Mauritius
Other International Treaties
Mutual
Assistance Treaties: Until 2005, Mauritius
had entered no mutual assistance treaties
as such, and there were no formal procedures
for cooperating with other countries.
The Reciprocal Enforcement of Judgements
Act 1923 covers most British Commonwealth
countries; non-Commonwealth countries
would have to obtain a Mauritian court
judgement before being able to enforce
judgement locally.
However,
in May, 2003, Sushil Khushiram, Mauritius
Minister of Economic Development, Financial
Services and Corporate Affairs set out
details of the country's current moves
in combatting money laundering and terrorist
financing, at the opening of a Financial
Intelligence Unit seminar.
'Since
this Government took office in September
2000', said the Minister, 'the political
will to combat money laundering and terrorist
financing and promote clean and reputable
financial services has been strong and
steadfast. We have implemented a programme
of deep seated reforms in the regulatory
and supervisory framework of financial
services, which led to the establishment
of the FSC and the FSPA. In parallel,
we have modernised our Companies Act and
introduced a new Trusts Act.
'We
know the dramatic changes that took place
in the international financial environment
in the wake of global terrorist threats
and amplified money laundering. Government
introduced a series of legislation in
early 2002, namely the Prevention of Corruption
Act, The Prevention of Terrorism Act and
the Financial Intelligence and Anti-Money
Laundering Act, following which the ICAC,
and soon after the FIU, became operational.
'Mauritius
also volunteered for a diagnosis of the
strengths and vulnerabilities of our financial
sector by the IMF/World Bank under a Financial
Sector Assessment Programme (FSAP) at
the end of last year. This exercise is
designed to help countries enhance their
resilience to financial crises, and to
foster growth by promoting financial soundness
and stability. The assessment included
a review of AML/CFT regime in place. It
is now in the process of being completed.
The FSAP reports will be presented to
the IMF Executive Board next month, and
Mauritius will then seek an upgrading
of its ranking by the Financial Stability
Forum. You will recall that Mauritius
was ranked in the third and lowest category
of offshore financial centres by the FSF
in April 2000 with regard to the quality
of its financial supervision. It has not
been an easy toil, but we are almost there,
and the expected adjustment the country’s
FSF ranking will further strengthen our
credibility in attracting new and better
business in financial services.
'As
part of the FSAP exercise, certain amendments
have been proposed to the existing legislation
to fine-tune some provisions and clear
certain ambiguities. We obtained technical
assistance from the World Bank and IMF
to look deeper into the proposed AML/CFT
amendments. A TA Team of two AML/CFT experts
visited us in March 2003 and submitted
their final report in April. A broad-based
National Coordination AML/CFT Committee
set up in early 2003 under the aegis of
my ministry met with the experts and discussed
the final report. The Committee, which
has been meeting regularly to coordinate
national AML/CFT policies, comprises the
intelligence and investigative bodies,
namely FIU, ICAC, the Police, the regulators,
i.e. the BOM and the FSC, the relevant
ministries – the Prime Minister’s Office,
the Ministry of Finance, the Ministry
of External Affairs, the State Law Office
and the Commissioner for Drugs.
'Further
measures will be examined with IMF/World
Bank technical assistance to reinforce
the operational effectiveness of the institutions
involved in AML/CFT. A Task Force has
been set up by the AML/CFT Coordination
Committee to streamline and formalize
procedures for dealing with financial
crime, from a STR to final prosecution.
Moreover, we are consolidating the AML/CFT
framework through other supporting legislation
to be introduced in the coming months.
A Convention for the Suppression of Terrorism
Bill, in obligation to UN requirements,
a Mutual Legal Assistance Bill and an
Extradition Bill are being finalised.
'No
one should entertain any doubts about
Government’s commitment to combating corruption,
money laundering and the financing of
terrorism. Institutions such as ICAC and
FIU are coming up fast on their learning
curve and will soon reach their cruising
speed. ICAC is investigating several high
profile cases, while some 80 suspicious
transactions reports have been received
by the FIU. I understand that a number
of these STRs have already been disseminated
by the FIU to ICAC or Police for investigation.
The regulators, namely the Bank of Mauritius
and the Financial Services Commission
have finalised AML/CFT guidelines for
their licensees. I am sure that during
the presentations this morning you will
learn more about the operations of these
organisations and the role they play in
achieving our common AML/CFT objectives.
'Ladies
and gentlemen, the most effective way
to combat money laundering is for both
the public and the private sectors to
play their part in understanding and targeting
criminal finance. This involves intelligence,
investigation and prosecution. Without
these three components, an AML/CFT strategy
cannot be truly effective. There is a
clear divide between those who receive
and disseminate financial intelligence
i.e. the Financial Intelligence Unit,
and those whose job is investigate, determine
the criminality and prosecute, e.g. the
ICAC, Police and Customs. The logic behind
this approach is that intelligence is
different from evidence. Intelligence
reports prepared by experts produce pictures
of the criminality – not just who is doing
what, but what type of crime is being
committed, how criminality is evolving
and where the next threat is coming from.
Using intelligence to follow the money
– identified through suspicious transactions
reports –can often lead to the criminal.
'However,
some banks and financial institutions
are not making sufficient efforts to understand
the institutional or legal framework that
emphasizes financial intelligence in combating
money laundering and terrorist financing.
A few banks are invoking legal or other
reasons in refusing to provide full and
complete information to the FIU. Let me
make it clear that the existing legal
ambiguities in the Banking Act will be
dealt with very shortly. Those of you
who are familiar with the forty recommendations
of the Financial Action Task Force on
Money Laundering, or more precisely Recommendation
5, will know that a country’s banking
secrecy laws must not conflict with, or
inhibit, the effectiveness of a national
anti-money laundering strategy. The FATF
recommendations are applied worldwide.
'Let
me also comment on the role that “gate
keepers” i.e. accountants, barristers
and other professional advisers are expected
to play in the AML/CFT combat. While I
understand that new legislation may need
time to sink down, I think that we need
an accelerated culture change here. The
Financial Intelligence and Anti-Money
Laundering Act makes it mandatory for
members of the relevant professions or
occupations to make suspicious transactions
reports to the FIU. But it seems that
the submission of STRs by them will take
some time to come by. The Bar Council,
the Law Society, the Association of Notaries
and Accounting Bodies represented in Mauritius
are no doubt calling members to take disclosures
of suspected money laundering cases seriously.
'Ladies
and Gentlemen, AML/CFT also has a regional
and international dimension. International
action to combat money laundering started
in the late 1980s with the ensuing development
of international standards and national
initiatives. The Financial Action Task
Force which was set up in 1989 by the
G7 nations has a leading role in the global
drive to combat money laundering, and
more recently terrorism financing. Its
40 plus 8 recommendations constitute the
international benchmark for assessing
the standards of an AML/CFT regime. Mauritius
is initiating action to obtain observer
status in the FATF, on the same basis
as was granted to South Africa.
'At
another international level, the Egmont
Group is an informal forum open to all
Government agencies having the means to
prevent criminals from using the legitimate
financial system and other economic sectors
to profit from illegal activities. Membership
of Egmont means direct involvement in
the decision making process of the Group,
participation in the activities of its
Working Groups, participation in training
sponsored by Egmont and more importantly
access to Egmont Secure Web for information
sharing and intelligence gathering.
'The
Mauritian FIU was sponsored by the US
FIU (FinCEN) for membership of the Egmont
Group and I am pleased to announce that
at its meeting of 31st March 2003 the
Legal Working Group of Egmont has endorsed
the application of Mauritius to join the
Egmont Group and will make a formal recommendation
on our candidacy before the 69 Egmont
member FIUs during the next plenary meeting
of the Group in Sydney on 23rd July, 2003.
This will put Mauritius to the top league
of countries with world class standards
and structures to combat global financial
crime.
'The
Mauritius FIU is working closely with
the newly created Financial Intelligence
Centre of South Africa and the French
FIU - Tracfin. As for FinCEN, it continues
to be active in our FIU development and
will be organising a regional training
session in Mauritius in September this
year for FIU and law enforcement officials
from South Africa, UAE and India.
'Mauritius
is also actively associated with a regional
AML/CFT initiative, as a founding member
of the Eastern and Southern Africa Anti
Money Laundering Group (ESAAMLG), which
is an FATF-style regional body receiving
the full support of all international
organisations involved in AML/CFT. ESAAMLG
members have started a mutual evaluation
of their respective AML/CFT regimes to
assess compliance with the FATF 40 + 8
Recommendations.'
In
April, 2003, the Mauritius Financial Services
Commission (FSC) issued three Codes on
the prevention of money laundering and
terrorist financing, namely:
Code
on the Prevention of Money Laundering
and Terrorist Financing intended for Management
Companies;
Code on the Prevention of Money Laundering
and Terrorist Financing intended for Investment
Businesses; and
Code on the Prevention of Money Laundering
and Terrorist Financing intended for Insurance
Entities.
Said the FSC at the time:
'These
Codes aim to preserve high standards of
practice and the integrity of Mauritius
as a reputable financial services center.
Mauritius is fully supportive of international
initiatives to combat money laundering
and terrorist financing and so the Codes
take account of international standards.
'These
Codes state minima criteria to be followed
by companies and market intermediaries
to prevent the exploitation of the financial
services industry in Mauritius by money
launderers and terrorist financiers.
'Economies
with emerging financial centers and inadequate
controls are particularly vulnerable.
Money laundering poses a serious threat
to the integrity and soundness of the
financial system of all countries. It
affects economic development, and foreign
investors' perception that the financial
services industry functions within a framework
of high legal, professional and ethical
standards.
'It
is therefore vital that all operators
in the financial industry in Mauritius
avoid exposure to the risk of involvement
in relationships concerning money laundering
or terrorist financing.
'The
Codes issued by FSC describe the regulatory
anti money laundering practices that operators
involved in these three disciplines are
expected to consistently follow and include:
The
"Know Your Customer" procedures;
The obligation for operators to check
the identity of clients;
The need to retain records; and above
all
The need to comply with the legal provisions
of the Financial Intelligence and Anti
Money Laundering Act 2002, particularly
as regards Suspicious Transaction Reporting.'
The Codes came into force on 2nd May 2003.
The
Information Exchange Agreement With India
In
December, 2002, Mauritius and India signed
a Memorandum of Understanding laying down
rules for information exchange between
the two countries.
Discussions
began in April, 2002, when the Deputy
Prime Minister and Minister of Finance
of Mauritius, on a visit to India, suggested
the signing of an MoU, and in June the
Mauritian Financial Services Development
Act was amended to give wider powers to
the FSC for investigation and exchange
of information with other regulators.
The
MOU provides for the two signatory Authorities
to assist each other in the detection
of fraudulent market practices, including
insider dealing and market manipulation
in the areas of securities transactions
and derivative dealings. Its principal
objective is to support the sound development
of the securities markets in both countries
by encouraging legitimate best practices.
Structures have been established for effective
implementation of exchange of information,
both on request and on a voluntary basis,
about suspicious securities dealings between
the two countries. The intention behind
the MOU is to track down transactions
tainted by fraud and financial crime,
not to target bona fide legitimate transactions.
It
was expected that the MOU would go a long
way towards dispelling doubts about the
unwillingness of the two Authorities to
engage in the effective exchange of information
in accord with standing international
best practices.
Indian
Government officials said the agreement
would deter traders from routing money
with doubtful origins through Mauritius.
The
Indian government had recently introduced
the SEBI Act 2002 to give the market regulator
greater powers to deal with market abuse.
The agreement with Mauritius was one of
a series that SEBI has signed with major
trading partners.
The
Financial Intelligence Unit
In
2003 Mauritius's Financial Intelligence
Unit (FIU) was admitted to the Egmont
Group, an informal coalition which provides
a forum for FIUs to improve support to
their respective national anti-money laundering
programmes.
The Mauritian FIU, which was sponsored
for entry into the group by its US counterpart,
FinCEN, was admitted prior to the Egmont
Group's 5-day plenary meeting of that
year, which was held in Australia.
In
March, 2005, Indian Prime Minister Manmohan
Singh signed a Free Trade Agreement with
Mauritius. Entitled the Comprehensive
Economic Cooperation Partnership Agreement,
the pact is aimed at strengthening the
existing economic cooperation between
the two countries. While it will liberalise
trade in goods and services and facilitate
joint ventures, the most important aspect
of the agreement is that it will encompass
the existing double taxation avoidance
agreement between the two countries.
This
DTAA had been the focus of much worry
for Mauritius over the years, as the Indian
tax authorities have sought to strengthen
the standards of proof for tax residency
in Mauritius, and had attempted to disallow
tax exemptions granted by Mauritius to
investors using the island as a conduit
for Indian investment (see above). Mauritius
is the second largest source of FDI for
India.
In
October, 2004, the Indian Supreme Court
upheld the validity of a circular issued
by the Indian Central Board of Direct
Taxes, which stated that a certificate
of residence issued by the Mauritian authorities
constituted sufficient evidence of residence
in the jurisdiction to allow a firm or
investor to take advantage of the provisions
of the bilateral DTA between India and
Mauritius. And earlier in the year the
Supreme Court threw out a 'curative petition'
which would have reversed the situation.
However,
the issue of Indian resident entities
'round-tripping' investments via Mauritius
is, as previously mentioned, still a concern.
Mutual
Assistance Treaties
In
October, 2005, India and Mauritius, which
has an Indian community of more than 800,000,
signed a batch of agreements including
a Legal Mutual Assistance Treaty aimed
at limiting the scope for money-laundering
between the two countries.
The
agreements were signed in the presence
of Indian Prime Minister Manmohan Singh
and his Mauritian counterpart Navinchandra
Ramgoolam after the two leaders held talks
on a wide array of bilateral issues.
Indian
Home Affairs Minister Shivraj Patil and
Mauritian Foreign Minister Madan Murlidhar
Dulloo signed the agreement which will
promote better co-operation among police
and investigative agencies in both countries
and envisages sharing of information and
data relating to crimes and criminals.
India
has signed similar Treaties on mutual
legal assistance in criminal matters with
around 21 countries, including the United
Kingdom, Canada, Russian Federation, France,
Kyrgyzstan, Kazakhstan, United Arab Emitrates,
Uzbekistan, Mongolia, Tajikistan, United
States of America, Turkey, Switzerland,
Ukraine, South Africa, Baharain, Thailand,
Kuwait, South Korea, Singapore and Belarus.
Salient
features of the Agreement are:
- To
improve the effectiveness of both counties
in the suppression, investigation and
prosecution of crime, including crime
relating to terrorism, and tracing,
restraint, forfeiture or confiscation
of the proceeds and instruments of crime
through cooperation and mutual legal
assistance in criminal matters.
-
'Criminal matters' means, for India,
investigations, inquiries, trials and
other proceedings relating to an offence
created by Parliament or by the legislature
of State; and, for the Republic of Mauritius,
subject to the laws of the Republic
of Mauritius, investigations, inquiries
or other proceedings relating to a statutory
offence.
-
Mutual legal assistance includes: locating
and identifying persons and objects;
serving documents, including documents
seeking the attendance of persons; providing
information, documents and records;
providing objects, including lending
exhibits; search and seizure; taking
evidence and obtaining statements; authorizing
the presence of persons from Requesting
State at the execution of requests;
making detailed persons available to
give evidence or assist investigations;
facilitating appearance of witnesses
or the assistance of persons in investigations;
taking measure to locate, restrain or
forfeit the proceeds of crime and other
form of assistance not prohibited by
the law of the Requested State.
- Mutual
legal assistance is to be granted irrespective
of whether the assistance is sought
or to be provided by a court or some
other competent authority.
-
Assistance may be refused if the execution
of the request would impair sovereignty,
security, public order or other essential
interest, or prejudice the safety of
any persons; if the execution of the
request would be contrary to the domestic
law of the Requested State; or if the
request relates to an offence in respect
of which the accused person had been
acquitted or pardoned.
In
January, 2006, the Mauritius Financial
Services Commission and the Jersey Financial
Services Commission signed a Memorandum
of Understanding effective from 26 December
2005 covering mutual assistance and the
exchange of information.
The
Memorandum establishes a formal framework
for mutual assistance and the exchange
of information between the two regulators
to facilitate the enforcement of, and
compliance with, the laws of each jurisdiction.
Such collaboration, say the two FSCs,
should help to protect investors and depositors
and to promote the integrity of financial
services markets in the two jurisdictions.
The
Memorandum of Understanding commits both
regulators to providing help within the
limits of each jurisdictions’ laws, and
establishes procedures and liaison points
so that requests for information needed
for tackling financial regulatory offences
can be handled rapidly and efficiently.
Milan
Meetarbhan, Chief Executive of FSC Mauritius,
said:
“Mauritius
is keen to establish itself as a reputable
International Financial Centre and in
addition to our wide Double Taxation Treaty
network which already provides for extensive
exchange of information, we now have a
number of agreements on exchange of information
with regulators across the world. We are
pleased to have an MOU with Jersey Financial
Services Commission as this will further
enhance the cooperation between our two
jurisdictions.”
David Carse, Director General of the Jersey
Financial Services Commission, said:
“I
am delighted to sign this Memorandum of
Understanding with FSC Mauritius. It is
the latest in a number established between
the Commission and other regulators around
the world and reflects the Commission’s
commitment to cross-border regulatory
co-operation.”
In
February 2007, around six months after
the Trade
and Investment Framework Agreement (TIFA)
between the United States and Mauritius
was signed (in September 2006), the first
TIFA Council meeting between the two countries
took place.
The
US delegation was led by Florizelle Liser,
Assistant US Trade Representative for
Africa.
The
TIFA was established as a vehicle for
strengthening and expanding bilateral
trade ties between Mauritius and the United
States. It provides an opportunity to
work more closely on a broad range of
trade-related issues, including the moving
of the WTO Doha Development Round forward
and the implementing of the AGOA. The
Agreement is considered as a first step
towards the creation of a Free Trade Area.
The
TIFA also includes provisions for the
establishment of a bilateral Trade and
Investment Council that will monitor trade
and investment relations and identify
opportunities for expanding trade and
investment, as well as important issues
and challenges that both Mauritius and
the United States need to address.
Commenting
following the conclusion of the first
Council meeting, Deputy US Trade Representative
Karan Bhatia announced that:
“I’m
pleased that, within six months of its
signing, we are using our TIFA agreement
with Mauritius to deepen and strengthen
our engagement with that country and to
stimulate our relationship with key African
trading partners.”
She
continued:
“Our
TIFA Council is an important part of our
continuing effort to improve the US-Mauritian
trade and investment relationship.”
The
meeting allowed the two governments to
set priorities, identify objectives, establish
benchmarks, outline impediments, and chart
the way forward for work under the TIFA.
During
the TIFA Council meeting, officials from
the United States and Mauritius explored
common objectives – including cooperation
in the World Trade Organization, implementation
of the African Growth and Opportunity
Act, export diversification, trade and
investment promotion, and economic development.
They also examined opportunities for a
more comprehensive trade and investment
relationship.
The
TIFA Council reviewed a common workplan
that the United States and Mauritius will
jointly undertake in order to implement
the TIFA, including a wide-range of programs
and activities to support, facilitate,
and ensure progress and success in strengthening
the US-Mauritian trade and investment
relationship.
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