1 juillet 2020 This Bill is another step to reinforce our legal framework.
Lors de la séance parlementaire du 30 juin 2020 , Mahen Seeruttun a présenté son priojet de loi, Anti-Money Laundering and Combatting the Financing of Terrorism (AML-CFT) (Miscellaneous Provisions) Bill 2020 et fait un discours sur le comment du pourquoi de divers chngementa apportés à plus de 15 lois à Maurice.
Mr Speaker Sir,
I move that the Anti-Money Laundering and Combatting the Financing of Terrorism (AML-CFT) (Miscellaneous Provisions) Bill 2020 be read a second time.
Mr Speaker Sir,
I would wish at the very outset of my intervention on this Bill to clarify one important issue.
The Honourable Members may be asking questions on the reason for Government to introduce two similar Bills, that is the Anti-Money Laundering and Combatting the Financing of Terrorism (Miscellaneous Provisions) Bills within a period of around one year.
Mr Speaker Sir,
I am referring here to the Anti-Money Laundering and Combatting the Financing of Terrorism and Proliferation (Miscellaneous Provisions) Act of May 2019 and the Bill before the House today.
It will surely be recalled that the Financial Intelligence and Anti-Money Laundering Act, that is, the FIAMLA was enacted in 2002 with a view to creating the appropriate legal environment in the context of Anti-Money Laundering and Countering the Financing of Terrorism (AML-CFT) regimes.
Mr Speaker Sir,
Money laundering is not a new phenomenon.It became an area of particular interest in the late 1980s in response to the growing concern of the global drug problem.
The FATF was set up in July 1989 by the Group of Seven summit in Paris to examine and develop measures to combat Money Laundering.
The first set of international AML standards were issued in 1990: the 40 Recommendations on Money Laundering.
In 2001, the 8 Special Recommendations to deal with Terrorist Financing matters were issued following the 9/11 attacks on the US.The FATF Recommendations were revised in 1996, 2001, 2003 and most recently in 2012.
Subsequently, the AML/CFT Frameworks of countries are being regularly assessed through a Mutual Evaluation Exercise which is conducted by an authorised international body.
Mauritius underwent a first mutual evaluation in December 2000.
A Financial Sector Assessment mission of the IMF/WB conducted a detailed assessment of the anti-money laundering (AML) and combating the financing of terrorism (CFT) regime of Mauritius.
The mission reviewed the relevant AML/CFT laws and regulations and supervisory and regulatory systems in place to deter money laundering and financing of terrorism with a view to identifying the strengths, vulnerabilities, and development needs in the financial sector and assisting the Mauritian authorities in designing appropriate responses.
Accordingly, the FIAMLA was introduced in 2002 to ensure that the appropriate legal framework is available to meet international standards with respect to AML/CFT.
Mr Speaker Sir,
This House will agree with me that AML/CFT is an issue, which is not static.It evolves with innovation, widespread accessibility and use of new technologies as delivery channels for financial goods, products and services and modernisation in general.
Just to cite an example, crypto currencies such as Bitcoins did not exist some ten to twelve years ago but are now extensively available on the market.
These new developments, Mr Speaker Sir, require the setting up of an appropriate legal infrastructure to ensure that there are no loopholes in an AML/CFT regime.
Accordingly, there is a requirement for countries to constantly review their legal and other frameworks, to protect their jurisdictions from being used for illicit activities.
Mr Speaker Sir,
The drafting of a legislation on AML/CFT is indeed a complex exercise.My Ministry had the full support of the ESAAMLG when the Anti-Money Laundering and Combatting the Financing of Terrorism Act of May 2019 was being drafted.
The ESAAMLG even commended Mauritius for that piece of legislation and stated that it could serve as a model for the region.
Yet, at that time, the requirements for additional legal provisions, some of which are being proposed in this Bill, could not be addressed for lack of local expertise.
Mr Speaker Sir,
Let me conclude this first part of my intervention by stating that with new developments in the Financial Services Sector, there may be need in the near future, to introduce further legislation to comply with upcoming standards, the more so that we know that the bar is being set higher and higher up each time to keep apace with market evolution.
Mr Speaker Sir,
I will now briefly mention the FATF Action Plan, which is directly linked to the Bill.
As the House is aware, at its February 2020 Plenary meeting, the Financial Action Task Force (FATF) decided that Mauritius should be monitored under the formal FATF International Cooperation Review Group (ICRG) process and accordingly placed Mauritius on its public document of “Jurisdictions under Increased Monitoring”.
At the same meeting, Mauritius made a high-level political commitment to work with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to strengthen the effectiveness of its AML/CFT regime.
In its public statement of 21 February 2020, the FATF acknowledged that since the completion of its Mutual Evaluation Report (MER) in 2018, Mauritius has made progress on a number of its MER recommended actions to improve technical compliance and effectiveness, including amending the legal framework to require legal persons and legal arrangements to disclose of beneficial ownership information and improving the process of identifying and confiscating proceeds of crimes.
Regrettably, the FATF listing has had far reaching consequences for Mauritius.
In fact, as a result of that listing, Mauritius has been listed on the EU list of High Risk Third countries in May 2020.
It is therefore imperative for Mauritius to expeditiously implement the FATF Action Plan to enable us to exit both lists at the earliest.
Mr Speaker Sir,
Mauritius is currently fully engaged in the implementation of the FATF Action Plan and has enlisted the support of technical assistance partners, namely the EU funded AML/CFT Global Facility, the German Development Agency (GIZ), the UK government, the UNODC and the IMF.
As at date, ten consultants have been engaged under the technical assistance programme and are working closely with the institutions involved in the implementation of the FATF Action Plan.
Immediately after receiving the FATF Action Plan, a detailed work plan was developed with the assistance of our consultants to identify all the measures that each and every institution will have to put in place to demonstrate an increase in the level of effectiveness of our AML/CFT systems and procedures.
The consultants have also advised on some legal obligations, which have taken on board in the Bill before the House today.
Mr Speaker Sir
I would like to bring to the attention of the House that, effectiveness on which the FATF Action Plan is based, cannot be demonstrated without a framework for national coordination at policy level and cooperation at operational level.In this respect, Recommendation 2 of the FATF provides that:
I quote:
“Countries should ensure that policy-makers, the financial intelligence unit (FIU), law enforcement authorities, supervisors and other relevant competent authorities, at the policy-making and operational levels, have effective mechanisms in place which enable them to cooperate, and, where appropriate, coordinate and exchange information domestically with each other concerning the development and implementation of policies and activities to combat money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction”.
End of quote.
To ensure the national coordination and cooperation, the National AML/CFT Committee has established a Core Group as well as a number of sub-committees to monitor the implementation of all the MER Recommendations and the FATF Action Plan.
At the highest level a Ministerial Committee chaired by the Prime Minster has been set up for monitoring the implementation of the FATF Action Plan.
Mr Speaker Sir,
With your permission, I would like to take some time to explain to the House the length and breadth of what the FATF is expecting from Mauritius in terms of effectiveness.I will use one of the Action Plan items as an example.
Mr.
Speaker Sir,
One of the major areas where Mauritius has to demonstrate effectiveness is with respect to the AML/CFT risk based supervision of the designated non-financial businesses and professions, commonly referred to as DNFBPs.
The lack of supervision of the DNFBP sector was flagged to Mauritius in the 2008 Mutual Evaluation Report.In the 2018 MER, the DNFBP sector was still an issue of concern for the assessors.
The DNFBP sector comprises the following sub-sectors: the legal profession comprising attorneys, barristers, notaries and law firms, the accounting professionals, gambling, dealers in precious metals and stones and real estate agents.
Mr Speaker Sir,
In July 2018, the Finance (Miscellaneous Provisions) Act 2018 amended the FIAMLA to realign the AML/CFT obligations of banks, financial institutions and the DNFBPs.
Moreover, comprehensive regulations were issued under the FIAMLA in October 2018 to set out the mandatory FATF requirements under the FIAMLA.It is important to note that the regulations issued under the FIAMLA in 2003 did not apply to the DNFBP sector.
Thereafter, as I mentioned earlier in my intervention, in May 2019, Government enacted the Anti-Money Laundering and Combatting the Financing of Terrorism and Proliferation (Miscellaneous Provisions) Act to lay down the legal foundation to enable the designated AML/CFT regulatory bodies, namely the Attorney General’s Office, the Financial Intelligence Unit, the Mauritius Institute of Professional Accountants, the Gambling Regulatory Authority and the Registrar of Companies to implement a risk based supervision framework for the DNFBPs.
In addition to the legal framework, the completion of the Money Laundering and Terrorism Financing National Risk Assessment was crucial.The National Risk Assessment was successfully completed and the report was published in August 2019.
Mr.
Speaker Sir,
The development of a risk based supervision framework is not a simple task but requires a progressive approach to supervision with activities progressing from education, to inspection and corrective actions.
The DNFBP regulatory bodies have come a long way in the development and implementation of the risk based supervision framework.
Despite the unprecedented challenges in the context of the COVID 19 pandemic, additional resources have been deployed to all the DNFBP regulatory bodies.
With the help of the consultants, outreach materials to support the education aspect have been developed, consultations with the industry have been undertaken, and outreach on the AML/CFT obligations is currently ongoing.
All the regulatory bodies are also gathering data on their respective sectors to develop a risk matrix, which will inform the level of intrusiveness of their supervisory actions.
Mr.Speaker Sir,
Assessing effectiveness of an AML/CFT system is based on a fundamentally different approach to technical compliance with the FATF Recommendations.It requires judgement as to whether the key objectives of an AML/CFT system, in line with the FATF standards, are being effectively met in practice.
All relevant institutions involved in the implementation of the FATF Action Plan are working relentlessly to complete their respective action plan items at the earliest.
Mr Speaker Sir,
Government has demonstrated a strong political will and determination to comply with the international standards to combat money laundering and the financing of terrorism and proliferation by bringing fundamental changes to the AML/CFT legislative framework.This is so since we took cognizance of the outcome of the 2018 MER [Mutual Evaluation Report] and 2019 FURs [Follow Up Reports].
Indeed, I would like to highlight that under the FATF Action Plan, Mauritius does not have any technical deficiencies that must be addressed.We have since focused on the strengthening of the effectiveness of our AML/CFT Regime.
In fact, a follow-up progress report was submitted in March 2020 to FATF for review as at the next plenary session, which had to be cancelled due to the Covid-19 pandemic.
Mr Speaker Sir,
Turning now to the Anti-Money Laundering and Combatting the Financing of Terrorism (Miscellaneous Provisions) Bill 2020, I must state that its purpose is twofold.
First, it will assist Mauritius to support the third application for technical compliance re-rating of the remaining five FATF Recommendations and second it will support the implementation of the FATF Action Plan.
While there are no technical deficiencies that must be addressed under the FATF Action Plan, as I mentioned, yet, we have to consider that the level of technical compliance contributes to the assessment of effectiveness.
Mr Speaker Sir,
The Bill provides for amending 19 pieces of legislations.
With your permission, I would wish to comment on the rationale of the major amendments proposed:
Clause 2 of the Bill – Banking Act amended
The Banking Act is being amended in section 64B by increasing the penalty for a breach of AML/CFT obligations from one million rupees to 10 million rupees with a view to aligning the penalty that may be imposed under the Banking Act with the penalty provided under Section 19 of the Financial Intelligence and Anti-Money Laundering Act.
Section 64C of the Banking Act currently provides that the Central Bank may from time to time, conduct an examination of the operations and affairs of every financial institution or licensee.The proposed amendment to section 64C shall allow the Central Bank to undertake the examination of its licensees on a risk sensitive basis in line with the FATF standards.
The proposed amendment will support the application for the re-rating of one of the remaining 5 FATF Recommendations.
Clause 3 of the Bill – Civil Status Act amended
Sections 8C and 17B of the Civil Status Act are being amended to enable the Bank of Mauritius, for the establishment of the Central KYC Registry under Section 52A of the Bank of Mauritius Act, to have access to the Central Population Database (CPD) maintained by the Civil Status Office for the validation of the KYC information submitted to the Central KYC Registry.
I shall move for an amendment at Committee Stage to clause 3 to facilitate the verification of the identity of a customer through any other system maintained and operated by the Bank of Mauritius.
Clause 4 – Companies Act amended
It is proposed to amend the Companies Act in order to enhance the transparency obligations of global business and authorised companies.Presently, not all information relating to global business companies and authorized companies as required under the FATF Standards are publicly available.It must be recalled that the information will be available upon a request made to the Registrar of Companies and payment of the prescribed fees.
It is therefore proposed to amend section 14(8) of the Companies Act to allow the following information to be made available upon request: –
(i) list of directors;
(ii) basic regulating powers (e.g.memorandum and articles of association/constitution); and
(iii) legal form and status.
The Registrar of Companies will provide additional guidance on the type of information that will be made available upon request.
Mr Speaker Sir,
Mauritius has submitted a technical compliance re-rating application for FATF Recommendation 24 to the ESAAMLG.The proposed amendment will support the application for the re-rating of Recommendation 24.It has to be pointed out that this Recommendation is currently rated partially compliant.
Amendments are also being proposed to relevant sections of the Companies Act for the disclosure of beneficial information at the time of incorporation.
In addition to the sanctions for non-disclosure of beneficial ownership information applicable under the Companies Act, the Court will be able to order the company to provide such information to the Registrar.The non-disclosure of beneficial ownership information will be a ground for the removal of a company from the register of the registrar of companies.
Clause 6 -The Financial Intelligence and Anti Money Laundering Act (FIAMLA) amended
Various amendments are being proposed to the FIAMLA including:
· the definition of financial institution is being revised to include credit unions as well as an institution or person approved under the Trusts Act.
· The reporting and supervisory regime for credit unions are being clarified to align the domestic AML/CFT framework with the requirements of the FATF.In this respect, amendments are being made to the FIAMLA and to the Cooperatives Act under clause 5 to this effect.
As required by the FATF, credit unions have now been defined as financial institutions.They are now no longer defined as DNFBPs.
At the same time, the Registrar of Cooperatives is being maintained as the designated AML/CFT supervisory body for this sector and a clear communication regime between the FIU and the Registrar has been established.
Importantly, the obligation to file STRs is being assigned to the internal controller of credit unions, as it is mandatory for all credit unions to appoint such an officer.
· These amendments shall have the merit of eliminating the duplication in reporting which existed previously and of improving the exchange of information between the FIU and the Registrar of Cooperatives.
· The FATF definition of Designated Non-Financial Businesses and Professions (DNFBPs) does not capture auditors.Accordingly, amendments are being brought to remove auditors from the ambit of the FIAMLA.However, auditors will still be required to file suspicious transactions with the FIU and comply with corresponding obligations.
For this purpose, section 10 to 16 and 19 of the FIAMLA are being amended.
· a provision for the FIU to disseminate information and results of analyses carried out by it to the Counter Terrorism Unit (CTU) established under the Prevention of Terrorism Act, in addition to relevant investigating authorities, overseas Financial Intelligence Units and regulatory bodies.
· Amendments are being made to the time frame within which STRs should be filed.An STR must now be filed within 5 working days after the suspicion arose.
Internationally the trend is to have a short timeframe for the filing of STRs, and with technological advances, reporting persons are able to flag and report suspicious transactions more swiftly.This will enable the detection of crime in a more efficient manner.
This change is particularly important in cases relating to suspicion of terrorism financing where swift action by the authorities is warranted.Under the current legislation, reporting entities have 15 working days (i.e.three weeks) to report.
This delay is unacceptable in cases where national security is at stake.
· Additionally, a new offence has been provided in relation to reporting persons who ought to have reasonably become aware of a suspicious transaction but fail to do so.
The failure to file a suspicious transaction report (STR) was already an offence under the FIAMLA.However, a further step has been taken to capture those reporting persons who fail to put in place adequate systems which would have enabled them to become aware of a suspicious transaction and to file an STR.This highlights the central role played by internal controls and procedures in strengthening our AML/CFT framework and in fighting ML and TF.
· To further support the supervision of DNFBPs, a provision is being included to assist regulators in the scoping of the population that they need to oversee.This will enable regulators to better focus their training and outreach activities and to enhance knowledge of AML/CFT obligations within their respective identified segments.This will provide a solid basis for risk based supervision of DNFBPs in line with the expectations of the FATF.
· Dealers in precious metals and stones (DPMS) have been identified by the FATF as one of the designated non-financial businesses and professions (DNFBPs) which should be subject to AML/CFT supervision.
To strengthen the supervision of DPMS in Mauritius, definitions of dealer, precious metals and stones are clearly being set out under section 2 of the FIAMLA and are in line with international best practices.
This will ensure that the relevant operators are properly identified, and that the AML/CFT framework can be applied for this sector in line with FATF recommendations.
The definition of jewellery has also been broadened to include objects which are not for personal adornment.
Money laundering is not perpetrated only through jewellery which can be worn.
As such, it is important for the AML/CFT framework to capture other objects which might be used to launder proceeds of crime.
Clause 8 – The Financial Reporting Act amended
· The Mauritius Institute of Professional Accountants has issued its first Guidelines on Anti-Money Laundering and Countering the Financing of Terrorism in May 2020.This shows the regulatory body’s commitment to combat Money Laundering and Terrorism Financing within the Accounting Sector.
· Section 55A of the Financial Reporting Act is being amended to impose an obligation on professional accountants, public accountants and relevant member firms to comply with Anti-Money Laundering and Countering the Financing of Terrorism Guidelines issued by the Mauritius Institute of Professional Accountants and the Financial Intelligence Unit.
Clause 10 – Foundations Act amended
· Several sections of the Foundations Act are being amended, including:-
– Section 2 to provide for the definitions in respect of beneficial owner, ultimate beneficial owner and nominee which will have the same meaning under the Companies Act.For the purpose of transparency, section 23 is also being amended to provide for disclosure of the full name and address of the beneficial owner or ultimate beneficial owner in the case where the beneficiary is a nominee.
– Section 36 subsection (6) is being repealed to provide for a new subsection relating to the provision of any information regarding the beneficial owner or ultimate beneficial owner of a Foundation to be lodged with the Registrar at the time of registration of the Foundation or foreign Foundation, as the case may be.Also, at the time of registration by way of continuation of the Foundation.
– Two additional subsections are being added under section 36 to create an obligation on the Foundation as well as the Council Member to comply with subsection (1)(d) or (e) failing which they shall commit an offence and shall, on conviction, be liable to a fine not exceeding 300,000 rupees.
– I will further move for an amendment at Committee Stage at clause 10 of the Bill to provide for a new sub-section to section 39 of the Foundations Act to allow Registrar of Foundations to remove foundation from the register where it has failed to comply with section 36(1)(d) or (e) or (5).
Clause 11 – Gambling Regulatory Authority Act amended
· Clause 11 amends the Gambling Regulatory Authority Act to provide among other things for the following:
· Specifying in the definition of horse racing organiser the requirement to be incorporated as a public limited company to adhere with the good governance standards in view of the exigencies and guidelines from ESAAMLG for greater transparency in the gambling sector;
· Introduction of the definition of beneficial owner for disclosure purposes at the time an application is submitted for the issue or renewal of a licence and authorising the Gambling Regulatory Authority to conduct due diligence on beneficial owners, directors, managers and other senior officers of an applicant for business;
· Empowering the Gambling Regulatory Authority to issue guidelines and codes for gambling sector in line with the AML/CFT standards to combat money laundering and terrorism financing in that sector;
· requiring all casino, gaming house and hotel casino to conduct transactions through player card or debit card at a main desk and only chips transactions on a live table game;
· requiring the horse racing organiser to ensure that all payments to jockey by the stables, stable manager or owners are paid through a specific bank account managed by the horse racing organiser.
· requiring the horse racing organiser to ensure that all registered owners pay their respective shares of keep money through a specific bank account managed by the Club;
· requiring the payment for purchase of horses be made solely by cheque or electronic transfer through a specific bank account managed by the horse racing organiser and closely monitor the source of funds for such purchases;
· notifying the Authority at the time of disposal of an interest in a licensee and obtain relevant information on the person acquiring significant interest to ensure whether the person is fit and proper;
· requiring any person to produce identity card for cumulative financial transactions equal to or above 20, 000 rupees;
· requiring a person to operate or issue a player card as may be authorised by relevant body;
· requiring licensees to register their money laundering reporting officer and deputy money laundering reporting officer with the Authority;
· introducing a fine not exceeding one million rupees on the horse racing organiser for non-compliance with any provisions under the Gambling Regulatory Authority Act and any conditions, Rules, Directions or any other guidelines issued by the Authority;
In addition, I will move for an amendment at Committee Stage of clause 11 in the proposed new section 26B by replacing the words ”hotel” and “hotel casino” by the words “gaming house”.
Clause 12- Good Governance and Integrity Reporting Act amended
· The Good Governance and Integrity Reporting Act currently has a financial threshold at which unexplained wealth can be confiscated of 10 million rupees.However, lower-level criminals rarely own assets exceeding 10 million rupees and their unexplained wealth cannot be confiscated under the current scope of the Act.
· Therefore, it is proposed that the confiscation threshold should be lowered to 2.5 million rupees in those cases where the unexplained wealth in question consists of cash seized by an enforcement authority during the course of a criminal enquiry.
· Confiscating cash interdicted at the airport or seized during property searches disrupts criminal networks, denying them the proceeds of crime and the means to finance their activities.
· The amendment will put the onus of proof on the respondent to show wealth has been honestly acquired and bypasses the need to first obtain a criminal conviction, which can be a very lengthy and uncertain process.
Clause 14-The Jewellery Act amended
I shall move for an amendment to clause 14 at Committee Stage to delete and replace clause 14.
This clause replaces the existing definition of “dealer” and exclude the Bank of Mauritius and other banks licensed by the Bank of Mauritius authorised to deal with precious metals from registration with the Controller.
Clauses 15 and 16 – The Limited Liability Partnerships Act and Limited Partnerships Act amended
I shall move for an amendment to clauses 15 and 16 at Committee Stage to make a distinction between limited partner and general partner.
Clause 17- The Mauritius Revenue Authority Act amended
· Presently, the time limit within which the MRA may issue an assessment for under-reporting is three years.
· In cases where there are reasonable suspicions that a tax evasion offence has been committed or where a tax evasion offence is also a predicate offence for Money Laundering, the MRA and ICAC will carry out investigations and initiate prosecution procedures, where applicable.
· During the prosecution process by the MRA or ICAC, the issue of assessments, by the MRA, will be stayed.
· The MRA Act is amended accordingly to provide, in these cases, for stay of issue of assessments coupled with an extension of two years for the issue of those assessments.
Clause 18- The Notaries Act amended
Section 16(a) of the Notaries Act is being amended such that any consideration/purchase price will have to be paid before the notary in order to be considered as part of the purchase price and that any price paid hors de la vue du notaire will not be considered as forming part of the purchase price.A clause shall be inserted in the deed, stating that the notary has made this clause known to the parties.
I will move for an amendment to Clause 18 at Committee Stage to provide for the disbursement by Notaries in respect of payments made by their clients to be made 5 days after the deed has been signed and executed by all the parties instead of 5 working days after payment is made to the Notaries.
Clause 19- The Prevention of Corruption Act (PoCA) amended
· There is presently a deficiency in the Prevention of Corruption Act regarding the absence of enforceable penalty for a legal person which has committed a corruption offence.
· In a decided case, the Intermediate court found that due to the lacuna in our law, no appropriate sentence could be passed in respect of the corruption offences committed by companies as it was not possible to apply custodial sentences to corporate bodies.The Court did not find it proper to substitute a non-punitive sentence which is wholly inappropriate and against the spirit of the POCA.
· The proposed amendment addresses this lacuna and will ensure that dissuasive sanctions are provided against legal persons who commit corruption offences.
Mr.Speaker Sir,
I shall move for an amendment to the Bill at Committee Stage by adding a new clause 21 to provide for the coming into operation of new section 11(c), (d) and (e) on a date to be fixed by Proclamation.
Mr Speaker Sir,
This Government has given a high level political commitment to the FATF to strengthen the effectiveness of its AML/CFT regime.
As a responsible Government, it is of utmost importance that we deliver on this commitment.
The future generations to come must be secured.
Investors and the international community must be reassured that the Government is serious in its fight against money laundering and terrorism and proliferation financing.
This Bill is another step to reinforce our legal framework and thus consolidate our robust foundation to strengthen the effectiveness of our AML/CFT regime.
I therefore, Mr Speaker Sir, commend the Anti-Money Laundering and Combatting the Financing of Terrorism (Miscellaneous Provisions) Bill 2020 to the House.Partager et informez vous aussi.
