The Financial Intelligence and Anti-Money Laundering Act 2002 (FIAMLA) is a crucial legal framework enacted to combat money laundering and the financing of terrorism. It was proclaimed by Proclamation No. 31 of 2002 and came into effect on 10th June 2002, in Mauritius.
FIAMLA was introduced in response to the growing global concern about the negative impacts that money laundering and terrorism financing can have on national economies, financial systems, and security. For those who are not acquainted with those terms, Money Laundering involves the process of making illicitly obtained funds appear legitimate by disguising their true origin while Financing Terrorism refers to the provision of funds or financial support to carry out terrorist activities.
The act was enacted to establish a legal and regulatory framework in Mauritius to prevent and detect money laundering and terrorism financing activities. It aims to protect the integrity and stability of the country’s financial system, promote transparency in financial transactions, and strengthen international cooperation in combating financial crimes.
The development and implementation of FIAMLA involved collaboration among various stakeholders, including government authorities, regulatory bodies, law enforcement agencies, and international organizations. The legislation was designed to align with international standards and best practices, including recommendations from the Financial Action Task Force (FATF), which is an intergovernmental body that sets global standards for anti-money laundering and counter-terrorism financing.
The specific provisions of FIAMLA include requirements for reporting persons, (from Financial institutions (FI), & Designated Non-Financial Businesses and Professionals (DNFBP), to undertake proper risk assessments, implement the right Customer Due Diligence measures, establish solid policies and procedures to mitigate risks, maintain records of transactions, and report suspicious activities to the Financial Intelligence Unit (FIU), which is the central authority responsible for receiving, analyzing, and disseminating financial intelligence to combat money laundering and terrorism financing.
The FIAMLA Regulations encompass a range of measures and obligations that regulated entities must follow. Here are some key components:
Risk Assessment: Reporting persons are required to conduct risk assessments to identify, assess, and understand the money laundering and terrorism financing risks associated with customers, countries or geographic areas, products, services, transactions, or delivery channels. The nature and extent of the risk assessment should be appropriate to the size and nature of the reporting person’s business.
Customer Due Diligence (CDD): Reporting persons must undertake CDD measures in various circumstances, including when opening an account or establishing a business relationship with a customer, for high-value transactions, or in cases of suspicion or doubts about customer information. CDD measures involve verifying the identity of customers, beneficial owners, and conducting ongoing monitoring of transactions.
Policies, Controls, and Procedures: Reporting persons are required to establish comprehensive policies, controls, and procedures to effectively mitigate and manage the risks of money laundering and terrorism financing identified in the risk assessment. These policies should be proportionate to the size and nature of the reporting person’s business and approved by senior management.
Record Keeping: Reporting persons must maintain all books and records related to their customers and transactions. This includes records obtained through CDD measures, transaction records, suspicious transaction reports, and related documentation. Records should be kept for a minimum of 7 years after the business relationship has ended.
Reporting Obligations: Reporting persons have an obligation to report suspicious transactions and currency transactions above a certain threshold to the FIU promptly. They should also report any doubts or suspicions regarding the veracity of customer identification information.
Third-Party Reliance: Reporting persons may rely on third parties to perform CDD measures, subject to prescribed terms and conditions. However, the reporting person remains responsible for ensuring compliance with FIAMLA requirements.
High-Risk Countries: FIAMLA allows for the identification of jurisdictions with significant deficiencies in their anti-money laundering and counter-terrorism financing measures as high-risk countries. Enhanced CDD measures should be applied to business relationships or transactions involving such countries, and additional mitigating measures can be implemented as deemed necessary.
By enacting FIAMLA, Mauritius demonstrates its commitment to combating financial crimes and maintaining the integrity of its financial system. The provisions aim to establish a robust framework for preventing, detecting, and combating money laundering and terrorism financing activities.
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