whose main mission is to ensure that the rules of good conduct in the financial field are respected. Money laundering and terrorist financing are considered to be the two most risky main crimes against the stability of Europe's financial system.

The EU's approach is serious enough since despite the efforts made by the government to meet the standards of the required requirements, in its edition of June 19, 2020, the Official Journal of the European Union states that the Mauritian jurisdiction is placed on its blacklist. The only consolation, if one were needed, is that Mauritius is not the only jurisdiction to have found itself in such a position. The measure also affects the Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mongolia, Myanmar (ex-Burma), Nicaragua, Panama and Zimbabwe.

The criticism leveled at these countries revolves around the shortcomings observed in the guarantees provided by these jurisdictions, proving that they do not constitute an area where companies and individuals wishing to avoid honoring their tax obligations can transfer their money to bank accounts. The establishment of this list is far from being a declaration of war against the countries mentioned. It is simply a strong signal that all is not well in a jurisdiction and that appropriate action needs to be taken. Efforts to achieve this are being made on both sides. In the case of Mauritius, we saw a desire on the part of both partners for things to change.

The EU is far from behaving like a professor with a mess rattan in hand. It brings everything in its power to help eliminate deficiencies that pose a threat to its financial system. One example is the recent organization by the Ministry of Financial Services and the EU AML/CFT Global Facility of a workshop on Suspicious Transaction Reporting. On the side of Mauritius, we did not skimp on the means to demonstrate its determination to allow the financial services sector to evolve in transparency and according to the standards desired by the EU and the FATF.

There are reasons to hope that it is no longer the question of the presence of the Mauritian jurisdiction on the blacklist which should be topical but rather the announcement by the European Council, the supreme authority of the EU, that Mauritius is no longer part of this list. In other words, to ask whether or not the name of the Mauritian jurisdiction should continue to be included in this blacklist.

Measures taken to remedy deficiencies

While it is true that it is difficult to read the minds of EU leaders, who are the sole masters on board in the protection of their financial system, Mauritius has never been recalcitrant. In this kind of situation, what counts is not so much the score achieved but the predisposition to make amends when deficiencies are reported. The initiatives taken by Mauritius, as soon as the country became aware of its presence and on the FATF list and on the EU list, are, among others:

The opening and the search for dialogue with the EU even if this decision was taken without prior consultation with Mauritius, contrary to a practice that has existed between the two parties so far.

Since the EU's approach is based on the FATF decision, which published a list of jurisdictions that require increased monitoring, as early as February 2020, the country made a solemn political commitment to implement the recommendations of the intergovernmental body, after the publication of its gray list. The country did not fail to specify that, according to the FATF action plan, it had no shortcomings at the technical level of its adherence to the standards recommended by this body.

The decision of the government to carry out a complete revision of the existing legislation relating to the fight against money laundering and the financing of activities associated with terrorism. Result of this approach: the mode of operation of the Mauritian financial services sector operates in full compliance with 35 and 40 recommendations compared to a list of only 14 recommendations with which the country was in compliance so far. It was in September 2018, as part of the publication of an evaluation report.

The emergence of Covid-19 since March 20 has had no impact on the government's determination to show its interest in respecting its commitment to submit a report on the progress made in the application of the action plan. recommended by the FATF.

The Mauritian jurisdiction has not refused to accept the aid offered to it by the EU through the AML/CFT Global Facility, an aid fund. He took the same stance when Germany, an influential member of the EU, did the same through the German Development Agency. An approach aimed at enabling Mauritius to improve the level of its compliance with EU financial requirements.

Never mind, one of the signs that demonstrates the government's desire to honor its political commitment to combat money laundering and the financing of terrorism is the promulgation, on July 9, of the Anti-Money Laundering and Combatting the Financing of Terrorism (Miscellaneous provisions) Act 2020.

Samade Jhummun: “We know that the Mauritian jurisdiction will be removed from the EU blacklist in the near future”

Asked, Samade Jhummun, Chief Executive Officer (CEO) of Global Finance Mauritius, a platform bringing together different categories of operators operating in the financial services sector, says he is more optimistic than ever. “We know that the Mauritian jurisdiction will be removed from the EU blacklist in the near future despite the challenges it faces.” His optimism is based on the fact that the Mauritian jurisdiction demonstrates its ability to evolve in accordance with international standards, compared to other jurisdictions which will have to submit to the requirements of exercises to review their modus operandi. The CEO of Global Finance Mauritius to continue that he finds it unfortunate that the inclusion of the Mauritian destination on the EU blacklist becomes official at a time when all economies are doing their best to get back on track at the following the emergence of Covid-19. For him, it remains imperative that the name of the Mauritian jurisdiction be removed as soon as possible from the FATF gray list and the EU blacklist. He argues that with the entry into operation of the presence of the Mauritian jurisdiction on the EU blacklist, international transactions will undergo sustained checks. “We support all the efforts that the government will make in this area. In the meantime, it is our duty to do everything possible to strengthen investor confidence in our jurisdiction. (…) We are required to ensure permanent communication in order to allow the Mauritian jurisdiction to make amends regarding the shortcomings identified by both the EU and the FATF.”