THE RISKS, EXTENT AND TREND OF MONEY LAUNDERING AND FINANCING OF TERRORISM IN MAURITIUS

National Survey Report
Produced on behalf of the Board of the Financial Intelligence Unit

May 2006

NATIONAL AML/CFT SURVEY 2006

Acknowledgements
Many staff of the FIU assisted in the development of this study. We would particularly like to thank the staff of the Independent Commission Against Corruption, the University of Mauritius, the Ministry of Finance and Economic Development and all the respondents who took part in this study. We would also like to extend a special thank to all the volunteers who conducted the field interviews and helped in processing the questionnaires.

© Financial Intelligence Unit – Republic of Mauritius. All Rights Reserved

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TABLE OF CONTENTS
Disclaimer Executive Summary 1.0 2.0
2.2 2.3

4 5 7 9
9 12

Introduction Methodology
Survey Design Limitations

3.0
3.4 3.5

Level of Awareness
Role of the FIU Commitment of Senior Management to AML/CFT issues

14
16 17

4.0
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8

AML/CFT Compliance / Support
Levelling of Playing Field Control Systems Impact on Competitiveness Impact of Compliance on Non-Reporting Institutions Real benefits from Compliance Suspicious Transaction Reports filed Reporting of Suspicious Money Laundering and Financing of Terrorism cases to the FIU Consideration

20
20 22 23 24 25 26 30 30

5.0
5.3 5.4 5.5

Perception
Underground Economy Nature of Predicate Crime Perception of risk by Sector

31
32 35 36

6.0
6.2 6.3

Level of Confidence
Views on Institutions Views on Legislations

38
38 39

Appendix I II

QUESTIONS SET IN THE QUESTIONNAIRES GLOSSARY

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© Financial Intelligence Unit – Republic of Mauritius. All Rights Reserved

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NATIONAL AML/CFT SURVEY 2006
This research is commissioned by the Board of the Financial Intelligence Unit to assess the risk, extent and nature of money laundering and terrorist financing in Mauritius. The author of this report is Danny Sougith Sanhye, Assistant Director of the Financial Intelligence Unit and the information in this report is not intended to address the circumstances of any particular sector, entity or individuals. This report is intended as a basis for discussion only. Whilst every effort has been made to ensure its accuracy and completeness and the material therein, the author of this report, the Financial Intelligence Unit, its Director and its Board give no warranty in that regard and accept no liability for any loss and/or damage incurred through the use of, or reliance upon, this report or the information contained herein.

© Financial Intelligence Unit – Republic of Mauritius. All Rights Reserved

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3. © Financial Intelligence Unit – Republic of Mauritius.1 Raising awareness among all stakeholder groups – regulated and non regulated. All Rights Reserved 5 . with respect to anti-money laundering legislation and the role of the FIU would strengthen potential impact.3 The impact of legislation has not had a profoundly adverse impact on competitiveness. Indeed 80% of the surveyed financial sector reporting organisations companies considered that they had benefited from having a better knowledge of their customers as required by the legislation.1 Financial sector reporting organisations (banks. 2. the Financial Intelligence Unit (FIU) carried out a survey among major stakeholder groups between January and March 2006.0 The survey revealed three main issues requiring further attention: 3. It is particularly encouraging to note the following: 2. management companies and insurance companies etc) are becoming increasingly aware of the legislation. As part of a process of learning lessons for continuous development and improvement.0 The survey confirmed that good progress has been made in the fight against money laundering and the financing of terrorism.0 Anti-Money Laundering legislation and regulation has existed in Mauritius for some five years. regulation and the role of the FIU. 2.2 Senior managers within the regulated sector recognise the risks associated with money laundering and the financing of terrorism and are devoting more time to ensuring that company policies and procedures provide appropriate safeguards.EXECUTIVE SUMMARY 1. 2.

3 Proceeds of drug related offences and corruption were seen to be the main crime for money laundering purposes. 4.3 Extending existing regulation to cover the legal profession. reduce the burden on organisations and help to get greater ‘buy in’ from stakeholders. 4.2 74% of the respondents believe that there is a severe problem of money laundering in Mauritius. on the one hand. 4.1 About 75 % of the respondents believe in the existence of an organised underground economy in Mauritius. accountants.EXECUTIVE SUMMARY 3. 4. to address the displacement factor and avoiding an excessive burden on some sectors.4 Between 60% to 70% of the of the respondents rated the gaming sector to be most exposed to money laundering activities © Financial Intelligence Unit – Republic of Mauritius. effective framework to prevent and detect money laundering and the financing of terrorism. estate agents and the gaming and betting sectors would tighten control over high risk parts of the economy and be consistent with international best practice. The size of that economy is not known. 3.0 The results of the survey highlight areas which need to be addressed in an effort to strike the right balance between. 4. All Rights Reserved 6 .2 Developing capacity within the regulated sector vis-à-vis risk assessment surrounding ‘Know Your Customer’ principles and the links to customer relationship programmes would improve the quality of reporting. and on the other hand.

shall commit an offence. is in possession of. In particular. we believe that the © Financial Intelligence Unit – Republic of Mauritius. by any means whatsoever. where he suspects or has reasonable grounds for suspecting that the property is derived or realised. significant progress has been made in the fight against money laundering and the financing of terrorism. Several legislations have been enacted and new institutions set up to address the problem of money laundering and putting up a barrier against terrorists and terrorist organisations 4. All Rights Reserved 7 .1. to commit in Mauritius or abroad (a) an offence in breach of an enactment specified in the Third Schedule. However. Extract of Section 3 (1) and 3 (2) of the Financial Intelligence and Anti-Money Laundering Act 2002 from misusing the financial sector. the proceeds of any crime. in full or in part. and establish a system of reporting of suspicious transactions to a central agency – Financial Intelligence Unit (FIU). seeking to identify the nature. converts. or in whole or in part directly or indirectly represents.3 In the last five years or so. All countries now face the challenge of expanding and refining their systems for it to be effective and comprehensive. 1. in whole or in part. directly or indirectly.1 This report describes the results of research carried out by the Financial Intelligence Unit between the months of January and March 2006. willfully and unlawfully. extent and perception of money laundering and the financing of terrorism in Mauritius. or (b) an act of terrorism. or (b) receives. or having reasonable grounds to believe that they will be used. provides or collects funds with the intention or knowledge that it will be used. conceals. (2) A bank. cash dealer or member of a relevant profession or occupation that fails to take such measures as are reasonably necessary to ensure that neither it nor any service offered by it. removes from or brings into Mauritius any property which is. shall commit an offence. 1.0 INTRODUCTION 1. there has never been an attempt. disposes of. Money Laundering (1) Any person who – (a) engages in a transaction that involves property which is. or in whole or in part directly or indirectly represents. Financing of Terrorism (1) Any person who. transfers. directly or indirectly from any crime.2 Mauritius was one of the first countries on the African Continent to develop and enact legislations which criminalises money laundering and the financing of terrorism. is capable of being used by a person to commit or to facilitate the commission of a money laundering offence shall commit an offence. financial institution. the proceeds of any crime. Extract of Section 4(1) of the Convention for the Suppression of the Financing of Terrorism Act 2003 3. to identify the nature and extent of the problem. disguises. This report is timely and an excellent first step towards assessing the success of anti-money laundering and the financing of terrorism legislation and regulation in Mauritius.

we selected some of the negative quotes to give a balance. However. All Rights Reserved 8 .INTRODUCTION findings of the survey report will assist in fine tuning the AML/CFT legislations and law enforcement actions in Mauritius. awareness of the general public of the risk of money laundering and the financing of terrorism and foster partnership among the different Quotes: We have added relevant quotes collected from respondents of members of the public and Non-Reporting Institutions during the interviews. Most of the comments collected were very negative in their tone and have not been included in the report. its publication will help to increase the stakeholders. Also. Many respondents who were more or less satisfy with the AML/CFT system did not make any comment. © Financial Intelligence Unit – Republic of Mauritius.

2.2.0 METHODOLOGY 2.2 The survey comprised a main sample. there were specific questions proper to the sector or the public plus questions of common interest to the three groups.3 A random probability sample was selected of both males and females above the age of 18 years old in various sectors across Mauritius and Rodrigues.1 From the three questionnaires designed to collect the responses of the Reporting Institutions. We took into account the various opinions received in arriving at the final set of the questions. designed to be representatives of the population of interest and a booster sample of the general public. where appropriate weighting has been applied to compensate for possible bias in selection. (Public) © Financial Intelligence Unit – Republic of Mauritius. “…There is lack of transparency in our system and there is also a lack of trust in the laws”. three surveys were conducted as part of this research to capture the perceptions of the population of interest.2 Survey Design 2. 2. the Non-Reporting Institutions and members of the General Public.2.1 To gather sufficient data to measure the extent of money laundering and the financing of terrorism reasonably and assess the nature of such crimes. The questionnaires were designed to reflect our findings from the Suspicious Transaction Reports (STRs) received and personal interviews were carried out. All Rights Reserved 9 .2.2. The booster sample was included to compare perceptions of risks of money laundering and the financing of terrorism and also to understand the different level of appreciation and knowledge of AML/CFT. 2.

it is further stratified by the level of education.e. 2. i.1% 29.4.4% 47. the socio-demographic characteristics of the sample.0% 18.4 Besides. age. risk assessment programme.0% 10.2. prosecute and disrupt money laundering and the financing of terrorism activities.4% 21. All Rights Reserved 10 . sector of operation and gender.0% 34. reporting of STRs.0% 46. The questionnaire was designed to capture information about the control system in place and its efficiency.5% 37.2% 8.2% 17.0% 22. inculcate the reporting culture and educate the whole population about money laundering and the financing of terrorism. The responses from the regulated sector were collected through self-administered questionnaire and for some.0% Banks FEDs/ Money Changers Management Cos NBFIs Insurance Cos Insurance Brokers Stockbrokers Accountants/ Auditors Attorneys Barristers Notaries Chartered Secretaries Bookmakers Casinos Gaming Houses TOTAL 8/19 2/6 8/55 3/15 5/18 1/17 1/11 3/81 6/41 8/47 6/35 2/29 4/9 1/2 2/7 Figure 1 – % respondents achieved from Reporting Institutions “…The need for FIU to conduct sensitisation campaigns.1 A survey of the Reporting Institutions.2% 50.2. institutions that have got an obligation under the Financial Intelligence and Anti-money Laundering Act 2002 to report suspicious transactions to the FIU.8% 50. prevent.” (Public) © Financial Intelligence Unit – Republic of Mauritius. type of job.9% 73. Targeted 193 17 132 29 42 22 28 81 50 50 38 29 49 6 10 776 % Achieved 54. through face to face interviews.METHODOLOGY 2. training and the general perception about the AML/CFT legislations and institutions set up to detect.

occupation and sectors not capture in Non-Reporting Institutions and a sub-group for members of the Ggneral public by geographic location.8% 100.0% 100.2.4. All Rights Reserved 11 . namely a specific group of interest for profession.4.3% 100.0% 100.” (Non-Reporting Institutions) © Financial Intelligence Unit – Republic of Mauritius.1 . their views on the AML/CFT legislations and institutions put in place to fight money laundering and the financing of terrorism were captured.2.METHODOLOGY 2. “…Need for more awareness campaigns regarding AML/CFT.7% 96.0% 95. institutions where the risk of money laundering and the financing of terrorism is present but has no obligation to report suspicious transactions to the FIU. New Car Dealers Imported Secondhand Car Dealers Second Hand Car Dealers Car Rental Spare Parts Charitable institutions Real Estate Agents Chartered Surveyors Contractors Architects Interior Designers Gem Dealers TOTAL Targeted 40 72 12 96 29 24 46 26 27 16 7 107 502 % Achieved 87. The questionnaire was designed to establish the usage of cash in some sectors and to capture more or less the same information as the Reporting Institutions. designed to capture the understanding and awareness of the problems of money laundering and the financing of terrorism and their perceptions about the areas of risks.2% 95% 17/20 36/36 5/5 46/48 14/14 24/24 22/23 15/26 14/14 11/15 7/7 107/107 Figure 1.3 There was a general questionnaire for the General Public. The General Public was divided into two sub-groups.0% 85.0% 95. i.e.% respondents achieved from Non-Reporting Institutions 2.2 A survey for the Non-Reporting Institutions. Also.7% 97. All the responses were collected through face to face interviews.5% 100. 502 people were targeted from various sectors and 95% responded to our survey.7% 57.

METHODOLOGY Special Categories NGOs Trade Unions Hotels Restaurants Electronic Shops Doctors Discotheque Journalists University TOTAL Strategic Points Black-River Flacq Grand-Port Moka Pamplemousses Plaine-Wilhems Port-Louis Riviere du Rempart Savanne Rodrigues TOTAL TARGETED 57 21 74 101 63 150 10 15 166 657 TARGETED 95 209 315 52 112 951 653 298 77 22 2784 % ACHIEVED 86.0% 33.0% 100.0% 100.0% 60.” (Public) Despite the use of non-response weighing to correct for this.0% 100.0% % ACHIEVED 100.0% 0.0% 31.0% 100.2 . it may still be that those who participate differed in key respects © Financial Intelligence Unit – Republic of Mauritius. That is the result obtained may differ from those that would be obtained if the entire population had been surveyed.3.0% 100.7% 68. All Rights Reserved 12 .2 Non-Response.3% 73.3 Limitations 2.0% 100. “…Money laundering and the financing of terrorism is a serious problem in Mauritius which has caused increase in crimes and this has negative effects on our economy. Not all those selected to participate actually did so.1 Level of Bias.0% Figure 1.0% 100. findings are subject to sampling error.3.0% 100. 2.0% 100.0% 100. As only a sample of the population is surveyed.0% 100.% respondents achieved from General Public 2. The non-response bias is mainly an issue for the Reporting Institutions given the low response rate. either because they flatly refuse to take part or were not available during the fieldwork period. to those who did not take part.

The survey excluded members of the legislative assembly and other people. 2. representatives of non governmental organisations and under and post graduate university students. “…Law enforcement should work closely with the public.3. trade unionists. layering and integration does not necessarily apply to the act of financing of terrorism as legitimate money can be used for such crime. Although terrorist financing often involves money laundering.3.5 Meaning of Money Laundering and Financing of Terrorism.4 Threshold of Tolerance.3 Coverage. who are known to be politically active. An oversimplification of the problem of financing of terrorism is assumed in this survey. However.” (Public) © Financial Intelligence Unit – Republic of Mauritius. there is due representation of journalists. All Rights Reserved 13 .3. as such no distinction is made between money laundering and terrorist financing. Evidence suggests that better educated respondents tend to apply a lower threshold of tolerance and therefore are more likely to perceive the indications of money laundering and the financing of terrorism while at the same time lower educated respondents tend to overlook the indications of money laundering and the financing of terrorism and accept it as part of normal activities. It also excludes people from law enforcement and supervisory bodies. 2.METHODOLOGY 2. the activity of placement.

2 The respondents were asked to state their level of understanding of the AML/CFT legislations and expressed their knowledge about their acquaintance with the work of the FIU.1 Forging partnership among the various stakeholders namely the FIU. All Rights Reserved 14 . unregulated sectors and members of the general public.0% 25.2% >50 15.6% <30 13. KNOWLEDGE OF AML/CFT LEGISLATIONS BY AGE FOR ALL RESPONDENTS 4.Knowledge of AML/CFT legislations by age “…Gives a better image of the country while fighting money laundering.1% 50. The risks posed by money laundering and the financing of terrorism to the reputation of the country and especially to the integrity of its financial systems are being recognised widely across the world.0% Very Good 50.1% 31.4% 2.0% Good Fair No Idea 75. non-banking financial institutions.2% 34. banking institutions.8% 32. is critical when building an effective AML/CFT framework. law enforcement agencies.” (Public) © Financial Intelligence Unit – Republic of Mauritius. Also. supervisory authorities. strong links between the private and the public sectors would inevitably lead to better decisions based on greater understanding of the environment and the implementation of the requirements of the legislations.4% 43.0% 100. It is vital to develop a converging approach among the various stakeholders in order to build and maintain a solid AML/CFT regime.8% 47.3.2% 4.0% Figure 2 .0 LEVEL OF AWARENESS 3.1% 0.1% 30-50 21. regulatory authorities. 3.

The public should be educated about the risks that money laundering and the financing of terrorism may have on the economy and on Mauritius.Knowledge of AML/CFT legislation for Reporting Institutions “…Also. if the public views the AML/CFT legislations as ineffective. professionals and members of the public to effectively and efficiently deal with AML/CFT” (Public) © Financial Intelligence Unit – Republic of Mauritius. 75 % of respondents who know the AML/CFT legislations very well are more than 30 years old.1 .3 The above figure gives the percentage of respondents by age and their knowledge of AML/CFT legislations which have been around for more than five years.LEVEL OF AWARENESS 3. It is alarming to note that more than 75% of the respondents have very vague knowledge of the law.7% 25.0% 75.0% 61. % RESPONDENTS FOR REPORTING INSTITUTIONS BY SECTOR WHO HAVE A GOOD KNOWLEDGE OF AML/CFT LEGISLATIONS Gaming 37.3% 92. there should be greater co-operation between the law enforcement institutions.0% 50. new laws will not be supported or followed. if people have confidence that laws will be used for its intended purpose. However.0% Figure 2.3% 63.5% 52.0% Professionals NBFIs/ Brokers Insurance Cos Management Cos Banks/ FEDs/Money Changers 0. they will see the benefits and be supportive.7% 60. The results also show that people below 30 years old are less aware of the AML/CFT legislations. It is very important for the public to be made aware of the governments’ actions. All Rights Reserved 15 . as a country. It was first criminalised in 2000 in the Economic Crime and Anti-Money Laundering Act 2000 before being repealed and replaced by the Financial Intelligence and Anti-Money Laundering Act 2002 in June 2002.0% 100.

the gap created by the absence in the function of a competent authority to educate the public and create more awareness about the risk of money laundering and the financing of terrorism is reflected in the poor knowledge of the AML/CFT legislations among Non-Reporting Institutions and members of the General Public. The FIU is not mandated to conduct research and educate its stakeholders but it cannot ignore the fact that as a central agency it has to make the requirements of the law known to them. UNDERSTANDING THE ROLE OF THE FIU PUB 40.0% 50.8% 0. All Rights Reserved 16 .6% 67. .Role of the FIU for Reporting & Non-Reporting Institutions and public “…Money laundering is seen as a result in increase in undetected crimes.0% 25.9% 59.1 Monitoring the extent and the risk of money laundering and the financing of terrorism in Mauritius is not the primary role of the FIU.9% of the public are aware of the role of the FIU. It is not a surprise to note that 87% of the respondents of the Reporting Institutions are conversant with the role of the FIU while only 32. Significantly in terms of knowledge of the AML/CFT legislations.0% 100.4% RI 87.1% NRI 32.” (Non Reporting Institutions) © Financial Intelligence Unit – Republic of Mauritius.2% 12. 64% of those surveyed from the Reporting Institutions have very good and good knowledge.LEVEL OF AWARENESS 3.4 Role of the FIU 3.6% of the non-reporting institutions and 40.0% Figure 3.4.0% YES NO 75. although it comes very close to its role as a central agency. and 34% know the law fairly well. However.

0% Management Cos Banks/ FEDs 0.2 Figure 4 above suggests an increasing focus on AML/CFT by senior management. to name but a few.0% 100.5 Commitment of Senior Management to AML/CFT Issues 3.0% < 25% > 25% Professionals 7.5% 45. Parmalat.8% 45. further 52. have triggered spontaneous reaction from authorities in the industry. 3. management companies and insurance companies surveyed from the Reporting Institutions spent more than 25% of their time on AML/CFT issues. 80% of them believe that compliance with AML/CFT have benefited their organisations in terms of better knowledge of customers.5. many organisations have included the AML/CFT risks in their main risk assessment programme and have placed compliance near the top senior management agenda. All Rights Reserved 17 . well publicised events like BCCI.5% 53.0% 50.1 A number of financial scandals have rocked the corporate world.1% 4.5.3% 40. Enron. % SENIOR MANAGEMENT RESPONDENTS OF REPORTING INSTITUTIONS ON THE AVERAGE TIME SPENT ON AML/ CFT ISSUES Gaming 33.0% Figure 4 – Average time spent on AML/CFT issues by senior management 3.” (Public) © Financial Intelligence Unit – Republic of Mauritius.0% 38. “…Laws must be adapted to Mauritius.LEVEL OF AWARENESS 3.5% 25.5% 54.5. To strike a balance between reputation and competitiveness. Between 25%-50% of senior management of banks.6% of them perceived that implementation of AML/CFT policies and procedures have benefited them and those benefits are mostly accrued to international financial institutions.5% 62.5% NBFIs/ Brokers Insurance Cos 25.5% 75.3 There is however some interesting differences when analysing the responses of banks and management companies.

2.0% 25.3% 83. The figure shows that there is an equal belief from respondents of the non-regulated sector that AML/CFT had no real effect on their businesses.1 .0% BENEFITTED Figure 4.2% 0.3% 66.” (Public) © Financial Intelligence Unit – Republic of Mauritius.5.4 Senior management from other financial services providers spend less time on AML/CFT issues but perceived that their organisations have suffered greatly in terms of loss opportunities.2% 16.Incidence of AML/CFT 3.6 Consolidated responses for the non-regulated and regulated sectors are compared in figure 4.1 above.3% Other Regulated Financial Institutions 46.0% SUFFERED 75.5% 43.7% 33.7% Banks/FEDs/OMCs 40.7% 36.5. All Rights Reserved 18 .0% 50.7% 16.4% Professionals 14.5.0% NO EFFECT 100. The results are shown in Figure 4. INCIDENCE OF AML/ CFT POLICIES ON THE ORGANISATION ACCORDING TO SENIOR MANAGEMENT Gaming 2.5 We asked respondents from the Reporting Institutions to ignore the cost of implementing AML/CFT policies and procedures and to state how much their organisations had suffered or benefited from the implementation of such policies and procedures. Responses received from the gaming sector show that not more than 2% of their time is spent on AML/CFT. “…Laws should be applied to everybody. 3.LEVEL OF AWARENESS 3.

0% SUFFERED 75.2% 1.5% 25.1% 0. The chart in figure 4.3% 19.Incidence of AML/CFT 3.How Reporting Institutions have suffered for senior & middle management “…Institutions should be more independent. All Rights Reserved 19 .7 They were then asked to select from a list how they perceived their organisations had suffered or benefited.4% 25.0% 22.8% 34.0% 25.3% 1.0% SENIOR MIDDLE Figure 4.9% 23. competitiveness.5.0% BENEFITED 50.8% Banks/ FEDs/ MCs 52. 25 % of them believe that their organisations have suffered mainly in terms of loss of opportunities.” (Public) © Financial Intelligence Unit – Republic of Mauritius.7% 28.2 .0% NO EFFECT Figure 4.2% 25.2% 24.0% 50. loss of customers and reduced % MANAGEMENT RESPONDENTS OF REPORTING INSTITUIONS WHO CLAIM THAT THEIR ORGANISATION SUFFERED IN THE FOLLOWING AREAS Loss of Opportunities Fines Sanctions by Regulators Reduce Competitiveness Loss of Customers 0.0% 100.LEVEL OF AWARENESS INCIDENCE OF AML/ CFT POLICIES ON THE ORGANISATIONS Other Regulated Financial Institutions 33.6% 28.3 .3 shows the perceptions for senior and middle management.3% 31.

0% 100.1% Real Estate 14. in June 2003 a set of regulations were passed for banks. The Financial Intelligence and Anti-Money Laundering Act 2002 was amended in September 2003 and before that. The new amendments and the regulations have split the Reporting Institutions in two categories.0 AML/CFT COMPLIANCE / SUPPORT 4. on the one side. as conduit to gain access to banking or other regulated sectors.0% 0.0% 75.4. % RESPONDENTS FOR NON-REPORTING INSTITUTIONS BY SECTOR WHO HAVE A GOOD KNOWLEDGE OF AML/CFT LEGISLATIONS Jewellery 15. financial services provided by legal professionals and accountants plus the gaming and betting sector which are not bound by the June 2003 Regulations and are not supervised with regards to compliance with AML/CFT legislations.0% 50. All Rights Reserved 20 . This is important in order to prevent gaps or weaknesses in the system at the mercy of criminals to launder the proceeds of their crimes or use those sectors where opportunities are gaping.1.2% 25.Knowledge of AML/CFT legislations for Non-Reporting Institutions “…I believe that the officers of the FIU should be more present in Rodrigues in order to detect possible cases of corruption or money laundering.2% Motor Vehicles 14. financial institutions and cash dealers.0% Figure 5 .4% Charitable Institutions 4.1 To succeed in the fight against money laundering and financing of terrorism. there should be a levelling of playing field as far as compliance with the requirements of the law is concerned.” (Public) © Financial Intelligence Unit – Republic of Mauritius. sectors under the supervision of the Bank of Mauritius and the Financial Services Commission and on the other side.1 Levelling of Playing Field 4.

1.” (Public) © Financial Intelligence Unit – Republic of Mauritius. notaries and gaming sector that their services are relatively safe from criminal activities.0% 50.0% Figure 5.1.6% 25. There is a general erroneous believe among respondents of the non-reporting institutions.3% 41.1 .2 Many of the sectors that we classified as non Reporting Institutions in this report.0% Professionals NBFIs/ Brokers Insurance Cos Management Cos Banks/ FEDS/ Money Changers 0. a common feature of complacency and a low degree of awareness about the threats of money laundering on their sectors. the lawyers.AML/CFT COMPLIANCE/SUPPORT 4. All Rights Reserved 21 . it is not surprising to note the relatively low percentage of perception of risk in these sectors.0% 100.8% 51.5% 28. It emerged from many of these respondents.0% 75.6% 54. have got reporting obligations in other countries because they are not spared from the risks of money laundering and the financing of terrorism.5% 25. accountants.3 Given the low knowledge of AML/CFT and the low level of awareness in the gaming sector and professionals providing financial services.% respondents who think their organisations may be exposed to money laundering and the financing of terrorism in the next five years “…The lack of co-operation between different institutions gives rise to crimes opportunities in Mauritius. % RESPONDENTS WHO THINK THEIR ORGANISATIONS MAY BE EXPOSED TO ML & FT IN THE NEXT FIVE YEARS Gaming 12. 4.

8% 50.2% 0. All Rights Reserved 22 .2 Control Systems 4.9% 11. again we note that 1/3 of the respondents from banks and foreign exchange dealers do not have any knowledge of them.1% 88. it demonstrates that control has been stepped up in high risk areas.0% 87. There is also a high level of monitoring of such policies and procedures.6% 41.” (Public) © Financial Intelligence Unit – Republic of Mauritius. YES 93.0% 12.AML/CFT COMPLIANCE/SUPPORT 4. 4.8% 100.% respondents having AML/CFT policies and procedures for Reporting Institutions Banks & FEDs/Money Changers Management Cos Insurance Cos NBFIs/Insurance Cos / Brokers/Stockbrokers Professionals Gaming 4.2 94% of respondents from the banking sector and foreign exchange dealers have policies and procedures on AML/CFT. “…Many people launder their money in the cash based sector – fictitious company.0% NO 6. them revised their policies and procedures every three years. From the responses received.2. A very high level of compliance with AML/CFT regulations in the regulated sector is noted. It is not known if the implementation of the control system is perceived as good business practice or for fear of sanctions from the authorities.2.4% 58.0% All the management companies surveyed have policies and procedures and 97% of Figure 6 . 87% revised them every three years.2% 50.2.3 When asked about the identification of real beneficial owners.1 Respondents of Reporting Institutions were asked a number of questions on the control system in place in their organisations to mitigate the risk of money laundering and the financing of terrorism. More than 50% of them are from foreign exchange dealers.

responses from leasing companies.0% 66. All Rights Reserved 23 .3. “…A money laundering indication is visible when people live a lavish life and have no official or legal source of revenue.1 The survey results indicate that the impact on banks.2. 4. One possible explanation for this could be the difficulty to pass on extra AML/CFT cost to their clients and provide other type of services which are not AML/CFT related.0% Figure 6. the AML/CFT regulations do not apply to all of them.0% 50.0% 75.0% Professionals NBFIs/ Brokers Insurance Cos Management Cos Banks/ FEDS/ Money Changers 0.” (Public) © Financial Intelligence Unit – Republic of Mauritius.9% 82.9% 74.4% 25. Some of the respondents from these sectors believe there are more factors that are relatively impacting on competitiveness.3 Impact on Competitiveness 4. insurance and management companies appeared to be more significant.1 .4 While the primary legislation covers all the Reporting Institutions.2% 100. stock brokers.AML/CFT COMPLIANCE/SUPPORT % RESPONDENTS WHO ARE AWARE OF ALL THE REAL BENEFICIAL OWNERS OF ACCOUNT HOLDERS OR COMPANIES Gaming 0% 50.% respondents who are aware of all the beneficial owners of account holders or companies 4.0% 100. However. The lack of AML/CFT supervision on the financial services provided by the professionals (legal and accountants) and the gaming and betting sector are clearly reflected by the level of control systems they have put in place. gaming sector and professionals is not profound.

6% 28.0% 50. request proof of funds.0% Figure 8 .0% 0.4 Impact of Compliance on Non-Reporting Institutions 4.1% 35.0% 75. All Rights Reserved 24 . believe that their activities may be exploited by criminals for money laundering activities.3% 25. and it is very difficult to detect.0% 50.1 To have an indication of the AML/CFT risks in the non-reporting sectors.5% 43.0% 23. Not surprisingly. 30% said they do not asked for proof of income and proof of address when conducting transactions with banks and other financial institutions.1% Real Estate 74. only 6% of the respondents 81% find it easy to conduct transactions with 21% of the respondents 68% of the respondents accept cash as the most banks and other financial institutions in Mauritius. common method of payment.4.5% 25.0% Figure 7 .7% Motor Vehicle 92.1% Charitable Institution 66.0% Professionals NBFIs/ Brokers Insurance Cos Management Cos Banks/ FEDS/ Money Changers 0.AML/CFT COMPLIANCE/SUPPORT % RESPONDENTS WHO THINK THAT COMPLIANCE HAS REDUCED COMPETITIVENESS OF THEIR ORGANISATIONS IN THE LAST THREE YEARS Gaming 25.” (Public) © Financial Intelligence Unit – Republic of Mauritius.% respondents who deal in cash in their sector “…Money laundering is a complex and secretive crime.0% 75.6% 57. % RESPONDENTS BY SECTOR WHO TRANSACT IN CASH Jewellery 98.% respondents who think that compliance has reduced competitiveness of their organisations 4.0% 100. respondents were required to state if they ask their customers or clients to declare their source of funds.0% 100.

0% 25.4.8% 81.5.9% 4. we would assume that PEPs are included in “…More investigations should take place. respondents from the public were asked to state the most common method of payment in the sector in which they operate. % MANAGEMENT RESPONDENTS WHO CLAIM THAT THEIR ORGANISATIONS HAS BENEFITED IN THE FOLLOWING AREAS would be interesting to know if the knowledge has resulted in generating new Cross selling 1. 62% of them used cash and only 7.3% 54. business from existing clients. Although not asked specifically about Politically Exposed Persons (PEPs).” (Public) © Financial Intelligence Unit – Republic of Mauritius.5.0% 100.2% 0. All Rights Reserved 25 .1 The responses from the Reporting Institutions were analysed between middle and senior management. All sectors together shows that the middle It management has definitely acquired better knowledge of their customers.% respondents who claim that their organisations benefited 4.5 Related benefits from Compliance 4.8% 24.9% 7. mostly when acquiring properties.2 Respondents were asked to state if specific AML/CFT policies and procedures for high net worth individuals have been implemented in their organisations.0% 38.0% SENIOR MIDDLE Figure 9 .0% 50. 60% of banks and foreign exchange dealers have implemented such systems which is 14% lower than management companies.5% 75.2 On the other hand.3% 29.AML/CFT COMPLIANCE/SUPPORT 4. 4.0% Generating new customers/ clients Better mgmt reputational risk Better mgmt credit risk Better knowledge of customers/clients 0.4% conduct transactions in excess of Rs 350 000 in cash.6% 19.

0% 100.0% 50. It would be interesting to know if this is the case for other Reporting Institutions. Reporting obligations of banks.8% 74. 14.0% 75.AML/CFT COMPLIANCE/SUPPORT the high net worth customers/clients as some respondents confirmed this as the policy of their organisations. 88% of those STRs filed by this particular institution have been disseminated to law enforcement bodies for further investigation. this is because one particular Reporting Institutions has been consistent in its reporting to the extent that in 2003 that institution filed 80% of the reports received and in 2004 and 2005. (2) Extract of Section 14 of the Financial Intelligence and Anti-Money Laundering Act 2002 “…There is a lack of transparency in investigation and prosecution of criminals. cash dealer or member of the relevant profession or occupation has reason to believe may be a suspicious transaction. “ (Public) © Financial Intelligence Unit – Republic of Mauritius.% respondents having specific AML/CFT procedures for high net worth customers/clients 4. In 2004. cash dealer or member of a relevant profession or occupation shall forthwith make a report to the FIU of any transaction which the bank.0% Professionals NBFIs/ Brokers Insurance Cos Management Cos Banks/ FEDS/ Money Changers 0. there was a 50% drop in the level of STRs compared to 2003.4% 60.6 Suspicious Transaction Reports filed 4.2% 37. cash dealers and members of relevant professions or occupations (1) Every bank.2% 25.1 There has been a sharp decrease in the level of STRs filed in last two years. % RESPONDENTS HAVING SPECIFIC AML/CFT PROCEDURES FOR HIGH NET WORTH CUSTOMERS/ CLIENTS Gaming 37. The number slightly went up in 2005. Nothing in subsection (1) shall be construed as requiring a law practitioner to report any transaction of which he has acquired knowledge in privileged circumstances unless it has been communicated to him with a view to the furtherance of a criminal or fraudulent purpose.5% 18. it filed between 35% 50% of the reports. All Rights Reserved 26 .1 .1% 54.6.0% Figure 9. financial institution. financial institution. financial institutions.

it is worth noting that high level of confidence does not necessarily means high level of STRs “…Proximities of law enforcement agencies and availability of hotlines are much needed.6% 80.% respondents who feel confident to report STRs 4. It is not known what factors the respondents considered when deciding their level of confidence. All Rights Reserved 27 . it would not serve its intended purposes if staff are not trained in the application of policies and procedures.0% 87.5% 83. Whatever the level of AML/CFT compliance cost would be.2 The purpose of the legislations is not to turn Reporting Institutions into detectives but to conduct proper due diligence.0% 100. A failure to report STR may increase AML/CFT risks on the organisations.4% 71.0% Professionals 1.9% 22.0% 75.6. The figure below shows the high level of confidence expressed by respondents from various reporting institutions to report STRs to the FIU.6% 25. The basis of trust on which the Reporting Institutions operate with their clients or customers.0% 50.3% 3.3% 1. conduct discrete commercial enquiry.0% 77.AML/CFT COMPLIANCE/SUPPORT 4.3 The level of confidence to file STRs with the FIU is compared with the actual STRs received. can easily be undermined by the involvement of Reporting Institutions in criminal activity wittingly and unwittingly.6.4% 100.0% Figure 10 .” (Public) © Financial Intelligence Unit – Republic of Mauritius. however. prompt detailing of firm suspicions and report suspicious transactions to the FIU.1% NBFIs/ Brokers Insurance Cos Management Cos Banks/ FEDs 0. % RESPONDENTS BY SECTOR WHO FEEL CONFIDENT REPORTING SUSPICIOUS TRANSACTIONS TO THE FIU % of STRs filed in 2005 0% Gaming 62.

10 1 0 0 1 0 0 0 0 0 0 0 0 > 10 1 0 0 0 0 0 0 0 0 0 0 0 Accountants/ Auditors 0 0 0 0 Figure 10. All Rights Reserved 28 .2 – Frequency distribution of STRs filed by Reporting Institutions in the year 2005 4.AML/CFT COMPLIANCE/SUPPORT Evolution of STRs : 2002-2005 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 No of STRs 2002 2003 2004 2005 Banks Management Companies Investigatory & Supervisory Bodies Others Total Reporting Entities Source: Annual Report 2005 of the Financial Intelligence Unit of Mauritius Figure 10.4 The basis for forming a suspicion is extremely wide and it is not possible to draw a checklist to determine if a transaction is suspicious or not. Figure 10. “…It projects a bad image of the Mauritian economy on the International scale.6.1– Evolution of STRs 0 Banks FEDs/ Money Changers NBFIs Management Cos Corporate Custodians/ Trustees Captive Insurance Managers Insurance Cos Insurance Brokers Stockbrokers Attorneys Barristers Notaries 8 6 47 81 24 6 19 18 11 1-2 5 1 1 4 0 0 2 0 0 0 0 0 3-6 4 1 0 1 0 0 0 0 0 0 0 0 7 .3 shows the high level of confidence among respondents of different sectors in their control systems.” (Non-Reporting Institutions) © Financial Intelligence Unit – Republic of Mauritius.

4 .9% Figure 10.5% Not Applicable 8.” (Non-Reporting Institutions) © Financial Intelligence Unit – Republic of Mauritius. All Rights Reserved 29 .3 Do you suspect that any suspicion of money laundering or financing of terrorism activities might go undetected in your organisation in one way or another? Yes 23.0% 10.5% No 69.7% 45.6% 12.1% 16.6% No 19. However. % RESPONDENTS ON REPORTING SUSPICIOUS ACTIVTY ANONYMOUSLY NO IDEA.6. 60.9% 5. 28.4% 2.4% 12.5% 72.5% NO.3 – Level of confidence among respondents of their control systems 4.9% 21.0% 2.8% 87.0% 50.0% 61.% respondents (Non-Reporting Institutions & Public) reporting suspicious activity anonymously “…Public must be encouraged to report money laundering cases.8% 0. many of the STRs received were long after the transactions took place which may be interpreted either as a lack of relevant information to appreciate the nature of the transactions or simply being complacent about their reporting obligation.3% 29.6% YES.6% 19. Reporting Institutions should have had more information on their customers and make timely reporting.0% 40.2% 54.AML/CFT COMPLIANCE/SUPPORT Q4.9% 40.6% 80.7% 30. 10.2% 51.0% 17.5% 7.0% 87.0% 2.0% Q4.9% 12.2 Do you have any system in place to detect failure by any member of your staff to report suspicious transactions internally? Yes Banks/FEDs /Money Changers Management Cos Insurance Cos NBFIs/Brokers Professionals Gaming 89.1% 37.5% Not Applicable 8.7% 41.0% Figure 10.5 On the premise that the responses are reliable.3% 29.

7. The concept of risk based approach to AML/CFT issues is a way forward to soothe the increasing AML/CFT compliance cost. For it to be effective.8 Consideration 4. However. All Rights Reserved 30 .7 Reporting of Suspicious Money Laundering and Financing of Terrorism cases to the FIU 4.1 61% of respondents of the Non-Reporting Institutions and public stated they would report suspicion of money laundering and financing of terrorism cases to the FIU anonymously. 4. One possible explanation for this high percentage could be a lack of trust in the system or the system does not provide for protection for whistleblowers.AML/CFT COMPLIANCE/SUPPORT 4. service providers would require a well defined risk assessment policies and procedures couple with tailored ‘Know Your Customer’ and ‘Customer Due Diligence’ requirements to avoid bias in any judgement. 4.2 Given the low level of cross selling. it transpires that high knowledge of customers acquired through ‘Customer Due Diligence’ is not being translated into a customer relationship programme to identify opportunities for cross-selling.1 The survey results suggest a high degree of compliance in the regulated sector. It is not known if regulatory pressure has encouraged this high degree of compliance or whether compliance is seen as a firewall against potential reputational risk. This knowledge could also help in better management of credit risk.” (Non-Reporting Institutions) © Financial Intelligence Unit – Republic of Mauritius.8. This approach would shift the burden on the service providers where compliance cost would be more of a risk assessment cost.8. there is no guarantee that the control systems put in place are working fine to mitigate the risk of money laundering and the financing of terrorism. Anonymity and confidentiality are crucial preconditions for the public to report suspicious cases of money laundering and financing of terrorism. “…There are loopholes in the legislation and these facilitate money laundering.

This is to say that the judgement of the respondents was dependent on their ability to recall what they have seen and read before the survey period and their experience. As a consequence. On that premise. many criminals may have successfully converted their ill-gotten gains into established businesses and integrated themselves in the normal economy. or the criminals were arrested 5.5. because not all proceeds of crime are laundered through the formal system and not all crimes are detected. In these circumstances the knowledge of the Reporting Institutions about these cases could have influenced their perceptions. The perception of the respondents on the extent of money laundering and the financing of terrorism in Mauritius could reasonably be classified as falling into three primary groups. All Rights Reserved 31 . it has undoubtedly prospered relatively undeterred.” (Public) © Financial Intelligence Unit – Republic of Mauritius.2 The money laundering suspicions or alleged offences have been disclosed but details have not been made public. Nevertheless.2 It is worth noting that there were no major events of money laundering and any kind of financing of terrorism reported in the media during the survey period. 5.0 PERCEPTION 5.1 Money Laundering was an underrated and a somewhat ignored crime in Mauritius until the beginning of the 21st Century. We cannot judge the extent and nature of money laundering and the financing of terrorism only by the number of suspicious transactions reported or number of successful prosecutions. “…People should be encouraged to come forward to give information. The world of money laundering is very secretive in nature. by using reasonable conjectures to ‘estimate’ its nature and extent. 5. it is possible.1 Money laundering cases that have been exposed and are in the public domain either because of wide press coverage.2. it is so vast and so hidden that it defeats any attempts to identify and quantify.2.

but are conducted with the intention of escaping something.% responses on the existence of an underground economy in Mauritius “…People have the perception that little is being done to fight money laundering and financing of terrorism.PERCEPTION 5. 5.2 For the purpose of the survey. i.3. it fulfills the function of a social safety net by facilitating the flow of resources between the underground and legal economy. especially in the developing countries.” (Public) © Financial Intelligence Unit – Republic of Mauritius. we explained the underground economy as a group of clandestine transactions that create (financial) value. primarily taxes.1 Besides the macroeconomics.e.3 The third group would be about money laundering activities that are not detected. revelation of bribes. government regulations or escaping prohibition and criminal prosecution Reporting Institutions Non Reporting Institutions Public 75% 75% 80% Figure 11 . But the perceptions of the respondents are influenced by the unexplained wealth of individuals which hit directly the eyes of the public. Also.3.3 Underground Economy 5. social and political implications of money laundering. The ability of criminals to launder money in the underground increase opportunities for them as entrepreneurs and also raise their standard of living. All Rights Reserved 32 .2. 5. One arguments raised against the underground economy is that it makes economic assessment impossible as these activities are by their very nature secretive. undetected money laundering activities contributes to the growth of the underground economy which comprises of both the informal economy and illegal economy.

There is a general consistency in the perception of the respondents of all three groups when asked about whether they believe there is an underground economy in Mauritius. there are only 25% of the respondents from the gaming and betting sector who believe that there is an underground economy in Mauritius. The absence of regulation and supervision.PERCEPTION 5.0% 100. More protection should be given to the members of the public”. known.1 . It would be very interesting to examine their arguments. between 75% . and the heavy reliance on the use of cash in some sectors of the economy might be one of the main reasons for the high level of activity in underground.80% of the respondents answered in the affirmative. (Public) © Financial Intelligence Unit – Republic of Mauritius.3 The growth of the underground economy is exacerbated by the enactment of legislations and its enforcement.3% 0.0% 50.0% 75.% respondents who perceive the extent of ML/FT to be severe “…People are afraid to disclose their identity.5% NRI 70.3. There is a widespread belief among respondents about the existence of an underground economy in Mauritius. All Rights Reserved 33 . but its actual size is not % RESPONDENTS WHO PERCEIVE THE EXTENT OF ML/FT TO BE SEVERE PUB 76.0% 25.0% Figure 11. However. The outlaw of the use of cash payment above Rs 350 000 could be another factor which might have pushed people to the informal sector to escape formal money laundering control and identification.

4 74% of the respondents from public believe that there is a severe problem of money laundering and the financing of terrorism in Mauritius which is more or less consistent with the percentage of public who believe that there is an underground economy in Mauritius.3.000 in cash or its equivalent) operators undertaking transactions over this threshold often circumvent the legislation by structuring their payments or do commingling of funds. Other might acquire and dispose of properties for large amounts of cash at an over or under-declared value as the actual price would represent an unrecorded asset.6 Another way of tackling the problem is to outlaw the use of cash for transactions above a certain size. Although. 48 % of Non-Reporting Institutions believe that the problem of money laundering and the financing of terrorism is serious. registration fee or penalty. this is already in existence (a threshold of Rs 350. and gradually reducing it as the financial system developed. but might instead covert their wealth into gold. 5. 19 % of the public have no idea about the existence of such an economy. an amnesty could be considered to incite the operators in the underground to join the formal sector. Conversely.5 One way of reducing the attractiveness to the informal sector is to tackle the problem at the interface between the formal and the informal sectors.3. silver or other gem stones which are easily transportable or into foreign currencies.7 Also. The amnesty could be in the form of tax. recorded. 5. Criminals operating in the underground sector would not necessarily go to the formal sector.” (Non-Reporting Institutions) This would ensure that those engaged in such transactions would be formally identified and transactions © Financial Intelligence Unit – Republic of Mauritius. “…It projects a bad image of the Mauritian economy on the international scale. To get round this problem is to set the threshold could very high level.3. or introduce a large cash transaction reporting system. Reporting institutions should be encouraged to pay particular attention to transactions that they suspect relate to informal operation and report those transactions accordingly.3.PERCEPTION 5. 5. All Rights Reserved 34 .

% total responses of different groups who rated the above crimes as severe 5.2 There is a general consistency from respondents of all the groups that drug related offences are the main crime for money laundering in Mauritius.4 Nature of Predicate Crime 5.4. They were asked to grade their perception in terms of ‘severe’.PERCEPTION 5. “…Money laundering cannot be stopped but can be controlled.4.4.3 The results for the respondents who checked the box ‘severe’ are displayed below.” (Non-Reporting Institutions) © Financial Intelligence Unit – Republic of Mauritius.4 Figure 12 also indicates that corruption is perceived as most prevalent in Mauritius.1 All respondents were given a list of most common crimes detected from the investigative analysis carried out on the suspicious transaction reports and asked to select the one they saw as the main cause of money laundering and the financing of terrorism in Mauritius. 5. Other crimes listed in the questionnaire also scored a high level of percentage with the exception of tax evasion which is 51%. 5.4. All Rights Reserved 35 . ‘moderate’ and ‘insignificant’. It is not possible to say why respondents have this strong perception but it is most likely that many have based their judgement on cases which are reported in the media. Drug related offences were seen as the main crime generating illicit money for money laundering. A ‘don’t know’ was included as a fourth option for respondents who do not want to express their views. Drug Reporting Institutions Non Reporting Institutions Public Average Total 88% 95% 88% 90% Fraud 55% 81% 80% 72% Tax 30% 60% 62% 51% Corruption 65% 82% 83% 77% Smuggling 52% 80% 75% 69% Figure 12.

the extent of risk would depend on the types of control in place.5 Perception of risk by sector 5.5.1 No sector is safe from money laundering and the financing of terrorism. it offers money launderers the ease to disguise and convert bulk illicit cash into less conspicuous forms. the anonymity it provides and the types of monetary instruments that are commonly in use in the sector. We compared the perceptions of the three different groups and noted that between 60%-70% of the respondents rated the risk in the gaming sector as the most severe for money laundering purposes. 5.PERCEPTION 5. however. As a cash intensive industry. All Rights Reserved 36 .2 Respondents were asked to state the sector where they perceive the risk of money laundering and the financing of terrorism to be most prevalent in Mauritius.” (Non-Reporting Institutions) © Financial Intelligence Unit – Republic of Mauritius. “…People are scared to reveal money laundering cases.5.

6% 27.9% 24.0% 12.5% 60.4% 70.9% 34.1% 16.1% 16.0% 28.1% 26.7% 20.0% 24.4% 18.7% 17. All Rights Reserved 37 .0% 27.1% 24.0% 39.6% 35.0% 100.2% 31.4% 37.5% 29.2% 50.9% 36.3% 16.1% 22.1% 31.0% 25.9% 29.7% 27.4% 25.0% 75.the perception of respondents on the risk of money laundering “…Lack of technologies and human resources to combat those crimes.4% 23.” (Public) © Financial Intelligence Unit – Republic of Mauritius.3% 21.0% DON’T KNOW SEVERE Figure 13 .PERCEPTION THE PERCEPTION OF RESPONDENTS ON THE RISK OF ML IN THE FOLLOWING SECTORS Betting/Horse Racing Casinos Real Estate Money Changers Car Dealing Global Business Jewellery Notaries Attorneys Informal Sector Banking/Financial Services Accountants Lawyers Tourism Family Insurance Stock Exchange 0.5% 28.2% 27.2% 13.8% 14.

” (Public) © Financial Intelligence Unit – Republic of Mauritius.2. prosecuting and disrupting money laundering and terrorist financing activities.2. the general ‘confidence measure’ for the public remains the level of successful prosecution. The low rating responses were principally from respondents between the age of 30-50 years old.6. while between 32%-48% believe that institutions are doing neither good nor bad. 47% of respondents rated actions on this line as low. 6. All Rights Reserved 38 . however institutions must continue to conduct their affair in a transparent manner.0 LEVEL OF CONFIDENCE 6.1 Respondents from all three groups were asked to rate in a scale of 1-5 from low to high.1 People who are better informed on the activities of different institutions in the AML/CFT framework tend to have a better opinion on the works that are carried out to fight money laundering and the financing of terrorism. preventing. how well they perceive institutions are doing in detecting.2 Between 5%-10% of respondents from the Reporting Institutions gave institutions a high rate of 5. As AML/CFT is about taking the proceeds out of the crime. However. “…Money laundering is seen as a result in increase in crimes. 43% of female respondents gave an average rating to the institutions compared to 37% of male respondents. As criminal confiscation depends on successful prosecution.2 Views on Institutions 6. respondents were also asked to express their views on confiscating and forfeiting proceeds of crime. Individual attitudes on the operational efficiency of institutions will always differ. 48% believe that prosecution of money launderers is low. access to accurate information about what is being done to fight crime can definitely improve confidence in the system. 6. Also.

Between 46%-61% of the respondents perceive the legislations as effective in detecting. and the scope of crime.7% Prosecuting ML/FT 10.0% 16.9% 14.3 About 50% of respondents from the public gave low rating to the institutions and about 20%-35% gave an average rating.3 Views on Legislations 6.1% 15. about 20% of the respondents from Non-Reporting Institutions gave a rating of 5 and 4 to 6.0% Figure 14 . All Rights Reserved 39 .8% Confiscating proceeds of ML/FT 10.0% HIGH 5 4 50.LEVEL OF CONFIDENCE % RESPONDENTS BY GROUP GIVING 5 & 4 RATING TO INSTITUTIONS Disrupting ML/FT activities 9.7% 25.2.1 The attitude of respondents on institutions was tested through another question to establish if the high or low rating was dependant on the efficiency and inefficiency of the AML/CFT legislation in Mauritius. “…The assets of money launderers should be confiscated.” (Public) © Financial Intelligence Unit – Republic of Mauritius.0% 15. institutions.% respondents by group giving 5 &4 rating to institutions 6. In return.8% Preventing ML/FT 10.3. reducing and deterring money laundering and the financing of terrorism.0% 0.2% 17.5% Detecting ML/FT 10. 24%-37% do not have any idea and this is more or less consistent with the percentage of respondents that have low knowledge of the legislations.

8% NRI 50.9% 35. actions that they think would reduce the risk of money laundering and the financing of terrorism activities for the financial sector to be effective.2 Respondents were then asked to select from a list.7% Adoption of international best practices 89.0% 25.0% 25.1% 78.0% 100. % RESPONDENTS BY GROUP ON ACTIONS TO REDUCE RISK OF ML & FT 81.1% 50.5% 88.0% 75.LEVEL OF CONFIDENCE % RESPONDENTS WHO GRADE THE EFFECTIVENESS OF THE AML/ CFT LEGISLATIONS IN MAURITIUS ALL 45.1% 33.9% PUB 31.0% 0.5% 76.4% 89.2% 64.0% 83.0% 50.4% RI 53.0% 48.9% 86.2% Increasing awareness about AML/CFT 92.3.% respondents who grade the effectiveness of AML/CFT legislations 6.2% Reinforcing enforcement of regulations Strengthening existing regulations 47.4% 17.0% Figure 15 .0% RI NRI PUB Figure 15.0% 86.0% 100.1 % respondents by group on actions to reduce risk of ML & FT “…Too many publicity by institutions but no results. All Rights Reserved 40 .” (Public) © Financial Intelligence Unit – Republic of Mauritius.0% EFFECTIVE INEFFECTIVE 75.6% 0.

1.0 Common questions in Reporting Institutions (RIs).000 or its equivalent in foreign currencies and whether they believed that the products/services they are dealing in could be exploited by criminals for ML activities. 2. moderate. tax evasion. money changers.4 They were asked to rate the efficiency of Mauritian institutions in detecting.Reporting Institutions (NRIs) and the Public questionnaire 1.1 Common questions in the NRIs and Public questionnaire Respondents were asked whether they accepted payments in cash in excess of Rs 500. disrupting ML/FT activities and prosecuting money launderers and terrorists. severe to no idea.6 The respondents were asked to give their opinion as to whether the AML/CFT framework is more effective than three years ago and whether they thought that an underground economy exists in Mauritius. moderate.Appendix I: QUESTIONS SET IN THE QUESTIONNAIRE 1. confiscating/ forfeiting their assets.2 Respondents were asked to rate the risk by sector where they thought ML/FT was most prevalent on a scale of insignificant.0 2. 1. casinos and professional intermediaries. 1. made up of betting and horse racing. made up of banks. informal sectors and other sectors not traced. © Financial Intelligence Unit – Republic of Mauritius.1 Respondents were asked to grade their knowledge about the AML/CFT legislations in Mauritius and whether they were conversant with the role of the FIU. The sectors were classified in financial institutions. They were requested to rate these institution on a scale from 5 (high) to 1 (low).5 The respondents were also requested to grade the efficiency of the AML/CFT legislation in Mauritius in detecting and deterring ML/FT and reducing the scope of crimes. All Rights Reserved 41 . global businesses. corruption smuggling or others) that would be committed by criminals to generate proceeds of crime in Mauritius. fraud.3 The respondents were asked to rate the degree of prevalence. 1. on offences (drug trafficking. precious stones & jewellery businesses. car dealing. 1. on a scale from insignificant. Non financial Institutions. stock exchange. severe and no idea. Non. preventing. real estate.

3 The respondents were also asked whether (i) they document source of wealth of their clients. prevent and report suspicious transactions relating to ML/FT and whether such policies and procedures have been reviewed in the last three years. All Rights Reserved 42 . 3. and (iv) they have identified types of accounts and transactions that require high security or constant monitoring.4 The respondents were also asked to grade the extent of ML /FT in Mauritius on a scale from insignificant. procedures and compliance of organisations to ML/FT were set. (iii) they are aware of all the real beneficial owners of account holders or companies for which they provide their services.Appendix I: QUESTIONS SET IN THE QUESTIONNAIRE 2.0 3. ICAC. cheques or any other mode of payments) for the sector in which they are operating in Mauritius. to produce proof of income and address.1 Specific questions to RIs Questions were set to subdivide the population by age. © Financial Intelligence Unit – Republic of Mauritius. 3. They were even asked if they were able to identify clients/ customers of high vulnerability to ML 2. and the FIU or to report to the above mentioned institutions anonymously. while conducting transactions at financial institutions in Mauritius.5 The respondents were also asked about their course of action if they ever come across an ML/FT activity by reporting that act to the Mauritius Police Force.3 The respondents were also asked if they have been requested. 2.2 A series of questions about the policies. 2. 2.2 They were also asked about the most common methods of payments (cash. position in organisations and organisations having overseas branches or head offices. Income Tax Office. 3. The respondents were asked whether they have in place policies and procedures to detect. moderate and severe to no idea.6 The personal views of the respondents were sought as regards to ML/FT in Mauritius 3. (ii) they have set up AML/CFT procedures fort high net worth individuals.1 The respondents were asked to give an indicative percentage of their time that they spend on average per month in preventing and detecting the risk of ML/FT in their organisations.

5 Some questions were set in connection with the consequences of AML/CFT. reduce competitiveness. or loss of customers. 3.8 In identifying risks. they were also asked whether (i) they were able to identify changes (both in nature and size) in their client’s transactions. new services for established customers. suffered moderately. customers dealing with countries having no equivalent jurisdiction for AML/CFT. or on transactions of nonprofit making organisations. better management of credit risk. 3.4 The respondents were asked to give an indicative figure that has been spent by their organisations as compliance cost for the last financial year and to indicate whether they believe that their organisations could be exposed to ML/FT in the next five years. . may it cash or otherwise. and (iv) they have in-house skills to investigate financial crimes committed by an insider or in collusion of a partner of their organisations. benefited moderately. better management of reputational risk. sanctions by regulators. All Rights Reserved 43 . sometimes. © Financial Intelligence Unit – Republic of Mauritius. In this respect. the respondents were asked to grade the consequences of implementing AML/CFT policies and procedures on a scale from suffered greatly. benefited greatly to no effect.6 They were also requested to state the frequencies. 3. (ii) they have identified places where ML /FT could occur in their organisations. on a scale of always. 3. with which they carry out due diligence on new customers. (iii) they have identified customers of high vulnerability to ML/FT in their organisations. politically exposed persons. rarely to never. the respondents were asked to confirm whether they monitored all transactions of their clients. customers dealing with NCCT countries. First. 3. generating new customer’s and cross selling.9 Questions were set in relation to records keeping and the respondents were asked if their records are easily available and retrievable and whether they have systems in place to ensure that records are not destroyed or altered.Appendix I: QUESTIONS SET IN THE QUESTIONNAIRE 3.7 There were various questions set to assess and monitor risks against ML/FT. They were also requested to specify the benefits or losses in terms of better knowledge of clients. fines and loss of opportunities.

wire transfers or otherwise) to suppliers and/or from customers respectively and they were asked if they physically transported funds internationally. All Rights Reserved 44 . cheques.Appendix: QUESTIONS SET IN THE QUESTIONNAIRE 3. (ii) they are able to identify a suspicious transaction. (iii) they need to receive feedback from FIU on all STRs filed.1 Specific questions on NRIs questionnaire Some questions were set on the operational activities of non-reporting institutions.11 The respondents were asked whether they had reported any suspicious transaction to the FIU and if they felt that the reporting obligation need to be extended to other persons than those listed in the FIAML Act 2002.12 They were even asked if they have systems in place to detect failure by staffs to report suspicious transactions internally and if they believed that suspicion on ML could go undetected in their organisation.10 There were questions addressing suspicious transaction reports and the respondents were asked whether (i) they feel confident to report STRs to the FIU. . 5. 4. and (iv) they were aware of all information that need to be filed with the FIU. They were also requested to state whether they verify and keep records of their clients.3 The respondents were asked if they found it easy to conduct transactions with bank and financial institutions in Mauritius and whether they were aware that banks had a duty to report suspicious transactions of Ml/FT to the FIU. The respondents were requested to state whether they request their clients about the source of their funds. . 4. 3.1 Specific question on Public questionnaire The respondents were asked to state whether they made payments or received cash in excess of Rs 350.0 5. 3.000 of its equivalent on foreign currencies and also to indicate the methods of payments and/or receipts (cash.2 They were requested to state whether their businesses necessitate payments in cash exceeding Rs 350.000.0 4. 4. © Financial Intelligence Unit – Republic of Mauritius.

the proceeds of crime are most apparent and therefore most at risk. securities. Layering: When dirty money passes through a series of transactions in order to obscure the origin of the proceeds. Compliance: The process of complying with laws. different financial assets such as shares. it is called layering. Money Laundering (ML): The process by which the proceeds of crime are converted into assets that appear to have a legitimate origin. Integration: This phase occurs after the original source of the funds has been obscured and at that stage of the money laundering process is for the money to appear as legitimate funds or assets Know Your Customer (KYC): The requirement that financial institutions understand who their customers are. national agencies responsible for the receiving. These transactions may involve different entities. analysing. KYC is often referred to as customer due diligence (CDD). (b) and includes any cheque which is neither crossed nor made payable to order whether in Mauritian currency or in any other currency. disclosures of financial information in relation to suspicions of money laundering and financing of terrorism. “NCCT countries” means non-cooperative countries and territories which may be having detrimental rules and practices that impede international co-operation in the fight against money laundering. All Rights Reserved 45 . source of funds. Anti-Money Laundering (AML): The process by which efforts are made to prevent and detect money laundering activity. properties or insurance products. address. regulations. including by obtaining documentation to verify identity. and guidance. and disseminating to competent authorities. such as companies and trusts.Appendix II: GLOSSARY The following terms are used throughout this report. In this phase. FIUs: Financial Intelligence Units are central. requesting. © Financial Intelligence Unit – Republic of Mauritius. etc. Placement: This phase of money laundering occurs when the cash generated from crime is placed into the financial system or is used to purchase gods. “Cash” means (a) money in notes or coins of Mauritius or in any other currency.

given their particular customer. (d) is made in circumstances of unjustified complexity. Risk-Based Approach: A risk-based approach involves organisations (a) identifying and assessing the money laundering risks that they face. © Financial Intelligence Unit – Republic of Mauritius. product. The term also applies to the family and close associates of such individuals. All Rights Reserved 46 . but are conducted with the intention of escaping something – primarily taxes. exchange controls or criminal prosecutions. and (b) identifying and applying measures to manage and mitigate these risks. functionaries and military leaders. or to be used for. “Underground economy” means a group of clandestine transactions that create financial value. and geographic profile. or (j) funds liked or related to. senior or influential officials. (f) is made by or on behalf of a person with whom the transaction is made. and terrorist organizations. terrorism or acts of terrorism or proscribed organisations.Appendix II: GLOSSARY Politically Exposed Persons (PEPs) refers to persons who perform important public functions for a state and includes heads of state. terrorists. senior judges. and people with similar functions in international or supranational organisations as well as members of ruling royal families. (e) appears to have no economic justification or lawful objective. Terrorist Financing (TF): The financing of terrorist acts. government and cabinet ministers. government regulations. or (g) gives rise to suspicion for any other reason. revelation of bribes. whether or not the funds represent proceeds of crime. services. “Suspicious transaction” means a transaction which: (c) gives rise to reasonable suspicion that it may involve – (i) the laundering of money or proceeds of crime.

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