Publication in the Official Journal of the European Union of 19 June of the list of 13 high-risk countries, including Mauritius, with strategic deficiencies in the fight against money laundering and terrorist financing

Commercial banks operating in the jurisdiction of Mauritius subject to new enhanced due diligence obligations

The MCBGroup apprehends: "The country's inclusion on the EU list could, if not promptly resolved, hamper the attractiveness and competitiveness of the MIFC"

Brussels has been intractable. The cleaver fell on Friday after the publication in the Official Journal of the European Union L 195 of the Black List of 13 high-risk countries, including Mauritius, with strategic deficiencies in the fight against money laundering and terrorist financing. Despite the government's lobbying campaign and statements by the Minister of Financial Services, Mahen Seeruttun, regarding the validity of the European Commission's Delegated Regulation (EU) of 7 May 2020, Mauritius has not been spared and is now part of this list that could harm the reputation and integrity of the Mauritius International Financial Centre (MIFC).

This decision undermines an economic sector with a potential contribution of 15% to gross domestic product (GDP) and thousands of high-paying jobs, or 3% of the working population while increasing the pressure on banks operating from Mauritius with enhanced due diligence obligations. The latest Staff Report of the International Monetary Fund (FMLI) under Article IV Consultations highlights that "assets under management" represent 50 times the GDP of Mauritius and a tax contribution of 6% of GDP.

To the last comma, the bodies of the European Union, from the Commission to the Council via the Parliament, have taken up the five weak points identified by the Financial Action Task Force (FATF) against Mauritius at the meeting in Paris at the end of last January (see details below) with Mauritius classified in the Grey List of this international body. The published regulation officially notes that it has taken note that these (13) countries (including Mauritius) have made high-level written political commitments to address deficiencies and have developed action plans with the Financial Action Task Force (FATF)." In principle, the European Union Blacklist will take effect from 1 October.

In an attempt to get off this blacklist, the government will present in first reading, Tuesday in the National Assembly, an omnibus bill, The Anti-Money Laundering and Combatting the Financing of Terrorism (Miscellaneous Provisions) Bill. With the adoption of this law, amending a series of laws, Mauritius intends to obtain a new evaluation from the Financial Action Task Force in September with a view to convincing the European Union to amend the Blacklist taking into account the efforts of Mauritius.

However, the official publication of this list by the European Union sent shockwaves through banking circles and the Global Business Sector, where there was little hope for the positive impact of the contacts established at the highest level of the Government House with Brussels. The obvious observation is the flagrant failure of Mauritius' economic diplomacy with proven partners. In banking circles, we are preparing to move into enhanced due diligence mode in transnational banking transactions.

The other great apprehension

The other great apprehension expressed in the high finance community relates to the new perception of Mauritius at the international level. In the latest edition of MCBFocus, Chief Strategy Officer Gilbert Gnany puts into perspective the risks of Mauritius' confirmation on the European Union's blacklist . "Within the financial and business services industry, the global business segment could, for some time yet, remain pressurised by muted investor sentiment and a more stringent operating environment. Notably, the country's inclusion on the EU list could, if not promptly resolved, hamper the attractiveness and competitiveness of the Mauritian International Financial Centre," the MCBGroup said.

Previously, MCB's Chief Strategy Offcer had drawn attention to the scale of the issue. "Overall, it is important that the Mauritian jurisdiction capitalises on all levers to resolve identified shortcomings within set timeframes, with a case in point being the need to leverage well-calibrated collaboration involving public and private stakeholders", notes the banker, stressing the importance of "continuous commitment towards adherence to and effective implementation of best practices and standards".

In any case, the race against time to regain the lost honour of the offshore is launched with a first stage in September for the meeting of the Financial Action Task Force before going to Brussels in advance of the deadline of 1 October.