Summary

This article is one of a series from Multiconsult Trustees Ltd, which is one of the leading trust service providers in Mauritius. The purpose of this article is to clarify the sensitive issue of confidentiality in Mauritius, an issue which is indeed of concern to many individuals and investors using Mauritius for the purpose of asset and wealth management. The safe keeping of records in respect of structures created by the investors and the extent of customer due diligence performed on them constitute a crucial and determining step in the overall fiduciary relationship that underpins such structures. This article provides an overview of the legal and regulatory provisions in Mauritius regarding confidentiality and customer due diligence and how it compares with other jurisdictions.

Introduction

By way of background, Mauritius is a Sovereign state and a democratic Republic within the Commonwealth. As such, all citizens are entitled to protection of their privacy under the written Constitution of the country that enshrines the principles of the European Convention on Human Rights. It is contended that privacy of personal details and information imparted to any institution is legitimate in that much of these information relate to their private lives and to their business transactions. In consequence, the right to privacy in the financial services sector is also legitimate. It is however worthy to point out that this legitimate right should not be misconstrued as being a right to secrecy. In the aftermath of 9/11, the high handed initiatives driven by OECD and FATF have compelled jurisdictions to embark on a series of robust legislative reforms interalia, making it a statutory obligation to conduct customer due diligence and to hold private information on investors with the result that these exercises have to some extent undermined or tampered with the fundamental right to privac

Customer Due Diligence Requirement in Mauritius

One should not overlook the fact that the obligation on financial service providers to conduct due diligence on customers or clients is set out under statute, namely the Financial Intelligence and Anti-Money Laundering Act, 2002, "FIAMLA" Section 17. The manner in which and the extent to which the due diligence should be conducted is set out under the FIAMLA regulations as well under the Codes of the Bank of Mauritius and the Financial Services Commission of Mauritius. These codes are advisory in nature and they reflect the requirements of the 40 +9 recommendations of the FATF.

Undoubtedly, the regime to combat money laundering and to counter terrorism in other jurisdictions should not be less to that of Mauritius since 9/11 as there has been consistent pressure from standard setting bodies such as FATF, OECD and IOSCO and other policy initiatives such as those from the IMF and the World bank to harmonise AML CFT legislations across the world. This is achieved mainly through the joint IMF/WORLD BANK FSAP Assessment programme conducted at the level of each jurisdiction. This pressure to harmonise legislations and to conform to international standards makes no room for the contention that the AML CFT regimes in other jurisdictions other than Mauritius is more attractive and flexible.

What the law provides

Our laws are reflective of the 40 plus 9 recommendations of the Financial Action Task force. Under the Financial Intelligence and anti-money laundering Act 2002, any service provider in the financial services sector is under an obligation to follow the due diligence procedures to identify its customer. This forms part of a central element of the due diligence obligation. The due diligence obligations in the acceptance of client funds represent a preventive measure for ensuring the integrity of the Mauritius Financial services centre. The Financial services Commission in Mauritius has issued guidelines and codes to this effect. The information on any client is confidential . Section 38(2) of the Trusts Act 2001 provides that the trustee shall keep all information in relation to any trust as confidential. Disclosure can only be lifted upon order of the Supreme court and such orders would only be granted where there allegations of criminal activities such as drug trafficking, arms trafficking or money laundering offences are not only serious but that they are not viewed as fishing expeditions by the courts. In fact the Supreme Court has on several cases refused to allow disclosure of information in relation to Global Business Companies.

How we conduct Customer Due Diligence

The CDD test is now an exercise which bears a cost which is high. At Multiconsult Trustees Ltd , we carry out a customer due diligence on all new clients and also as an on-going process. Before accepting any new business, we first examine the criminal records of the potential client through the World Check database. This exercise helps us to identify whether the client has any record of criminal activity. Secondly, we carry out a risk profiling analysis on the client according to the country where the client is domiciled and the nature of the business. If the risk assessment satisfies our Company’s acceptance policy, then we probe further in identifying the customer or the settlor and/or beneficial owners. Thus, the client is requested to provide to us an original of a utility bill, a bank reference letter from a reputable bank on himself , a certified copy of his passport pages, and a signed CV. When funds are transferred, he must state the sources of the funds and also its application. As an on-going process, we monitor the bank accounts and see to it that the funds which are transferred match with the purpose for which the vehicle has been set up.

Conclusion

The Financial Services sector has been subjected to lots of changes through various reports from the OECD, FATF, FSAP assessment programmes , and legislations and Codes driven by the FATF. This has impacted business in the sector so much so that the nature of the business has also changed a lot . The responsibility of service providers is now placed at a high watermark level and the regulators worldwide are also readjusting their role to preserve the integrity of their centres. Mauritius has so far paved its way successfully in the financial services industry whilst distinguishing itself from various other established centres in that it reckons a diversified economy and has a strong network of tax treaties with various European, African and Asian countries. As to the criticisms that are levelled against the Mauritian jurisdiction, it is contended that this is but a perception. The reality is that even the established jurisdictions other than Mauritius are also carrying out the due diligence with the same rigour as the OECD and the FATF and other standard setting organisations have recommended.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.