Statement by Minister of Financial Services and Good Governance

(Sitting 17 July 2018)

Madam Speaker,

With your permission, I propose to make a statement with regard to the mutual
evaluation exercise which is presently being undertaken by the Eastern and Southern
Africa Anti-Money Laundering Group (ESAAMLG) on the systems and procedures
in place in Mauritius to combat money laundering and the financing of terrorism.

The ESAAMLG is a group of eighteen countries from the Eastern and

Southern Africa, including Mauritius, which was set up in 1999 to combat money
laundering in the region.

By joining this group, the member countries agreed to participate in an

ongoing programme of Mutual Evaluation which is done in accordance with Mutual
Evaluation Procedures approved and reviewed from time to time by the ESAAMLG
Council of Ministers.

Mauritius underwent a prior evaluation in 2007 and its anti-money laundering

(AML) and combating the financing of terrorism (CFT) regime was assessed on a
set of procedures that were established in 2004.

The 2008 Mutual Evaluation Report (MER) contained detailed

recommendations to assist Mauritius in complying with the Financial Action Task
Force (FATF) Recommendations. Mauritius was under the ESAAMLG reporting
process for the period 2008 to April 2016, when it exited the process for the current
evaluation exercise.

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 Madam Speaker,

Unfortunately during 2008 to 2016, except for the enactment of the Asset
Recovery Act, most of the recommendations for improving the AML/CFT
regulatory landscape in the 2008 Report were not implemented.

Although Mauritius held the ESAAMLG Presidency between September

2011 and September 2012, and in that capacity had a leadership role in ESAAMLG
region, it failed to address its own AML/CFT deficiencies.

Madam Speaker,

Although Mauritius had advance notice of new FATF requirements since

April 2012, no initiative was taken to review the AML/CFT framework of Mauritius
to bring it in conformity with these new Recommendations.

Furthermore, the low level of engagement of Mauritius with the ESAAMLG

with limited participation in the Council of Ministers has undermined our
commitment at the highest level of ESAAMLG. This issue is presently being
addressed.

Madam Speaker,

The current evaluation is being undertaken on the basis of a new set of

procedures established in 2013. This mutual evaluation started with a desk review
exercise in October 2016 and reviewed our legislative and institutional frameworks
for combating money laundering and terrorism financing with focus on actions taken
between August 2008 to June 2017.

In fact, Madam Speaker, over this period of 9 years, Mauritius ought to have
completed, as a minimum,
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 (i) the assessment of the money laundering and terrorism financing risks
facing the country, that is, a national Risk Assessment exercise; and

(ii) the enactment of appropriate legislations and implementation of other

measures to bring the AML/CFT framework in conformity with the
new FATF standards.

Madam Speaker,

A first draft of the Mauritius Mutual Evaluation Report was submitted for
comments after the desk review and the onsite visit undertaken in June 2017.

Mauritius provided extensive comments on the successive draft reports and a

delegation of senior technical officers also participated in a discussion on the Report
at the Task Force Plenary meeting held in Arusha, Tanzania in April 2018.
However, when the post plenary version of the report was received, a number of
shortcomings regarding the quality and consistency as well as some procedural
irregularities were noted.

For example, some issues have been interpreted differently in different parts
of the report which resulted in an inconsistent analysis by the evaluators.

Moreover, the report contained factually incorrect information although

Mauritius had submitted detailed information on these facts on numerous occasions.

With respect to procedural irregularities, it was noted that the final edited
version of the MER contained substantive changes that were not approved by the
task force plenary meeting. The Mutual Evaluation procedures of ESAAMLG are
not fully documented and as such this undermines the transparency of the mutual
evaluation process.

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 In accordance with the 2014 Mutual Evaluation Procedures, Mauritius, on
several occasions, expressed its concerns over the post-plenary edited version of the
Mutual Evaluation Report to the ESAAMLG Secretariat, but to no avail.

Consequently, the advice of the ESAAMLG Secretariat was sought on

whether Mauritius ought to convey its concerns to the President of the ESAAMLG
Council of Ministers in line with the Mutual Evaluation Procedures.

The Secretariat confirmed that Mauritius could do so and indicated that the
letter be sent to the President of the Council of Ministers and copied to the
Chairperson of the Task Force.

Accordingly, as Minister of Financial Services and Good Governance, I

expressed the concerns of Mauritius to the President of the Council of Ministers and
shared same with other Ministers of the Council.

Madam Speaker,

I wish to stress that Mauritius has never requested for the rejection of the
Report, but only that the Report be not adopted in its present form, and it be
discussed at the forthcoming meetings of the ESAAMLG Task Force and Council
of Ministers to be held in Seychelles in September.

On 30 June, the President of the ESAAMLG Council of Ministers acceded to

the request of Mauritius.

The draft report is still CONFIDENTIAL and its final version will be made
available in the public domain after its adoption by the Council of Ministers in its
meeting in September.

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 Madam Speaker, over the years, Mauritius has built a solid reputation as a
sound International Financial Centre, as supported by several international indices,
a few of which I would wish to mention here.

In 2016, Mauritius ranked 1st out of 54 African countries in the Mo Ibrahim

Index of African Governance (IIAG). Furthermore, the Republic emerged 45th in
the Global Competitiveness Index 2017-2018 and was placed 25th out of 190
countries for ease of doing business by the World Bank’s Doing Business 2018
Report. Moody’s, in 2018, reaffirmed the Government of Mauritius’s Baa1 long-
term issuer and senior unsecured ratings.

Moreover, as per the findings of the OECD’s Global Forum on Transparency

and Exchange of Information for Tax Purposes, Mauritius has received an overall
compliant rating. Mauritius has also been a signatory of the Foreign Account Tax
Compliance Act (FATCA) and the Common Reporting Standard (CRS).

Madam Speaker, as per the Census on Foreign Liabilities and Assets of

Indian Direct Investment Companies 2016-17 of the Reserve Bank of India,
Mauritius was the largest source of Foreign Direct Investment in India.

Madam Speaker,

I wish to underline that Government is taking a series of measures and actions

to reform our financial services sector. The blueprint contains a number of policies
and proposals which will further develop this sector and certainly take it to new
heights in the coming years.