Financial Action Task Force (FATF) & Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)
Virtual Assets (VAs) have grown exponentially over the past few years with record prices and heightened activity in the VA ecosystem, attracting the attention of regulators and other stakeholders. The Financial Action Task Force (FATF), as the global standard-setter for combating money laundering and the financing of terrorism and proliferation of weapons of mass destruction, acknowledges both the potential of VAs for financial innovation and their propensity for criminal use through Money Laundering (ML) and Terrorism Financing (TF).
To this effect, Mauritius concluded its National Risk Assessment (NRA) with respect to the VA sector in November 2021. This risk assessment exercise relied upon the World Bank methodology and risk assessment tool. The NRA has enabled the identification and evaluation of the associated ML and TF threats, as well as, vulnerabilities with VAs and Virtual Asset Service Providers (VASPs) through a sectoral approach.
At the time of the assessment, the overall ML/TF residual risk associated to VAs/VASPs was considered to be “Very High” after the consideration of mitigating measures. The combined ML/TF vulnerability ratings indicated a general tendency of “High to Very High” vulnerabilities driven by factors such as the nature and complexity of the VASP businesses, country risks, customer types, products and services of the VA ecosystem and their operational features (for instance, anonymity, speed of settlement and whether the VASPs were registered).
The combined ML/TF threat ratings indicated a general tendency of “Medium to High” threats driven by factors, such as the nature and profile of VAs, their sources of funding, the ease with which VA channels are accessible to criminals and their economic impacts. VASPs and Issuers of Initial Token Offerings must take into account any relevant findings of the NRA while conducting their business risk assessments.
A copy of the NRA report is available here.
As an international financial centre Mauritius is committed to protecting its financial services sector from abuse by illicit actors engaging in proliferation financing and other proliferation efforts. All natural and legal persons in Mauritius should exercise caution and vigilance in order to ensure that they do not in any way whatsoever support individuals or organisations which are subject to United Nations Security Council (UNSC) proliferation-related sanctions under UNSC Resolutions 1718 (2006) related to the Democratic People’s Republic of Korea (DPRK), 2231(2015) related to the Islamic Republic of Iran, and their successor resolutions.
The Financial Action Task Force (FATF) requires States to implement targeted financial sanctions related to proliferation financing under Recommendation 7.
Recommendation 7 requires countries to implement targeted financial sanctions to comply with United Nations Security Council resolutions that require countries to freeze, without delay, the funds or other assets of, and to ensure that no funds and other assets are made available to, and for the benefit of, any person or entity designated by the United Nations Security Council under Chapter VII of the Charter of the United Nations, pursuant to Security Council resolutions that relate to the prevention and disruption of the financing of proliferation of weapons of mass destruction.
Mauritius, being a member of the United Nations (UN) and having endorsed the FATF Standards as a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), enacted the United Nations (Financial Prohibitions, Arms Embargo and Travel Ban) Sanctions Act (the Sanctions Act) in May 2019. The Sanctions Act 2019 provides the legal framework for the implementation of UN sanctions as adopted by the UNSC under Chapter VII of the UN Charter. This legislation also implements the requirements of the FATF regarding targeted financial sanctions under Recommendation 7.
The National Sanctions Committee has approved the Guidelines on the Implementation of Targeted Financial Sanctions (TFS) under the United Nations (Financial Prohibitions, Arms Embargo and Travel Ban) Sanctions Act 2019 on 21 August 2020.
The Guidelines can be downloaded here, with the two reporting templates as follow:
(i) Template for Reporting under Section 23(4) of the United Nations (Financial Prohibitions, Arms Embargo and Travel Ban) Sanctions Act 2019 –here;
(ii) Template for Reporting on Positive Name Match under Section 25(2) of the United Nations (Financial Prohibitions, Arms Embargo and Travel Ban) Sanctions Act 2019 - here.