Considered among one of the main International Financial Centre by the business network, Mauritius is the favored platform for doing business in Africa, ranking 1st on the continent for facilities proposed of doing business in 2020. The country has an alluring business condition and, combined with a strong regulatory environment, pulls in many corporates, entrepreneurs, financial specialists (investors) and High Net-Worth Individuals.
However, in spite of being outstanding amongst other business platforms for doing business in Mauritius, the EU has recently included Mauritius on the high-risk countries with strategic inadequacies in their regime in regards to anti-money laundering and countering terrorist financing to its money-laundering blacklist. This has caused a negative impact on Mauritius and numerous financial entities no longer want to invest or do business with Mauritius.
Henceforth, we have outlined the key measures that will be applicable for organizations and companies operating in the Global Business sector, along with a study on the potential implications for their business and how to keep on drawing in Investors in Mauritius:
- Regulatory Framework
The Government has responded to the threat of the EU list of high-risk jurisdictions and has demonstrated its pledge to address the jurisdiction’s inadequacies according to the Financial Action Task Force (FATF) recommendations by September 2020. The following measures will be implemented:
- risk-based supervisions in accordance with the recommendations of the FATF;
- targeted outreach programmes to promote clear understanding of money-laundering and terrorist financing risks;
- increased reporting of suspicious transactions;
- targeted financial sanctions in cases of terrorist financing; and
- timely access to beneficial ownership information.
The Government will fortify the current legislative framework by presenting a new AML / CFT (Miscellaneous Provisions) Bill.
The Government will also provide a dedicated and specialised Financial Offences Court.
Regulatory framework analysis
The Government is resolved to persuade the EU to keep Mauritius off the list of high-risk jurisdictions, and it has until the end of September 2020 to complete this task as the list is expected to be in effect as from the 1st of October 2020. We hope that the proposed measures will be implemented quickly and on a convenient basis to remediate the hole in AML/CFT compliance in Mauritius. We believe that the new AML / CFT legislation contains robust and forward-looking provisions that will not only solve the current issues and problems, but also set the scene for the adoption of international norms and practices. This is critical, even essential, for the reputation and on-going success of our financial sector.
- Business Facilitation
The Government has announced a number of incentives to encourage and attract foreigners to migrate, work and invest in Mauritius. They come as follows:
- The Work Permit and Residence Permit will be combined into one single permit.
- The Government will be extending the validity of an Occupation Permit (OP) and a Residence Permit for retired people to 10 years renewable.
- The minimum investment amount for obtaining an Occupational Permit (OP) will be reduced from USD 100,000 to USD 50,000.
- The minimum turnover and investment requirements for Innovator Occupation Permits are being removed.
- The spouse of an OP holder will not need a permit to invest or work in Mauritius.
- OP holders will also be allowed to bring their parents to live in Mauritius.
- Professionals with an OP and foreign retired people with a Residence Permit will be able to invest in other ventures/sectors without any shareholding restriction.
- Non-citizens who have a residence permit under the various real estate schemes will no longer require an Occupation or Work Permit to work and invest in Mauritius.
- The Permanent Residence Permit will be extended from 10 to 20 years.
- OP and Residence Permit holders will be eligible to apply for a Permanent Residence Permit if they have held the permit for three consecutive years.
- The minimum investment amount for an investor to obtain the status of Permanent Resident or for a holder of an immovable property under an existing scheme to obtain the status of Resident will be reduced from USD 500,000 to USD 375,000.
- Non-citizen holders of Residence Permit, Occupation Permit or Permanent Residence Permit will be allowed to acquire one plot of serviced land not exceeding 2,100 m2 for residential purposes within Smart Cities.
The Central Bank will set up a centralized KYC (Know-Your-Client) platform.
The Corporate and Business Registration Department (CBRD) will become the central repository for all business information and licences through a digital platform.
Business facilitation analysis
At a time when many amongst worst hit countries are showing an inclination for isolationism or non-interference, it is encouraging to see Mauritius seeking and pursuing its opening and opportunities to the world with renewed vigour. Making it easier for foreign nationals to live, work and invest in Mauritius is a welcoming move, more so in the face of an ageing population and a scarcity of competencies in innovative and specialist sectors. On the business facilitation side, supportive measures such as the “Centralised-KYC” platform will be a real game changer if implemented swiftly and correctly. Such a platform will hasten and give as boost to on-boarding and related AML/KYC processes to allow clients to set up their businesses faster and more smoothly.
The Mauritian Jurisdiction is actively and effectively working with the FATF to address vital and strategic deficiencies in their systems. These are done to counter money-laundering, terrorist financing, and proliferation financing in an increasingly effective way.
The country is resolved to implement the action plan one year ahead of schedule, as concurred with the FATF. Various specialized committees have been set up to address each of the five inadequacies with a strict period and outcomes. Mauritius has submitted a report to the FATF, tending to the five issues raised. The Mauritian government is completely dedicated to exiting the FATF and EU records. Mauritius is largely compliant with 35 of the 40 recommendations by FATF.
Furthermore, the Mauritian Financial Services Commission (FSC) has recently issued a full framework on for security tokens and has started to license companies, thus creating a regulated environment for the much-sought tokenization.
The FSC is aiming at positioning Mauritius as a regional hub of sound repute in the field of Fintech.
The publication of a Guidance Note on Security Tokens Offering and Security Tokens Trading Systems is another stepping-stone in building an open and transparent regulatory regime for Fintech in Mauritius.
With this initiative, the Island will allow security token trading platforms to apply for an FSC license. This will enable and allow the companies to legally issue a token offering for security tokens, popularly known as STOs, as well as operate a trading house for such digitized securities in the jurisdictions.
The guidelines highlighted that the license holders need to follow a strict money laundering (AML) and countering the finance of terrorism (CFT) requirements. In addition, similar to the traditional exchanges operating in the jurisdictions, these platforms have to publish daily trading data and seek review from the regulator.
