Anti-Money Laundering (AML)

Definition

AML (Anti-Money Laundering) refers to the body of laws, regulations, and internal procedures designed to prevent the financial system from being used to conceal the origin of funds derived from illicit activities. This framework requires financial institutions and regulated professionals to identify their clients, understand the origin of funds, and report any suspicious transaction to the competent authorities.

Framework in Mauritius

In Mauritius, AML obligations apply to entities supervised by the Financial Services Commission (FSC), the regulator of non-bank financial services, as well as to the Bank of Mauritius for the banking sector. Management companies licensed by the FSC — which administer, in particular, Global Business Companies (GBC) and Authorised Companies (AC) — are subject to these obligations in their role as registered agent and intermediary for their clients. Mauritius exited the FATF (Financial Action Task Force) grey list in October 2021 and the European Union's list of high-risk third countries in January 2022, following the strengthening of its compliance framework.

In practice

In the process of setting up or administering a company, trust, or foundation in Mauritius, AML obligations translate into concrete measures of customer due diligence (Know Your Customer), verification of the identity of the beneficial owner(s), justification of the source of invested funds, and ongoing monitoring of the business relationship. A Money Laundering Reporting Officer is appointed within regulated entities to centralise this oversight and, where applicable, report any unusual transaction. These requirements are assessed case by case, according to the client's profile and the nature of the structure envisaged; they are a precondition for opening the relationship with the management company and, downstream, with banking institutions.

Related terms

KYC (Know Your Customer) constitutes the operational component of AML due diligence, focused on identifying and verifying the client. The MLRO (Money Laundering Reporting Officer) is the person responsible, within a regulated institution, for ensuring compliance with these obligations and handling reports. The FSC is the authority that supervises the application of these rules for management companies and the companies they administer.

Related terms