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Mauritius : New Global Business companies on the rise despite EU blacklist

Mauritius New Global Business companies on the rise despite EU blacklist

The Mauritian Global Business center, which emerged in the early 1990s, was placed on the provisional European Union’s blacklist for money laundering and terrorist financing. Mauritius joined countries like the Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mongolia, Myanmar/Burma, Nicaragua, Panama and Zimbabwe identified by the EU as potential threats to its financial system.

The EU listing comes after FATF’s (Financial Action Task Force) decision to place Mauritius in its list of “Jurisdictions under Increased Monitoring”, last February. The FATF was founded in 1989 on the initiative of the G7 to develop policies combating money laundering and terrorism financing.

Yet this does not seem to dampen the enthusiasm of investors. Indeed, the Mauritius Global Business Sector currently has more offshore entities than it had at the start of 2020. 

In six month, the Financial Services Commission, issued 472 new licenses. Excluding the 42 “non-live” companies, the number of firms carrying the Global Business Company Category 1 business (GBC 1), rose from 12,058 to 12,493. 

The number of Global Funds in operation in the Mauritian jurisdiction also increased, from 1,019 to 1,052.

Global Business  Data Sheet – Monthly Evolution – 2020

Category 1Category 2Authorised CompanyMCs Global Funds
Number of Live GBCs  beginning Jan 202012 0587 2591 3661851 019
Revisions prior to Jan 201921
Reinstatements during the year33

Newly Licensed

Category 1Category 2Authorised CompanyMCs Global Funds
Total Newly Licensed Companies4720304435
Less non-live companies in 20204257912
Number of Live Companies – end Jun 202012 4937 2061 6611881 052

The Global Business sector is an essential pillar of the Mauritian economy. It contributes to 5.8% of the island’s GDP and employs directly around 10,000 people.

The Economic Development Board (EDB), responsible for promoting investment in Mauritius, says in the presentation of the Global Business segment that “Mauritius International Financial Centre (IFC) provides convenience, fiscal efficiency and risk mitigation for companies engaged in international operations“. 

Mauritius figures on the provisional high-risk third country of EU mainly because of strategic deficiencies in its Anti Money-Laundering and Counter Financing Terrorism (“AML/CFT”) regime.

The list is based on the presumption that any third country that has been identified by the FATF as representing a risk to the international financial system shall affect the European Union. 

The deficiencies identified by the EU include: 

(1) deficiencies in demonstrating that the supervisors of its global business sector and DNFBPs implement risk-based supervision; 

(2) failure to ensure access to accurate basic and beneficial ownership information by competent authorities in a timely manner; 

(3) failure to demonstrate that law enforcement authorities can conduct money laundering investigations, including parallel financial investigations and complex cases; 

(4) failure in implementing a risk-based approach for the supervision of its non-profit organization sector to prevent abuse for terrorist financing purposes; and 

(5) failure to demonstrate an adequate implementation of targeted financial sanctions through outreach and supervision. 

On this basis, Mauritius should be considered as a country having strategic deficiencies in its AML/CFT regime” can be read in the Official Journal of the European Union. 

The Mauritius government reiterated its commitment to implement the FATF Action Plan at the earliest. The country is largely compliant or compliant with 35 out of the 40 recommendations as compared to 14 in its Mutual Evaluation Report of September 2018.

Mauritius’ government argues that the IFC has achieved the FATF expectations for what the FATF has termed the “Big Six Recommendations.” That is the criminalization of the money laundering offense, the criminalization of the terrorism financing offense, the implementation of a framework for targeted financial sanctions, customer due diligence, record keeping, and suspicious transactions. 

Mauritius has obtained technical assistance from the EU funded AML/CFT Global Facility and the German Government through the German Development Agency, the GIZ, to support the implementation of the FATF Action Plan. “Even during the sanitary curfew, Mauritius has continued to work extensively with the technical assistance providers,” said the Mauritian government in a communique to defend itself.

The EU will officially introduce the new countries identified to the black list, on the 1 October 2020.

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