Financial Action Task Force (FATF) is the global organisation established by the Paris G7 Summit in 1989 to combat money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. FATF carries out its mandate on the basis of its 40 Anti-Money Laundering and Combatting the Financing of Terrorism and Proliferation (AML/CFT/CPF) Recommendations and 11 Immediate Outcomes, today recognized as the FATF AML/CFT/CPF International Standards.

FATF’s objective is to protect financial systems and the broader economy from threats of money laundering and the financing of terrorism and proliferation, thereby strengthening financial sector integrity and contributing to safety and security.

• Studies money laundering, terrorist financing, and other financial threats, tracks trends and methods, and supports national and global risk assessments.
• Updates and refines its 40 Recommendations to keep international AML/CFT standards effective and relevant.
• Evaluates member countries through mutual evaluations to check compliance, effectiveness, and proper implementation of AML/CFT measures.
• Works with countries having strategic weaknesses or are high-risk to protect the global financial system.
• Ensures all countries apply its standards correctly, working with regional bodies and international organisations, providing training and guidance.

FATF 40 Recommendations set out a comprehensive and consistent framework of measures which countries should implement in order to combat money laundering, and terrorism and proliferation financing. The essential measures, captured in those recommendations, that countries are required to adopt, should be able to:

• Identify the risks and develop policies and domestic coordination;
• Pursue money laundering, terrorist and proliferation financing;
• Apply preventive measures for the financial sector and other designated sectors;
• Establish powers and responsibilities for the competent authorities (e.g. investigative law enforcement, supervisory authorities) and other international measures;
• Enhance the transparency and availability of beneficial ownership information of legal persons and arrangements;
• Facilitate international cooperation.

The 40 Recommendations are as follows:

• R.1 – Assessing Risks and Applying a Risk-Based Approach
• R.2 – National Cooperation and Coordination
• R.3 – Money Laundering Offence
• R.4 – Confiscation and Provisional Measures
• R.5 – Terrorist Financing Offence
• R.6 – Targeted Financial Sanctions related to Terrorism and Terrorist Financing
• R.7 – Targeted Financial Sanctions related to Proliferation
• R.8 – Non-Profit Organisations
• R.9 – Financial Institution Secrecy Laws
• R.10 – Customer Due Diligence
• R.11 – Record Keeping
• R.12 – Politically Exposed Persons
• R.13 – Correspondent Banking
• R.14 – Money or Value Transfer Services
• R.15 – New Technologies
• R.16 – Wire Transfers
• R.17 – Reliance on Third Parties
• R.18 – Internal Controls and Foreign Branches and Subsidiaries
• R.19 – Higher-Risk Countries
• R.20 – Reporting of Suspicious Transactions
• R.21 – Tipping-Off and Confidentiality
• R.22 – DNFBPs: Customer Due Diligence
• R.23 – DNFBPs: Other Measures
• R.24 – Transparency and Beneficial Ownership of Legal Persons
• R.25 – Transparency and Beneficial Ownership of Legal Arrangements
• R.26 – Regulation and Supervision of Financial Institutions
• R.27 – Powers of Supervisors
• R.28 – Regulation and Supervision of DNFBPs
• R.29 – Financial Intelligence Units
• R.30 – Responsibilities of Law Enforcement and Investigative Authorities
• R.31 – Powers of Law Enforcement and Investigative Authorities
• R.32 – Cash Couriers
• R.33 – Statistics
• R.34 – Guidance and Feedback
• R.35 – Sanctions
• R.36 – International Instruments
• R.37 – Mutual Legal Assistance
• R.38 – Mutual Legal Assistance: Freezing and Confiscation
• R.39 – Extradition
• R.40 – Other Forms of International Cooperation

FATF currently comprises 38 member jurisdictions and two regional organisations (the European Commission and the Gulf Cooperation Council).

The 38-member jurisdictions of FATF are:
Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Greece, Hong Kong, China, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Portugal, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Türkiye, United Kingdom, United States

FSRBs are regional organisations set up as associate members to provide support to the FATF in ensuring that countries in those regions implement the FATF 40 recommendations. FSRBs play a crucial role in promoting actively the FATF 40 Recommendations and act as assessor bodies through mutual evaluation processes and follow-up procedures. There are currently 9 FSRBs set up in different regions of the world and Mauritius is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG).

ESAAMLG supports the FATF evaluation process by ensuring that its member countries are evaluated for their compliance with the FATF 40 AML/CFT/CPF standards. It also sustains effective post-evaluation implementation of AML/CFT/CPF measures in member countries, as well as prioritizing and consolidating regional AML/CFT/CPF capacity building, particularly for assessing ML/TF/PF risks and adopting risk-based approach to implementation of AML/CFT Standards.

The 21 member countries of ESAAMLG are:
Angola, Botswana, Burundi, Eritrea, Eswatini, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, South Sudan, Tanzania, Uganda, Zambia, Zimbabwe

Mutual Evaluations are peer reviews of a country’s compliance with the FATF standards, the result of which is a Mutual Evaluation Report highlighting the strengths and weaknesses in its AML/CFT/CPF system.

A Mutual Evaluation comprises two inter-related components:

• Technical Compliance; and
• Effectiveness of a country’s AML/CFT system.

The two components provide an indication of the level of compliance of a country with the FATF Recommendations and the extent to which its AML/CFT system is effective.

Technical compliance is an assessment of whether the laws, regulations and other measures adopted by a country to combat money laundering, terrorism and proliferation financing, meet the requirements of the FATF 40 Recommendations. For each Recommendation, Technical Compliance ratings can be either:

• Compliant (Best)
• Largely Compliant
• Partially Compliant
• Non-Compliant

Effectiveness is evaluated through evidence that the assessed country’s legal and institutional framework are working and delivering the right results. Effectiveness is assessed on the basis of 11 Immediate Outcomes, a defined set of outcomes that are central to a robust AML/CFT system. For each Immediate Outcome, effectiveness ratings can be either:

• High Level of effectiveness (Best)
• Substantial level of effectiveness
• Moderate level of effectiveness
• Low level of effectiveness

The 11 Immediate Outcomes are:

• IO.1 – Money laundering and terrorist financing risks are understood and, where appropriate, actions co-ordinated domestically to combat money laundering and the financing of terrorism and proliferation.
• IO.2 – International co-operation delivers appropriate information, financial intelligence, and evidence, and facilitates action against criminals and their assets.
• IO.3 – Supervisors appropriately supervise, monitor and regulate financial institutions, DNFBPs and VASPs for compliance with AML/CFT requirements commensurate with their risks.
• IO.4 – Financial institutions, DNFBPs and VASPs adequately apply AML/CFT preventive measures commensurate with their risks, and report suspicious transactions.
• IO.5 – Legal persons and arrangements are prevented from misuse for money laundering or terrorist financing, and information on their beneficial ownership is available to competent authorities without impediments.
• IO.6 – Financial intelligence and all other relevant information are appropriately used by competent authorities for money laundering and terrorist financing investigations.
• IO.7 – Money laundering offences and activities are investigated and offenders are prosecuted and subject to effective, proportionate and dissuasive sanctions.
• IO.8 – Proceeds and instrumentalities of crime are confiscated.
• IO.9 – Terrorist financing offences and activities are investigated and persons who finance terrorism are prosecuted and subject to effective, proportionate and dissuasive sanctions.
• IO.10 – Terrorists, terrorist organisations and terrorist financiers are prevented from raising, moving and using funds, and from abusing the NPO sector.
• IO.11 – Persons and entities involved in the proliferation of weapons of mass destruction are prevented from raising, moving and using funds, consistent with the relevant UNSCRs.

A country would be subject to ICRG review if, based on the findings of its Mutual Evaluation Report, it meets the referral criteria.

The FATF has established two categories of countries with AML/CFT weaknesses:

• High-Risk jurisdictions that have significant strategic deficiencies in their regimes to counter money laundering, terrorisms and proliferation financing (“black list”);
• Jurisdictions under increased monitoring which have committed to resolve swiftly, and work closely with the FATF and the respective FSRB, to address the identified strategic deficiencies within agreed timeframes (“grey list”).

This review process is carried out by FATF’s 4 regional Joint Groups.

A jurisdiction that enters the ICRG review process as a result of the findings of its Mutual Evaluation has a one-year Observation Period to work with the FATF and its FSRB to address the identified deficiencies. For all countries under ICRG review, the FATF requires a high-level political commitment that the jurisdiction will implement the legal, regulatory, and operational reforms required by the action plan.

Jurisdictions placed under increased monitoring are those that the FATF has identified as having strategic deficiencies in their AML/CFT/CPF frameworks, which should be addressed. These strategic deficiencies can be in terms of technical compliance and/or effectiveness of measures in place and which can, therefore, pose high risks to the international financial system.

These jurisdictions should actively work with the FATF to address the strategic deficiencies in their regimes and commit to swiftly resolve such deficiencies within agreed timeframes.

The FATF and the FSRBs continue to work very closely with these jurisdictions as they report on the progress made to address the strategic deficiencies.The FATF does not call for the application of enhanced due diligence measures to be applied to these jurisdictions.

At the time of the adoption of the Mutual Evaluation Report in 2018, Mauritius was rated compliant or largely compliant with only 14 of the 40 FATF recommendations.

As a result of an overhaul of the AML/CFT legal framework, and necessary measures taken to address the remaining outstanding technical compliance gaps, Mauritius is rated Compliant or Largely Compliant on all of the 40 FATF Recommendations since September 2022.

After the publication of the Mutual Evaluation Report in 2018, Mauritius was given one year to demonstrate positive and tangible progress on all the recommended actions made therein. After the post observation period of one year, the Africa/Middle East Joint Group assessed the progress made by Mauritius.

The A/ME Joint Group considered that, since the completion of its MER in 2018, Mauritius had made progress on a number of its MER recommended actions to improve technical compliance and effectiveness. However, the A/ME Joint Group considered that not all strategic deficiencies were fully addressed. It recommended that Mauritius be placed on the list of jurisdictions under increased monitoring by the FATF to address the strategic deficiencies which basically relate to 5 Immediate Outcomes concerning effectiveness.

Mauritius had to take measures to:

• demonstrate that the supervisors of the Global Business sector and Designated Non-Financial Businesses and Professions to implement risk-based supervision;
• ensure access to accurate basic and beneficial ownership information, and verification of such information, by competent authorities in a timely manner;
• demonstrate that LEAs have capacity to conduct money laundering investigations, including parallel financial investigations and complex cases;
• implement a risk-based approach for supervision of its Non-Profit Organisation sector to prevent abuse for Terrorism Financing purposes;
• demonstrate the adequate implementation of targeted financial sanctions through outreach and supervision.

Mauritius was thus placed on the FATF list of ’Jurisdictions under increased monitoring’ in February 2020. Furthermore, an action plan containing 19 action items to address the identified strategic deficiencies with prescribed timelines for completion was prepared by the ICRG. Mauritius provided a high-level political commitment to complete the FATF Action Plan items within the agreed timelines. It must be highlighted that under the FATF Action Plan, Mauritius does not have technical compliance issues.

In order to be removed from ICRG, a jurisdiction is expected to complete all, or nearly all, the actions included in the FATF action plan. The ICRG would determine factually that the process of implementing the required reforms and actions are fully in place and is being sustained and there is a high-level political commitment to continue implementing and improving the AML/CFT framework.

Once the ICRG has determined that a jurisdiction has implemented the recommended reforms, it will organise an on-site visit to confirm that the implementation of the necessary legal, regulatory, and/or operational reforms is underway and there is the necessary political commitment and institutional capacity to sustain implementation. On the basis of the onsite visit report, the ICRG will decide whether the jurisdiction is ready to exit the ICRG process. If the decision is positive, the FATF will make a public statement indicating that the jurisdiction is no longer subject to formal ICRG process. The concerned jurisdiction will then continue to work within the FATF or the relevant FSRB, through its follow-up process, to improve its AML/CFT regime.

In February 2021, the FATF has indicated that, “since February 2020, Mauritius made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime. Mauritius has taken steps towards improving its AML/CFT regime, including by conducting outreach to promote understanding of ML and TF risks and obligations, and providing training for law enforcement authorities to ensure that they have the capability to conduct money laundering investigations. Mauritius should continue to work on implementing its action plan to address its strategic deficiencies, including by:

• implementing risk-based supervision plans effectively for the Financial Services Commission and relevant DNFBP supervisors and increase the diversity of STR filing, especially among higher risk sectors;
• ensuring the access to accurate basic and beneficial ownership information by competent authorities in a timely manner;
• demonstrating that law enforcement agencies have capacity to conduct money laundering investigations, including parallel financial investigations and complex cases;
• implementing a risk-based approach for supervision of its NPO sector to prevent abuse for TF purposes;
• demonstrating the adequate implementation of targeted financial sanctions through outreach and supervision.

In September 2021, the A/ME JG conducted an onsite visit to Mauritius following the FATF initial determination, at its June 2021 Plenary, that “Mauritius has substantially completed its Action Plan and warrants an on-site assessment to verify that the implementation of Mauritius’s AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future.” In October 2021, on the strength of the findings of the A/ME JG, the FATF Plenary decided to remove Mauritius from the FATF Grey List. The FATF Plenary was satisfied that Mauritius had successfully completed its Action Plan aimed at addressing the identified strategic deficiencies. This came six months ahead of the FATF scheduled time.

Mauritius was placed on the EU List of High Risk Third Countries on the basis of its listing on the FATF List of Jurisdictions under Increased Monitoring. According to the EU procedures, the de-listing of a country from the EU List is not solely dependent on being removed from the FATF list but there may be additional top-up criteria determined by the EU which that country will have to comply with.

In the case of Mauritius, no Top-Up criteria was applied in as much as the EU has assessed that the FATF Action Plan is comprehensive enough to meet its requirements. In March 2022, the removal of Mauritius from the EU list of high-risk third countries (EU blacklist) became effective since all strategic deficiencies based on the criteria laid down in Directive (EU) 2015/849 were addressed.

On 26 March 2021, the United Kingdom (UK) has amended its Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to provide for the establishment of its own list of high-risk third countries with strategic deficiencies in their respective AML/CFT regime. The UK was required to initiate a legal process to establish a list of “high risk third countries” in terms of its domestic Money Laundering Regulations as a consequence of its withdrawal from the EU. Prior to the publication of this autonomous list, the UK had been subject to EU Regulations. As a result of the withdrawal from the EU, the UK has now established a domestic regime to list ‘High Risk third Countries’.

The UK has chosen to mirror the FATF lists, without reference to EU legislation. Twenty-one countries were placed on this list including Mauritius. There was no change in status of Mauritius as a result of these regulations in as much as Mauritius was previously covered by the FATF and EU List. What the new provisions confirm is the UK position that domestic listing is directly linked to the FATF Lists. Therefore, once a country is added to or removed from a FAFT Lists, UK law will be updated to reflect the changes following the regular FATF plenaries.

Following Mauritius’ exit from the FATF Grey List, Government actively engaged with the UK representatives to demonstrate the Government’s robust and sustained commitment to improve the AML/CFT regime. Shortly after, the United Kingdom also removed Mauritius from its list of high-risk countries under the UK Money Laundering and Terrorist Financing (Amendment) (No. 3) (high-risk countries) Regulations 2021.

The next Mutual Evaluation of Mauritius is scheduled to commence in March 2027. The on-site visit by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) is planned for January–February 2028, with the adoption of the Mutual Evaluation Report expected in August–September 2028.

The upcoming Mutual Evaluation is crucial for Mauritius given the significant contribution of the financial services sector to the country’s economy, investment flows, and employment. A positive outcome will reinforce Mauritius’s position as a trusted and well-regulated international financial centre, strengthening confidence among investors, financial institutions, and international development partners.

It is also key to safeguarding the country’s reputation and maintaining the integrity of its financial system. A strong performance will demonstrate Mauritius’s commitment to international AML/CFT standards, while any adverse outcome could lead to reputational damage, increased scrutiny, and potential impacts on cross-border financial relationships.

Mauritius has undertaken extensive reforms and strategic actions to ensure a high level of preparedness for the upcoming Mutual Evaluation as follows:

• Setting up an Inter-Ministerial Committee on AML/CFT chaired by the Attorney-General and the Minister of Financial Services and Financial Services
• launch of the Second National Risk Assessment on AML/CFT
• formulation of the National AML/CFT/CPF Strategy for the period 2026–2029
• review of the Non-Profit Organisations, Legal Persons and Legal Arrangements and Virtual Assets Risk Assessments
• conduct of the first Proliferation Financing, Cross-Border, Tax Evasion Risk Assessment
• passing of the Anti-Money Laundering, Combatting the Financing of Terrorism and Countering Proliferation Financing (Miscellaneous Provisions) Bill

Several initiatives are well underway to ensure Mauritius’s full readiness for the 2027 Mutual Evaluation.

Mauritius maintains strong and continuous engagement with international bodies such as the Financial Action Task Force and the Eastern and Southern Africa Anti-Money Laundering Group, actively participating in mutual evaluations, follow-up processes, and technical discussions. The country also cooperates closely with international organisations and development partners through capacity-building programmes, technical assistance, and knowledge-sharing initiatives to strengthen its AML/CFT/CPF framework.

At the operational level, Mauritius fosters effective international cooperation through timely exchange of information, mutual legal assistance, and collaboration between competent authorities, including financial intelligence units, law enforcement agencies, and regulators. This proactive and transparent approach underscores Mauritius’s commitment to upholding international standards and contributing to the integrity and stability of the global financial system.