MONEY LAUNDERING AND ANTI-CORRUPTION LAW

UNIT 1 - INTRODUCTION

Learning objectives of the module:

• Provide for a complete and comprehensive overview of money laundering and anti-corrup-

tion law in Mauritius

• Provide for an understanding of the factual overview of money laundering and corruption

in Mauritius

• Introduce learners to the main legislations and legal and normative framework on money

laundering and corruption at both the domestic and international levels

• Provide for a thorough understanding of the specific offences under money laundering and

corruption

• Acquaint learners with important case law from judicial bodies pertaining to money laun-

dering and corruption offences

• Introduce learners to the main organisations such as the ICAC and the FIU relevant to the

combat against money laundering, financing of terrorism and corruption in Mauritius.

1.1 Introduction

Worldwide, institutions are being impacted by money laundering. The United Nations Office on

Drugs and Crime (UNODC) estimates that between two and five percent of the global GDP, or

$800 billion and $2 trillion, is laundered abroad each year. The ubiquity of this fraudulent activity

opens the door for terrorist plots and may even cause market distortion. Global fines and penalties

for violations of the Know Your Customer (KYC), anti-money laundering, data privacy and Mar-
kets in Financial Instruments Directive (MiFID) laws were paid by financial institutions in 2020, to-

talling $10.4 billion.

1.2 What is money laundering?

Money laundering is the process or method used by criminals to disguise the true source and owner-

ship of the gains from their illegal activity. If carried out correctly, it gives them the ability to retain

control over those revenues and, in the end, gives them a reliable explanation for the source of their

income. Money laundering is a widespread issue that has various degrees of impact on every nation.

Since it is a clandestine activity by definition, it is hard to determine the scope of the issue or the

volume of illicit funds generated locally or internationally annually. However, failing to stop the

laundering of criminally obtained money allows criminals to profit from their activities, making

crime a more alluring endeavour.

1.3 What are the economic consequences of money laundering?

A nation's economy depends on money, and if money laundering is not addressed and avoided, it

can have serious and wide-ranging implications. Local and international enterprises may be af-

fected, which would disrupt not only the economy but also society. What does it mean that the

money in circulation is "dirty" then?

Unstable money demand

The cash input and outflow are easy for money launderers. The nation's unrestrained and quick

money flow causes expenditure rates to increase. However, there could be significant rises in im-

ports, exports, the gap in the balance of payments, inflation, interest rates, and unemployment.

These many black money-related demands for money will have a negative effect on monetary pol-

icy. Market stability is impacted by the global scope of these fraudulent actions, and financial crises

in one country can spread to others. How central banks' monetary policies are affected depends on
whether or not the demand for money is predictable. Black money's impact on money demand may

be viewed as a cause of central banks' failed policies.

Loss of government revenue

The government has a tough time collecting taxes from connected transactions due to money laun-

dering. Overall government income is also decreased as a result of the decline in tax revenue.

Losses in government money can be harmful for organisations that depend on them, such public

hospitals. The overwhelming percentage of all public revenue comes from taxes. There is a high

likelihood that public revenue will fall short of public expenditures if income is low, which could

lead to budget deficits.

Instability of financial institutions

Financial firms run the risk of having their assets and responsibilities abruptly shifting if they unin-

tentionally engage in money laundering. News of money laundering at some banking institutions

alerts the public authorities, bringing those organisations' auditing under closer examination and

damaging their reputation.

Distortion of markets

The expansion of the private sector is constrained by the availability of goods at prices below the

cost of production. Criminals may turn once-productive firms into unprofitable ones in order to

launder their money. In the end, this makes it difficult for businesses to compete, which has an im-

pact on the productivity of the economy. Aside from that, money laundering can cause significant

volatility in international capital flows and exchange rates as well as erratic fluctuations in the de -

mand for money.

Corruption
Illegal monies earned through illegal conduct can be utilised to finance criminal enterprises if they

are made legitimate. Money laundering has an impact on society and the economy. It gives crimi-

nals economic influence over the market, the government, and the people, which encourages crime

and corruption.

1.4 Why it is necessary to combat money laundering?

Criminals must always be stopped from turning "dirty" money into "clean" money in order to legit-

imise the proceeds of their crimes, which is essential in the battle against crime. A crucial compo-

nent of the success of criminal activities is the capacity to launder money through the financial sys -

tem. If those engaged in money laundering seek to profit from their actions, they must take advan-

tage of the resources offered by the global financial sector businesses. Unrestrained use of the finan-

cial systems for this purpose runs the risk of undermining specific financial institutions and, in the

end, the entire financial industry. The increasing ease with which illegal money can be laundered

and the difficulty of tracking it are both a result of the increased integration of the financial systems

around the world, the removal of restrictions on the free flow of capital, and the expansion of elec -

tronic banking.

The ability to draw in and hold onto legally acquired money is essential to the long-term success of

any financial industry around the world. Money obtained through criminal activity is generally tem-

porary. The honest depositor is discouraged, and the reputation and integrity of financial systems

are damaged. Anyone or any organization implicated in a money laundering controversy runs the

danger of being prosecuted and losing their good name in the marketplace.

1.5 Stages of money laundering

Following are the three stages that the laundering process typically takes, which may include sev-

eral transactions by the launderers that could raise suspicions of money laundering.

Placement
The physical disposal of the first illicit gains from criminal conduct is known as placement.

Layering

The process of disconnecting illicit proceeds from their source by building up a complex web of fi-

nancial transactions that hide the audit trail and give anonymity.

Integration

Giving money that was obtained illegally the appearance of legitimacy. If the layering process was

successful, integration schemes would put the cleaned-up revenues back into the economy in a way

that would make them look to be regular corporate money when they re-entered the financial sys-

tem.

The three fundamental steps can happen in different, distinct phases. They could happen at the same

time or, more frequently, they could overlap. The available laundering methods and the demands of

the criminals determine how the fundamental procedures are used. The money launderer finds it dif-

ficult to avoid certain points of vulnerability in the laundering process, and these points are where

his activities are more likely to be discovered. These points of vulnerability include cash entry into

the financial system transfers to and from the financial system.

1.6 How can financial sector businesses be vulnerable to money laundering?

In the past, attempts to stop money laundering have largely focused on how financial sector compa -

nies handle deposits because that is where the launderer's activities are most likely to be identified.

However, criminals have recently come to understand that paying cash into organisations in the

banking industry can frequently result in further inquiries. In order to make it more difficult to de -

tect at the placement stage, several methods have been sought to convert the unlawfully obtained

cash or to combine it with legal cash profits before it enters the financial system. These include the

use of wire transfers and "smart" cards, which are difficult to track. As a result, financial institutions
should think about the money laundering risks presented by the goods and services they provide, es-

pecially where the face-to-face contact with customers is minimal or non-existent.

All financial institutions are susceptible to being used in the placement stage of money laundering

as well as the layering and integration stages since they offer a wide range of money transportation

services. The susceptibility is increased by electronic funds transfer services, which make it possi-

ble to quickly switch cash deposits between accounts with different identities and in different coun -

tries.

Additionally, a few financial institutions may come under the scrutiny of more advanced criminal

enterprises and their "professional money launderers." Such organisations will set up massive but

fictitious international trading operations to transfer their illicit funds from one jurisdiction to an-

other, possibly using front companies and candidates as a cover. They will utilise fabricated, ficti -

tious letters of credit to further muddle the trail while creating the appearance of foreign trade by in-

flating invoices artificially to generate what appear to be valid international wire transfers. In order

to finance the business activity, several of the front firms may even seek their lenders for financing.

Financial organisations that provide services for international trade should be on the lookout for

various types of laundering.

1.7 A brief overview of the legal evolution on money laundering in Mauritius

The State of the Republic of Mauritius has made clear through a number of actions that it is fully

committed to preventing money laundering and the financing of terrorism. Mauritius committed to

the Mutual Evaluation mechanism and the 40 Financial Action Task Force (FATF) recommenda-

tions on December 23, 1997. The Financial Action Task Force is the task force that sets the global

standards for combating money laundering (FATF). The G-7 Summit, which took place in Paris in

July 1989, created the FATF. It published its Forty Recommendations in 1990, outlining the funda-

mental guidelines for initiatives aimed at preventing money laundering. The FATF Standards were

revised in February 2012 following the revision of the FATF Standards in the document titled "In-
ternational Standards on Combating Money Laundering and the Financing of Terrorism and Prolif-

eration." The Forty Recommendations were first revised in 1996 and then in June 2003 to take into

account changes in money laundering methods, techniques, and trends that have developed as coun-

termeasures to combat this crime. The FATF Standards are designed to improve international secu-

rity measures and further defend the integrity of the financial system.

Additionally, on October 20, 2000, Mauritius agreed to adhere to the requirements set forth by the

United Nations Minimum Performance Programme adopted in the Cayman Islands meeting called

the Global Programme Against Money Laundering Plenary. The Government of Mauritius addition-

ally ratified the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Sub-

stances (also known as the Vienna Convention) and the UN Convention against Transnational Or-

ganised Crime (also known as the Palermo Convention).

The Economic Crime and Anti-Money Laundering Act 2000 was adopted by the government in

June 2000 and went into effect in Mauritius on July 7, 2000. Fraud and corruption were covered by

the Economic Crime and Anti-Money Laundering Act of 2000. The Economic Crime and Anti-

Money Laundering Act 2000 was ultimately abolished and replaced by the Financial Intelligence

and Anti-Money Laundering Act 2002, which gave a Financial Intelligence Unit (FIU) clear powers

to gather, analyse, and disseminate information. Mauritius has been operating under this Act since

June 10, 2002. It states, among other things, that financial institutions should report suspicious

transactions immediately to the FIU, as opposed to the previous practice of reporting suspicious

transactions to the Bank of Mauritius. However, the Financial Intelligence and Anti-Money Laun-

dering Act 2002 does not include the Economic Crime and Anti-Money Laundering Act 2000's cor-

ruption provision. It was incorporated into the Prevention of Corruption Act of 2002, which also

stipulated that an Independent Commission Against Corruption established under that Act would in-

vestigate money laundering offences.

Under the Financial Intelligence and Anti-Money Laundering Act of 2002, Regulations (G.N. No.

79 of 2003), which became effective in Mauritius on June 21, 2003, were proclaimed on June 19.

They include provisions for identification verification and record keeping. To better account for eli-

gible and group introducers, among others, these Regulations have been amended by the Financial

Intelligence and Anti-Money Laundering (Amendment) Regulations 2005 (G.N. No. 117 of 2005)

and the Financial Intelligence and Anti-Money Laundering (Amendment) Regulations 2006 (G.N.

No. 127 of 2006). Additionally, on September 16, 2003, Parliament passed the Anti-Money Laun-

dering (Miscellaneous Provisions) Act. The Financial Sector Assessment Program (FSAP) mission

of the World Bank and International Monetary Fund made recommendations that led to the creation

of the Act. The institutional and regulatory structure that existed in Mauritius with regard to anti-

money laundering underwent several changes as a result of the Act. The Eastern and Southern

Africa Anti-Money Laundering Group was founded with Mauritius as a founding member

(ESAAMLG). The FATF now recognises the ESAAMLG as an associate member.

The Anti-Money Laundering (Miscellaneous Provisions) Act 2003, the Financial Intelligence and

Anti-Money Laundering Regulations 2003, the Financial Intelligence and Anti-Money Laundering

(Amendment) Regulations 2005, the Financial Intelligence and Anti-Money Laundering (Amend-

ment) Regulations 2006, and the Prevention of Money Laundering Act are the main pieces of legis-

lation pertaining to money laundering.

1.8 Financing of terrorism

The Convention for the Suppression of the Financing of Terrorism Act, the Prevention of Terrorism

Act 2002, the Prevention of Terrorism (Special Measures) Regulations 2003 (G.N. No. 14 of 2003),

the Prevention of Terrorism (Special Measures) (Amendment) Regulations 2003 (GN No. 36 of

2003), and the Financial Intelligence and Anti-Money Laundering Act 2002 are the primary pieces

of legislation that address terrorism financing.

Financial institutions' services may be utilised, knowingly or unknowingly, to move or conceal cash

used for terrorist acts and the techniques by which they are carried out. While other illegal acts typi -

cally aim to make money, terrorism may have a different end goal. Nevertheless, terrorists still need

financial assistance in order to carry out their plans. A successful terrorist organisation, like any

other criminal organisation, must be able to establish and sustain an efficient financial infrastruc-

ture. For this, it needs to create funding sources, a mechanism to launder the money, and then a way

to make sure the money can be used to buy the supplies and other logistical equipment needed to

carry out terrorist operations.

Therefore, financial institutions should take precautions to avoid becoming a channel for such activ-

ities and use their already in place due diligence requirements, current money laundering policies

and procedures, and enhance them as needed to detect transactions that could potentially involve

terrorist funds. As part of their standard internal and external audit procedures, financial institutions

should examine their operations in this area. When examining their policies, procedures, and re-

quired due diligence, financial institutions are recommended to take into account the risks men-

tioned by the FATF in its Report "Emerging Terrorist Financing Risks," published in October 2015.

They should improve their systems and controls in accordance with the Report's identification of

the strategies and tactics for financing terrorism.

1.9 Sources of terrorist funds

Although there are additional sources that are equally essential, there are two main avenues from

which terrorist finance may come. The first main source of funding for terrorist organisations comes

from States or organisations with extensive infrastructures that may raise money and then distribute

it to them, as well as from wealthy people. Income directly obtained from various "revenue-generat-

ing" activities serves as the second significant source of funding for terrorist organisations. Similar

to criminal organisations, a terrorist organisation may receive funding via criminal activity or other
illegal pursuits like large-scale smuggling, various forms of fraud, theft and robbery, and drug traf-

ficking.

Contrary to criminal organisations, however, funding for terrorist organisations may sometimes

come from legal means, such as contributions, or from a mix of legal and illegal sources. The fact

that terrorist organisations receive their income from legal and seemingly legitimate sources sets

them apart from more conventional criminal organisations. The FATF has emphasised that numer-

ous law enforcement investigations and prosecutions have discovered a connection between a com-

mercial enterprise and terrorist organisations, including used car dealerships and restaurant chains,

where money from the commercial enterprise was being used to support the terrorist organisation.

One extremely efficient method of generating money to support terrorism is through community so-

licitation and fundraising drives. Such fundraising efforts are frequently made in the name of groups

with the legal standing of charitable or aid organisations. In many instances, the organisations that

receive donations are indeed legal in the sense that they carry out some of the activities they claim.

However, the majority of the organisation's members are unaware that a percentage of the monies

collected by the charity are being misappropriated in a recognisable pattern for terrorist causes. The

accumulation of membership dues and/or subscription fees, the sale of publications, cultural and so-

cial events, door-to-door solicitation within the community, appeals to wealthy members of the

community, and donations of a portion of one's own earnings are just a few of the specific fundrais -

ing techniques that may be used.

1.10 Laundering of terrorist related funds

Terrorists and their associates largely employ the same techniques established criminal organisa-

tions do to raise money from illicit sources. Although funding from lawful sources does not need to

be "laundered," terrorists frequently need to hide or disentangle linkages between their funding and

their legitimate funding sources. Therefore, in order to use them without drawing the notice of law

enforcement, terrorists must figure out ways to launder these cash. FATF specialists came to the
conclusion that terrorists and the organisations that assist them typically utilise the same techniques

used by criminal organisations to launder money after looking into terrorist-related financial activi-

ties.

Cash smuggling, deposits to or withdrawals from bank accounts, purchases of various monetary in-

struments (travellers' checks, bank cheques, money orders), usage of credit or debit cards, and wire

transfers are just a few of the specific tactics identified with regard to various terrorist organisations.

The ultimate goal of the terrorist is to acquire resources to fund his actions, not to profit from his

fundraising methods. Therefore, the path that fund transfers go would be extremely important for

finding terrorist financing. On the basis of repeated, comparable transactions from a single account

or from a number of accounts maintained in the same institution by several parties, a conclusion

may be drawn in this regard.

The discovery and tracing of these monies are made more challenging when terrorists acquire their

funding from legitimate sources (donations, sales of publications, etc.). For instance, it has been

suggested that certain terrorist groups are heavily funded by charities, non-profit organisations, and

other legal companies. At first glance, it may appear that there are few, if at all, signs that would

make a specific financial transaction or sequence of transactions stand out as connected to terrorist

operations due to the funding's apparent lawful source. The amount and character of the transactions

involved are additional significant aspects of terrorist financing that make its detection more chal-

lenging. According to a number of FATF specialists, funding for a terrorist operation does not al-

ways require significant sums of cash, and the transactions that go along with them are frequently

simple and include the transfer of small amounts via wire transfers. Therefore, improved due dili-

gence methods are needed to find terrorist financing. While it is a crime in and of itself, financing

terrorism also serves as a pretext for money laundering.

1.11 FATF’s special recommendations pertaining to terrorism financing

The FATF took the significant step of developing the Eight Special Recommendations on Terrorist

Financing in October 2001 after expanding its mission, which had previously only dealt with money

laundering. These recommendations are in addition to the forty recommendations and include a se-

ries of actions targeted at preventing the funding of terrorist acts and terrorist organisations. In addi -

tion, the FATF issued another measure in October 2004 called Special Recommendation IX on

Cash Couriers, which instructs nations to halt cross-border transfers of currency and financial in-

struments linked to terrorist financing and money laundering and seize such funds. This new mea -

sure was a crucial addition to the global counter-terrorist financing defences. The FATF's nine Spe-

cial Recommendations on Terrorist Financing were fully incorporated into the Forty Recommenda-

tions in February 2012, mirroring both the fact that Terrorist Financing has been a long-standing is-

sue and the close ties between anti-money laundering provisions and counter-terror financing mea-

sures.

Self-Assessment Activities

1. Discuss the historical evolution of legal framework on money laundering and financing

of terrorism in Mauritius.

2. Discuss how money laundering is intrinsically linked with financing of terrorism.

3. Evaluate how the financial sector of Mauritius can be affected by money laundering if

not appropriately curtailed.

4. Elaborate on the various stages of money laundering.

 UNIT 2 - THE LEGAL FRAMEWORK ON MONEY LAUNDERING: A MAURITIAN

PERSPECTIVE

Learning objectives of the unit:

• Provides for an overview of the Financial Intelligence and Anti-Money Laundering Act 2002

• Introduces the Financial Intelligence Unit

• Discusses the various stages of money laundering

• Discusses the offences of money laundering and limitation of payment in cash

• Legal obligations and financial reporting of financial institutions

2.1 The Financial Intelligence and Anti-Money Laundering Act 2002

The Economic Crime and Anti-Money Laundering Act 2000 was the first explicit piece of law to

address the hazards of money laundering in Mauritius. The Prevention of Corruption Act of 2002,

which went into effect on April 1, 2002, repealed the Economic Crime and Anti-Money Laundering

Act. On February 27, 2002, Parliament passed the Financial Intelligence and Anti-Money Launder-

ing Act of 2002 (hereinafter referred to as FIAMLA), which went into effect on June 10, 2002. The

Anti-Money Laundering (Miscellaneous Provisions) Act 2003 revised the Financial Intelligence and

Anti-Money Laundering Act 2002 in response to the joint IMF/World Bank Financial Sector As-

sessment Program Mission's evaluation of our legal system.

2.2 From the Economic Crime and Anti-Money Laundering Act 2000 to the FIAMLA 2002

Financial institutions were required to notify the Bank of Mauritius of any questionable transactions

under the Economic Crime and Anti-Money Laundering Act 2000. All alleged money laundering

transactions must now be directly reported to the Financial Intelligence Unit in accordance with the

FIAML. The Economic Crime and Anti-Money Laundering Act of 2000 specified that the Eco-

nomic Crime Office, which was also established under that Act, would conduct investigations into

money laundering offences. According to the Prevention of Corruption Act of 2002, the Indepen-

dent Commission Against Corruption is in charge of conducting investigations into offences involv-

ing money laundering.

The FIAMLA contains provisions for regulatory bodies to report to the Financial Intelligence Unit

suspicious transactions that they become aware of in the course of their supervisory duties, a proce-

dure that was not available under the Economic Crime and Anti-Money Laundering Act 2000. It

also offers a complete framework for the dissemination of information to other regulatory and law
enforcement bodies. Transactions related to terrorism are specifically mentioned in the FIAMLA's

definition of a suspicious transaction.

2.3 The Financial Intelligence Unit (FIU)

Financial institutions are required to alert the Financial Intelligence Unit about any dubious transac -

tions. On June 10, 2002, the FIAML authorised the establishment of the Financial Intelligence Unit.

A Director leads the Financial Intelligence Unit, which is run by a board made up of a chairperson

and two additional members. The FIU is the primary organisation in Mauritius tasked with collect-

ing, soliciting, analysing, and sharing with the investigative and supervisory authorities disclosures

of financial information regarding: (a) alleged money laundering offences and suspected proceeds

of crime; (b) information required by or under any law to combat and prevent money laundering; or

(c) financing of any activities or transactions related to terrorism. The Financial Intelligence Unit is

primarily an intelligence-gathering organisation that gathers and organises data on terrorism and

money laundering. It serves as the central database for financial data related to alleged or confirmed

money laundering and financing of terrorism.

The Financial Intelligence Unit, which represents African FIUs on the EGMONT Committee,

joined the EGMONT Group on July 23, 2003. Members of the Group benefit from one another's co-

operation in instances involving money laundering for the Financial Intelligence Unit. In order to

further help its members' national anti-money laundering programs, the EGMONT Group, which

currently unites Financial Intelligence Units from 151 countries, shares financial intelligence data

among other things.

2.4 The offence of Money Laundering

Section 3 of the FIAMLA provides for money laundering offences as follows:

(1) Any person who -

(a) engages in a transaction that involves property which is, or in whole or in part directly
or indirectly represents, the proceeds of any crime; or
 (b) receives, is in possession of, conceals, disguises, transfers, converts, disposes of, re-
moves from or brings into Mauritius any property which is, or in whole or in part directly or
indirectly represents, the proceeds of any crime,

where he suspects or has reasonable grounds for suspecting that the property is derived or
realised, in whole or in part, directly or indirectly from any crime, shall commit an offence.
(2) A bank, financial institution, cash dealer or member of a relevant profession or occupa-
tion that fails to take such measures as are reasonably necessary to ensure that neither it
nor any service offered by it, is capable of being used by a person to commit or to facilitate
the commission of a money laundering offence or the financing of terrorism shall commit an
offence.

(3) Reference to concealing or disguising property which is, or in whole or in part, directly
or indirectly, represents, the proceeds of any crime, shall include concealing or disguising
its true nature, source, location, disposition, movement or ownership of or rights with re-
spect to it.

It is noted that a bank, as per section 3(2) of the FIAMLA, encompasses any individual operating a

non-bank deposit taking business licensed under the Banking Act as well as moneylenders, credit

unions, and other entities with the same meaning as under the 2004 Banking Act. As for financial

institution, it means an institution, or a person, licensed or registered or required to be licensed or

registered under (a) section 14 or 77 of the Financial Services Act, (b) the Insurance Act and (c) the

Securities Act.

In the case of ICAC v Dumont and Another 2011 INT 77, both Accused were jointly charged with

‘Money Laundering’ in breach of sections 3(1) (a) and (b) of the Financial Intelligence and Anti

Money Laundering Act. The Prosecution adduced the following evidence to prove the essential ele-

ment common to both offences: 1. The various deposits effected in the joint accounts held by both

Accused namely the sum of 80,000 rupees on 10-11-06, 40,000 rupees on 15-02-07, 20,000 rupees

on 27-02-07, 50,000 rupees on 19-03-07 and 100,000 rupees on 27-04-07. The Court held that It

can only be safely stated that the facts of this case point unequivocally to the fact that both Accused

indeed had reasonable grounds for the suspecting that the different sums in lite were derived in part,

directly, from the said crime….drug dealing. Therefore it can safely and reasonably be inferred that

such a reasonable suspicion does exist in the present case under all counts. There are no facts more-
over present in this case which might have weakened or destroyed such inference reached. Both ac-

cused were found guilty of money laundering.

2.5 Limitation of payment in cash

Section 5 of the FIAMLA further provides that:

(1) Notwithstanding section 37 of the Bank of Mauritius Act 2004, but subject to subsection
(2), any person who makes or accepts any payment in cash in excess of 500,000 rupees or
an equivalent amount in foreign currency, or such amount as may be prescribed, shall com-
mit an offence.
(2) Subsection (1) shall not apply to an exempt transaction.”

The Intermediate Court has the power to try any offence in violation of the Act or regulations made

thereunder, and upon conviction, it has the power to order the forfeiture of assets in addition to any

other penalties it may impose, such as a fine of up to 2 million rupees and a term of incarceration

not to exceed 10 years. Any property that is owned by, under the control of, or in the possession of

a person who has been found guilty of a money laundering offence is considered to have been ob-

tained by criminal activity, and the court may order its forfeiture.

The definition of "crime" in the Act is as follows: (a) an offence punishable by I penal servitude; (ii)

imprisonment for a term greater than 10 days; (iii) a fine exceeding 5,000 rupees; (b) an activity

carried out outside of Mauritius that would have been considered a crime if it had occurred there;

and (c) an act or omission that occurred outside of Mauritius that would have been considered a

crime if it had.

In addition, regarding what amounts to suspicious transaction, the FIAMLA provides as follows:

“Suspicious transaction” means a transaction which -

(a) gives rise to a reasonable suspicion that it may involve the laundering of money or the proceeds
of any crime; or funds linked or related to, or to be used for, terrorism or acts of terrorism or by
proscribed organisations, whether or not the funds represent the proceeds of a crime;

(b) is made in circumstances of unusual or unjustified complexity;

(c) appears to have no economic justification or lawful objective;

(d) is made by or on behalf of a person whose identity has not been established to the satisfaction
of the person with whom the transaction is made; or

(e) gives rise to suspicion for any other reason.

The objective standard is the one that applies to both suspicion and offences involving money laun -

dering. Therefore, if the proper officer of a financial institution should have had a reasonable suspi -

cion but did not actually have one, the offence may have been committed. The "Know Your Cus-

tomer Principle," which is covered in section 6 of these guideline notes, should be well-known to

those officers.

A limit on cash payments has been established under the Act with the intention of securing an audit

trail and as a precautionary action against the laundering of the criminal proceeds. Accordingly, all

cash transactions exceeding 500,000 rupees are prohibited, with the exception of a few exempt

transactions. Exempt transactions are transactions for which the 500,000 rupee limit does not apply

and are typically transactions between I the Bank of Mauritius and any other person, (ii) a bank and

another bank, (iii) a bank and a financial institution, (iv) a bank or financial institution and a cus-

tomer, where (a) the transaction does not surpasses an amount that is equivalent with the lawful ac-

tivities of the client, and 1) the customer is, at the time the transaction occurs or b) the chief execu-

tive officer or chief operating officer of the bank or financial institution, as the case may be, person-

ally approves the transaction in accordance with any guidelines, instructions or rules issued by a su -

pervisory authority in relation to exempt transactions; or (v) between such other persons as may be

prescribed.
In the case of ICAC v Shibani Finance 2012 INT 177, the accused company as represented is

charged with the offence of ‘Limitation of payment in cash’ under three counts, in breach of sec-

tions 5(1) and 8 of the Financial Intelligence and Anti- Money Laundering Act coupled with section

44(2) of the Independent and General Clauses Act. It is averred in the information that on or about

the 9th, 14th and 19th July 2004 the accused as represented wilfully, unlawfully and criminally ac-

cepted from Mr Mohammud Yousouf Meeajun payments in cash in foreign currency – GBP60,000

(Rs3,103,800), GBP35,000 (Rs1,811,250), GBP 15,000 (Rs780,000) – whose equivalence was in

excess of Rs350,000.

It was held that there is evidence on record that… the accused company… could not have had any

business relationship with Mr Y. Meeajun. The transactions were confined to three days in one

month. The fact that the accused company ascertained that the money was withdrawn from the ac-

count of the Mr Meeajun’s daughter, by the daughter and that she authorised her father to make the

exchange, is not really verification of the source of the funds.

2.6 Obligations of Financial Institutions

Every financial institution shall take steps to guarantee that neither it nor any services it provides

can be used to commit or enable the commission of a money laundering offence in order to fight

money laundering and the funding of terrorism. Additionally, financial institutions are required by

the FIAML to confirm the real identities of their customers and anyone else they do business with.

In accordance with the Banking Act of 2004, financial institutions may only open accounts for cash

deposits when they are confident they have positively identified the individual to whom the monies

are to be attributed.

Financial institutions must also install internal controls and other measures to prevent money laun -

dering and the funding of terrorism, as well as adopt internal reporting policies, including the ap -

pointment of a money laundering reporting officer.

2.7 Legal requirements pertaining to reporting

In Beezadhur v ICAC 2013 SCJ 292, it was held that “…banks or other financial institutions have a

duty and are responsible for reporting any suspicious financial transactions exceeding the pre-

scribed limit to the Financial Intelligence Unit.”

According to section 14 of the FIAMLA, every financial institution is required to disclose to the

FIU any transaction that it has cause to believe might be a suspicious transaction as soon as practi -

cally possible, but no later than 15 working days. To that end, the FIU has created a form. Financial

institutions must report suspicious transactions using the form that is available at the FIU. Each re-

port submitted to the Financial Intelligence Unit must contain the following information: the identi-

fication of the party or parties to the transaction; the quantity of the transaction; a synopsis of the

nature of the transaction; all circumstances and contexts giving rise to the suspicion; the business

relationship between the person of interest and the financial institution; if the suspect is an insider,

any details regarding whether the suspect is still linked to the financial institution; any voluntary

declaration as to the source, origin, or destination of the transaction.

After receiving a report, the FIU will inform the appropriate financial institution and the Bank of

Mauritius in writing of the study's findings. In no process is a report of a suspicious transaction ad-

missible as evidence. After a financial institution reports a suspicious transaction to the FIU, the di -

rector of the FIU is authorised to ask the financial institution for more information about the suspi-

cious transaction as well as any other financial institution that is or appears to be engaged in the

transaction. When a financial institution gets a request for additional information from the Director

of the FIU, it must provide the requested information to the FIU as soon as is reasonably possible,

but no later than 15 working days. But there are two limitations to the Director of the FIU's author -

ity: - (i) The extra information may only be requested in order to determine whether it should be

sent to supervisory or investigative authorities. (ii) Any additional information should be related to

the financial institution's notice of a suspicious transaction.

The Act clearly forbids anybody who is directly or indirectly engaged in the reporting of a suspi -

cious transaction from disclosing that the transaction has been reported to any party involved in the

transaction or to any unauthorised third party. If someone is found guilty of tipping off, they could

face a fine of up to one million rupees and up to five years in prison after being found guilty. In re-

ality, making initial inquiries about a potential client in order to validate their authentic identity,

learn more about their financial situation, or determine the exact nature of the transaction they are

engaging in won't result in a tip-off offence. However, extreme caution should be exercised to pre-

vent customers from learning that their identities have been brought to the FIU's attention when a

dubious transaction has already been reported and additional investigation is required.

Any financial institution, director, or employee who wilfully and without good reason neglects to I

comply with a request from the FIU under section 13(2) or 13(3) of the FIAMLA, (ii) submit a re-

port under section 14 of the FIAMLA, (iii) verify, identify, or maintain records, registers, or docu-

ments as required under section 17 of the FIAMLA, will be subject to a fine not to exceed one mil-

lion rupees upon conviction.

If the Bank of Mauritius determines that a financial institution under its supervision has violated an

FIAML requirement or a regulation that applies to that financial institution and that the violation

was the result of a negligent act or omission or a serious flaw in the implementation of any such re-

quirement, the Bank of Mauritius may, in the absence of a valid defence, take any of the following

actions:

(a) if a bank is involved, take legal action against it in accordance with Sections 11 and 17 of

the Banking Act 2004 on the grounds that it is conducting business against the public's best inter-

ests;

(b) proceed against a cash dealer or a person with a deposit taking business license under sec-

tions 16 and 17 of the Banking Act 2004 on the grounds that they are operating their businesses

against the public's best interests.

2.8 The Financial Intelligence and Anti-Money Laundering Regulations 2003

On June 19, 2003, the Financial Intelligence and Anti-Money Laundering Regulations 2003 were

passed, and on June 21, 2003, they went into effect. The Financial Intelligence and Anti-Money

Laundering (Amendment) Regulations of 2005 and the Financial Intelligence and Anti-Money

Laundering (Amendment) Regulations of 2006, however, have revised these regulations.

The Regulations as amended outline the conditions under which identity verification must be done,

the minimal documents needed, record-keeping requirements, adoption of internal reporting proce-

dures, including the identification and appointment of a Money Laundering Reporting Officer, ap-

plication of internal controls, and other measures for countering money laundering and the funding

of terrorism, as well as the level of reliance by financial institutions.

Self-Assessment Activities

1. Highlight the main features of the FIAMLA 2002.

2. Elaborate on the elements of the offence of money laundering.

3. Discuss the legal framework on the limitation of payment in cash in Mauritius.

4. What are the reporting obligations that financial institutions have in Mauritius?
 UNIT 3

FINANCING OF TERRORISM AND ASSET RECOVERY

Learning objectives of the Unit:

• Provides for an understanding of the concept of financing of terrorism

• Elaborates on the legal framework on financing of terrorism

• Introduces and explains the principle of asset recovery in Mauritius through existing legisla-

tions

3.1 The Convention for the Suppression of the Financing of Terrorism Act 2003

The Convention for the Suppression of the Financing of Terrorism Act of 2003 currently regulates

the suppression of terrorism financing, which was previously covered by the Prevention of Terror-

ism Act of 2002. In this regard, the Convention for the Suppression of the Financing of Terrorism

Act 2003 has repealed Sections 11, 13, and 14 of the Prevention of Terrorism Act 2002. The Inter-

national Convention for the Suppression of the Financing of Terrorism guides the creation of the

anti-terrorist financing offences in the Convention for the Suppression of the Financing of Terror-

ism Act of 2003.

The Act's newly created offence for sponsoring terrorism is as follows:

4. Financing of terrorism
(1) Any person who, by any means whatsoever, wilfully and unlawfully, directly or indirectly,
provides or collects funds14 with the intention or knowledge that it will be used, or having rea-
sonable grounds to believe that they will be used, in full or in part, to commit in Mauritius or
abroad -
(a) an offence in breach of sections 4, 5, 6 and 6A of the Civil Aviation (Hijacking and Other
Offences) Act and section 12 of the Prevention of Terrorism Act 2002; or

(b) an act of terrorism,

shall commit an offence.

 (2) For an act to constitute an offence under subsection (1), it shall not be necessary that the
funds were actually used to carry out the offence in breach of sections 4,5,6 and 6A of the Civil
Aviation (Hijacking and Other Offences) Act and section 12 of the Prevention of Terrorism Act
2002 an act of terrorism, as the case may be.
(3) Any person who commits an offence under subsection (1) shall, on conviction, be liable to
penal servitude for a term of not less than 3 years.

“Funds”, for the purposes of the Convention for the Suppression of the Financing of Terrorism Act

2003,

(a) means assets of every kind, whether tangible or intangible, movable or immovable, however

acquired;

(b) (b) includes legal documents or instruments in any form, including electronic or digital, evi-

dencing title to, or interest in, such assets, including but not limited to, bank credits, travellers'

cheques, bank cheques, money orders, shares, securities, bonds, drafts and letters of credit.

3.2 The Prevention of Terrorism Act 2002

The Prevention of Terrorism Act of 2002 (POTA), which was passed on February 19, 2002, went

into force on March 16, 2002, in the Republic of Mauritius. The Act forbids terrorism in general

and gives our judicial system the authority to effectively address the problem of terrorism. The Act

has provisions for, among other things:

(a) the prevention, suppression and combating of terrorism;

(b) new offences relating to terrorism generally

(c) reinforcing intelligence gathering, investigatory and enforcement measures for the above

and:
(d) implementing the international commitments of the Republic of Mauritius in respect of

terrorism.

Under the Prevention of Terrorism Act 2002, Acts of Terrorism are defined as acts which :-

(a) may seriously damage a country or an international organisation; and

(b) is intended or can reasonably be regarded as having been intended to-

(i) seriously intimidate a population;

(ii) unduly compel a Government or an international organisation to perform or abstain from per-

forming any act;

(iii) seriously destabilise or destroy the fundamental political, constitutional, economic or social

structures of a country or an international organisation; or

(iv) otherwise influence such government, or international organisation; and

(c) involves or causes, as the case may be-

(i) attacks upon a person’s life which may cause death;

(ii) attacks upon the physical integrity of a person;

(iii) kidnapping of a person;

(iv) extensive destruction to a Government or public facility, a transport system, an infrastructure

facility, including an information system, a fixed platform located on the continental shelf, a public

place or private property, likely to endanger human life or result in major economic loss;

(v) the seizure of an aircraft, a ship or other means of public or goods transport;
(vi) the manufacture, possession, acquisition, transport, supply or use of weapons, explosives or of

nuclear, biological or chemical weapons, as well as research into, and development of, biological

and chemical weapons;

(vii) the release of dangerous substance, or causing of fires, explosions or floods, the effect of

which is to endanger human life;

(viii) interference with or disruption of the supply of water, power or any other fundamental natural

resource, the effect of which is to endanger life.

The Section 15 of the Act, which is reproduced below, is especially important because it concerns

with terrorist property, which includes money.

15. Dealing in terrorist property

(1) Any person who enters into, or becomes concerned in, an arrangement which facilitates the re-

tention or control by, or on behalf of, another person of terrorist property16, in any manner, includ-

ing -

(a) by concealment;

(b) by removal from the jurisdiction; or

(c) by transfer to any other person,

shall commit an offence.

(2) It shall be a defence for a person charged under subsection (1) to prove that he did not

know and had no reasonable cause to suspect that the arrangement related to terrorist prop-

erty.

Under the Prevention of Terrorism Act 2002, "terrorist property" means property which -

(a) has been, is being, or is likely to be used for any act of terrorism;
 (b) has been, is being, or is likely to be used by a proscribed organisation;

(c) is the proceeds of an act of terrorism; or

(d) is gathered for the pursuit of, or in connection with, an act of terrorism.

3.3 Prevention of Terrorism (Special Measures) Regulations 2003

The Prevention of Terrorism (Special Measures) Regulations 2003 were passed on January 25, 2003

and provides for the freezing of terrorists' funds. The Convention for the Suppression of the Financ-

ing of Terrorism Act of 2003's definition of "funds" was comparable to that in those rules. How -

ever, on March 19, 2003, the Prevention of Terrorism (Special Measures) (Amendment) Laws 2003

altered those regulations' definition of "funds" to accommodate some exceptions set forth in UN Se-

curity Council Resolution 1452 with relation to payments for terrorists' daily necessities. Section (b)

of the definition of "funds," which is copied hereunder, details certain exemptions.

"funds"

(a) means assets of every kind, whether tangible or intangible, movable or immovable, however ac-

quired, and legal documents or instruments in any form including electronic or digital, including ti -

tle to, or interest in, such assets, including, but not limited to, bank credit, travellers cheques, bank

cheques, money orders, shares, securities, bonds, drafts, letters of credit;

(b) does not include funds and other financial assets or economic resources that have been deter-

mined by the Minister to be –

(i) necessary for basic expenses, including payments for foodstuffs, rent or mortgage, medicines and

medical treatment, taxes, insurance premiums, and public utility charges, or exclusively for pay-

ment of reasonable professional fees and reimbursement of incurred expenses associated with the
provision of legal services, or fees or service charges for routine holding or maintenance of frozen

funds, other financial assets or economic resources, after notification to the Committee of the inten-

tion to authorize, where appropriate, access to such funds, assets or resources and, in the absence

of a negative decision by the Committee within 48 hours of such notification;

(ii) necessary for extraordinary expenses, provided that such determination has been notified to,

and approved by, the Committee.

Regulations No 7 and 8 of the Prevention of Terrorism Regulations (Special Measures), read together

with the Prevention of Terrorism (Special Measures) Regulations 2003 (Amendment) outlines in

Regulations 2003 with regard to, among other things, the concept of involvement in terrorist fi-

nances or property.

“7. (1) No person shall -

(a) deal, directly or indirectly, in any property that is owned or controlled by or on behalf of any

listed terrorist, 30

including funds derived or generated from property owned or controlled, directly or indirectly, by

any listed terrorist;

(b) enter into or facilitate, directly or indirectly, any financial transaction related to a dealing in

property referred to in sub-paragraph (a); or

(c) provide any financial or other related services in respect of any property referred to in sub-

paragraph (a) to, or for the benefit of, or on the direction or order of, any listed terrorist.

(2) Reference in paragraph (1) to a listed terrorist shall be deemed to include reference to an entity

owned or controlled by any listed terrorist.

8. (1) No person shall -

(a) make available any funds or other financial assets or economic resources; or

(b) make available any financial or other related services for the benefit of any listed terrorist.

(2) Reference in paragraph (1) to a listed terrorist shall be deemed to include reference to -

(a) any entity owned or controlled by any listed terrorist; or

(b) any person or entity acting on behalf, or at the direction of any listed terrorist or of any entity

owned or controlled by any listed terrorist.”

An international terrorist group or a suspected international terrorist is what the statutes describe as

a listed terrorist. In this regard, the Bank is authorised to direct by notice that funds and property

held by financial institutions for those listed terrorists be frozen and to subsequently refer the case

to the police for investigation upon the publication in the Government Gazette of a proclamation by

the Prime Minister listing those alleged international terrorists or international terrorist groups.

3.4 The complementing nature of the FIAMLA towards the Prevention of Terrorism Act 2002

and related legislations

The FIAMLA is an additional supplement to the Prevention of Terrorism Act of 2002, the Conven-

tion for the Suppression of the Financing of Terrorism Act of 2003, and any regulations issued un-

der those laws. Dealing in the profits of any crime is considered a money laundering offence under

the FIAML. Therefore, under the FIAML, the laundering of funds linked to offences covered by the

POTA, the POTA Regulations, and the 2003 Convention for the Suppression of the Financing of

Terrorism Act would also constitute a money laundering crime.

A transaction that, among other things, raises a reasonable suspicion that it may involve (i) the laun-

dering of money or the proceeds of any crime, or (ii) funds associated with, related to, or intended

to be used for terrorism or acts of terrorism, or by proscribed organisations, whether or not the
funds represent the proceeds of a crime, is considered suspicious under the FIAMLA. The FIU is

designated as the central agency in the Republic of Mauritius under Section 10 of the FIAML for

receiving, requesting, analysing, and disseminating financial information, including information

about the financing of any activities or operations related to terrorism, to the investigatory and su-

pervisory authorities.

3.5 The Asset Recovery Act 2011

The National Assembly passed the Asset Recovery Act (the Act) on April 5, 2011, and it was pro-

claimed on February 1, 2012, making it effective. The Asset Recovery (Amendment) Act 2012,

which was passed in November 2012, and the Asset Recovery (Amendment) Act 2015, which took

effect on January 26, 2016, respectively, have since altered the Act. The Act specifies the steps to

be taken in order for the State to recover assets that are either I the proceeds of criminal activity or

terrorist property after a person has been found guilty of a crime (conviction-based confiscation) or

(ii) the proceeds of criminal activity or terrorist property after a person has not been charged with a

crime but it can be established on the balance of probabilities that the property in question repre-

sents such items (i.e. non-conviction based, or civil, asset forfeiture).

Additionally, it establishes a thorough framework for asset recovery that is applicable to all criminal

offences in Mauritius that carry a maximum sentence of at least 12 months in jail, including drug re-

lated crimes. It also applies to any crime performed outside of Mauritius that would be illegal there

if it were committed there. Any crime committed during ten years of the Act's inception, as well as

any property acquired during that time, are subject to its provisions.

3.6 Enforcement Authority under the Asset Recovery Act 2011

The Act's Part II creates a separate Enforcement Authority (EA). The EA has been vested in the

FIU as of January 26, 2016. Before that, the EA served as the Director of Public Prosecutions or an -

other law enforcement official to whom he had assigned authority. The Enforcement Authority may

use any of the legal authority granted to it by the Act, including asking a Supreme Court judge for a
recovery or confiscation order or asking the Judge in Chambers for a property-related restraining or

restraint order. The Enforcement Authority may also: (a) request from the Judge in Chambers for an

ancillary order, such as a search and seizure order or an account monitoring order; (b) require any-

one to produce or disclose any information or material, other than privileged information or cus-

tomer information; and (c) require a financial institution to provide any customer information it may

have about a particular person.

3.7 Customer Information and Account Monitoring Order

Financial institutions may be required to provide the Enforcement Authority with the following cus-

tomer information under the Act: (a) information regarding whether an individual currently holds or

has previously held an account at a financial institution alone or jointly with another individual; (b)

information regarding any evidence obtained by the financial institution under or for the purposes of

a law relating to money laundering; and (c) such particulars, relating to the account or its holder.

A financial institution named in the application for the order is required to disclose account infor-

mation of the description indicated in the order to the enforcement authority in the way and by the

time specified in the order for the duration of the order. The financial institution must abide with the

Order and give the Enforcement Authority the requested account information once the Enforcement

Authority applies to the Judge in Chambers for an Account Monitoring Order. The request for an

Account Monitoring Order may include information about (a) all accounts held by the applicant at

the financial institution requested; (b) a specific description, or specific descriptions, of the accounts

held; or (c) a specific account, or specific accounts, maintained. A financial institution is prohibited

by the Act from using a statement it makes in response to an Account Monitoring Order as evidence

against it in any legal actions.

3.8 The Asset Recovery Investigative Division

Within the FIU, an Asset Recovery Investigation Division (ARID) has been established. The previ-

ous Investigative Agency, established under the Director of Prosecution's office, has been replaced
by the ARID. The ARID must be made up of law enforcement officers, one of whom must be cho -

sen by the Director of the FIU to serve as the Chief Investigating Officer. A law enforcement officer

must possess and exercise whatever authority the enforcement authority deems necessary.

The Director of the FIU needs to consult with and try to obtain such assistance from such individu-

als in Mauritius relating with combating money laundering, including, among others, such persons

representing banks, financial institutions, and cash dealers as the FlU considers desirable in fulfil-

ment of the roles of the FlU under the Asset Recovery Act.

3.9 International Co-operation and Tipping Off

Any Ministry, Department, Public Authority, or Body outside of Mauritius may be the subject of an

agreement between the Attorney-General or the Enforcement Authority for the collection, use, or

release of data, including personal information, with the aim of exchanging or sharing information

outside of Mauritius or for any other intent authorised by the Act. In the case of a foreign request

for the spotting of tarnished property, the Enforcement Authority may ask a judge to issue an order

requiring, among other things, that financial institutions immediately provide the Enforcement Au-

thority with any information they have about any business transactions involving the property for

any time period before or after the date of the order, as the judge may specify.

The Judge may, for good cause shown by the Enforcement Authority, order a law enforcement

agent to gain entry and search the site specified in the order and remove any document, material, or

other thing within it for the reasons of executing such order if a person is refusing to comply with,

trying to delay, or otherwise impeding such an order.

Any financial institution that has been obligated to provide customer information or account infor-

mation about a person in accordance with sections 48 or 49 of the Act and provides information, or

makes information available to be provided, to that person regarding the Customer Information Or-

der or Account Monitoring Order is guilty of tipping off, according to the Act.
It is against the law to give or make available any incorrect or misleading information to the En-

forcement Authority, or to refuse to comply with an ancillary order or written notification of the En-

forcement Authority [paragraph 4.58 (b) and (c) pertains]. According to the seriousness of the of-

fences committed, the Act provides for punishments ranging from fines not exceeding 100,000 ru-

pees to 2 million rupees, imprisonment not exceeding 5 years, and penal servitude not exceeding 10

years.

Self-Assessment Activities

1. How effective is the Prevention of Terrorism act 2002 of Mauritius?

2. How effective is the Asset Recovery Act 2011 in combatting money laundering in

Mauritius?

3. Elaborate on the role of the Asset Recovery Investigative Division.

UNIT 4

THE LEGAL FRAMEWORK ON ANTI-CORRUPTION LAW: A MAURITIAN PERSPEC-

TIVE

Learning outcomes of the Unit:

• Provides for an overview of the situation on corruption in Mauritius

• Provides for a review of legislations pertaining to combating corruption

• Introduces to the learners guidelines and policies on corruption in Mauritius

4.1 Introduction

Mauritius scored 46 out of 100 on the "Corruption Perceptions Index" for the public sector in 2021.

The scale has a 0 to 100 scale. The number increases as corruption increases. As a result, Mauritius

comes in at number 50. So it is average when compared to other nations. In 2021, there was a little
decline in corruption compared to the year before. It has also recently experienced a mild drop over

the long run. With a score of 33, the US is ranked 27th overall. New Zealand, which scored a 12 in

the ranking, is in first place. South Sudan is present at the unfortunate last position (89 points).

With the passing of the Financial Intelligence and Anti-Money Laundering Act 2002 and the Pre-

vention of Corruption Act 2002, respectively, the year 2002 marked a turning point in the battle

against corruption and money laundering. The Independent Commission Against Corruption

(ICAC), the nation's primary anti-corruption body, is to be established in accordance with the

PoCA. The ICAC fights corruption through a three-pronged strategy of investigation, prevention,

and education.

A study conducted in May 2020 entitled “Perception of Corruption in Mauritius” (KANTAR)

showed that one of the most urgent challenges at the present is corruption, which is also frequently

referred to as a type of social evil. In addition, the magnitude of corruption in Mauritius is seen as

being on par with drug usage in terms of societal evil. It also established that two thirds of Mauri -

tians believe that corruption is high or extremely high, hence the issue of corruption in the nation

continues to be a worry. One in four Mauritanians had seen an act of corruption in the last 12

months. Even still, the study finds that there is still a significant hesitation to report a case, even if

the number were higher. There is a strong fear of the repercussions on the one hand and a percep-

tion that concerns are not taken seriously (and no action will be taken). Few responders have volun -

tarily named any other anti-corruption organisations than the ICAC. However, one-third of Mauri-

tians who were asked said they had heard of Transparency Mauritius. However, they are unable to

distinguish it clearly from ICAC in terms of its function. Simply said, both organisations are recog-

nised for their work against corruption.

The Corruption Prevention and Education Division of the ICAC is to be established in accordance

with the Prevention of Corruption Act of 2002, and it has a clear mandate to inform the public about

corruption and to mobilise and cultivate public support in the fight against it. The Community Rela -
tions Branch and the System Enhancement Branch are two specialist Branches that support the Cor-

ruption Prevention and Education Division of the ICAC:

The primary provisions of the Prevention of Corruption Act 2002 (PoCA) as revised with regard to

the prevention of corruption are to: a) undertake public campaigns to warn the public on perils of

corruption; b) engage and nurture public support in combating corruption; c) help in improving the

school curriculum so as to educate children on the dangers of corruption; d) raise awareness among

the public on the mechanism through which complaints of acts of corruption should be made; and e)

carry out campaigns to encourage the creation and bolstering of non-governmental organisations to

fight corruption. f) collaborate with trade unions and organisations in the private sector to establish

anti-corruption procedures; g) organise workshops and other events to support efforts to prevent and

eradicate corruption; h) undertake and aid in research studies to determine the root causes of corrup-

tion and its effects on, among other things, Mauritius' social and economic framework; i) cooperate

with all other statutory corporations whose goal is to improve Mauritius's social and economic situ-

ation; j) in order to develop international cooperation in the fight against corruption, strengthen ties

between the Commission and international organisations; k) foster collaboration between the Com-

mission and organisations of a comparable nature abroad; and l) increase awareness of the risks

posed by corruption. m) ensure that any contract given by the government is carried out in a way

that it deems appropriate and without any irregularities or improper practices; n) a public entity's

policies and processes in order to make it easier to find instances of corruption and to ensure that

any ways of operation or procedures that the body believes may be corrupting be revised. o) provide

any public entity with advice and support on how to eradicate corruption; p) Model code of con-

ducts are drafted, and public organisations are advised to adopt them.

4.2 Conducting Corruption Prevention Reviews

The improvement of ethics, transparency, and accountability frameworks, the reduction of system

complexity, and compliance through best practices are key changes in the public sector that can
lessen the perception of corruption. The Prevention of Corruption Act 2002, as amended, Sections

20(d), (f), (g), (h), I (j), (k), and Section (30) compel the ICAC to exert vigilance and supervision

over the integrity systems and procedures in public bodies with a view to removing chances for cor-

ruption.

In order to make recommendations for enhancements or changes that would reduce the likelihood of

irregularities and corrupt activities, the ICAC has carried out a number of comprehensive examina-

tions of the policies and practices of government institutions known as Corruption Prevention Re-

views (CPR). As of December 31, 2010, 24 public bodies had undergone 27 CPRs, yielding 967

recommendations. In order to ensure that corruption prevention safeguards are incorporated into the

systems as early as feasible, these recommendations include revisions to the law. Focus group dis-

cussions are held with management to help with implementation of recommendations in order to

guarantee effective and quick implementation of the anti-corruption measures suggested by the

ICAC. Six months after the report's release, follow-up activities are carried out to evaluate and track

the status of the implementation.

4.3 Public Sector Anti-Corruption Framework

The Public Sector Anti-Corruption Framework (PSACF), created by the ICAC, enables public or-

ganisations to build the necessary competence to prevent and combat corruption in their area of re-

sponsibility. The Framework will make it possible for public bodies to assume responsibility for

fostering anti-corruption efforts within their individual organisations. The idea is being piloted in

four public organisations before being implemented nationwide.

4.4 Best Practices and Guidelines

Anti-corruption tools are effective ways to strengthen the fight against corruption and empower per-

sonnel. Numerous anti-corruption solutions are available in this situation to proactively address and

control corruption concerns. The resources, which have been prepared by the Independent Commis-

sion Against Corruption in partnership with the relevant organisations over the past five years, are
primarily in the form of Best Practices and Guidelines. They are designed to be self-assessment

tools for public entities to improve their systems and processes. The primary ones are as follows:

Total Integrity Management Handbook for Head Teachers, 2010

To aid headmasters in maintaining complete integrity management in schools, this handbook has

been created. Only when schools are run honestly and ethically and when teachers feel appreciated

and motivated can anti-corruption ideals be fostered among schoolchildren.

Charter for Vehicle Owners – National Transport Authority

In order to give vehicle owners a checklist of the standards that their vehicles must meet in order to

be fit for the road, a charter for vehicle owners has been created in partnership with the National

Transport Authority (NTA). The NTA has also made arrangements for the charter to be widely dis-

seminated by display at its Vehicle Examination Centers, headquarters, and other public locations.

Handbook on Managing Conflict of Interests

To assist organisations in developing a culture that promotes and supports the identification, disclo-

sure, and management of conflict of interest situations, a handbook has been created.

Guide on Good Governance for the Co-operative Sector

The ICAC and the Ministry of Business, Enterprises and Cooperatives have worked together to es-

tablish a guide on good governance for the cooperative sector in an effort to further ingrain a culture

of integrity and probity in the industry.

Public Sector Anti-Corruption Framework Manual

It was created to help public institutions build up their institutional capacities by creating effective

controls for corruption.

Best Practice Guide on “Building Integrity in NGOs”

The handbook was created by the ICAC in partnership with the NGO Trust Fund and the MACOSS

to help NGOs conduct themselves ethically.

Model Code of Conduct for Parastatal Bodies

The model code was created to give parastatal bodies the fundamental guidelines they need to fol -

low when creating their own code of conduct.

Code of Conduct for Public Officials Involved in Procurement

The code was created in conjunction with the Procurement Policy Office with the intention of exer -

cising oversight and vigilance in public organisations.

Best Practice Guide - Inspection Works for Public Bodies

The "Inspection Works for Public Bodies" handbook was created with the goal of helping organisa-

tions to create systems to combat corruption opportunities in the inspection function and promoting

good governance principles.

Best Practice Guide – Recruitment and Selection in Parastatal Bodies

Parastatal organisations have their own hiring procedures. A guideline on Recruitment and Selec-

tion in Parastatal Bodies has been developed by ICAC in light of the significant chances for corrup-

tion present in such a procedure. In addition to addressing potential for fraud, the guideline may

help all parastatal agencies standardise their hiring methods.

Model Internal Audit Charter

Internal audit is the foundation of sound governance because it is a component of an organisation's

supervision system. The ICAC has created a Model Internal Audit Charter that establishes the

guidelines for conducting an efficient internal audit in order to cater to this target population. In ad-

dition to promoting the growth of this crucial instrument in all organisations, the goal is to free
management from the duties of creating, putting into place, and maintaining an effective internal

control system.

Procurement of Goods and Services -Best Practice Guide for Public Bodies

This document outlines crucial control processes that could be used in a purchasing and tendering

system and addresses the corruption-prone regions. It also offers guidance for systems' self-evalua-

tion with regard to procurement.

Contract Works - Best Practice Guide for Public Bodies

The purpose of this manual is to give public entities a checklist to help them evaluate how vulnera-

ble they are to corruption risks in contract employment.

Guide on Management of Funds by Parent Teachers Associations

This manual seeks to help PTAs better understand good governance and create the necessary poli-

cies and processes to carry out their mission and objectives in an open and accountable manner.

The Financial Services Commission

The Financial Services Commission (FSC) is responsible for licensing, regulating, monitoring, and

supervising company activities in the financial sector and for the protection of consumers. It also

oversees the stock market and other worldwide global firms. The FSC is also able to conduct finan-

cial fraud investigations.

The FSC also encourages equity and openness in the financial markets and sets operational policies

and methods to identify financial fraud, dishonest trading and business activities, and market abuse

in the securities and capital markets. Additionally, it has released Codes on the Prevention of

Money Laundering and Terrorist Financing for Management Companies, for Insurance Entities, and

for Investment Businesses, as well as Guidelines on Corporate Governance for Non-Financial Ser-

vice Providers.
Bank of Mauritius

The Bank of Mauritius, which oversees all banking institutions in Mauritius, has also released rules

to increase accountability and openness in this industry.

4.5 A Review of Related Legislations

Mauritius has reviewed a number of laws, including the Companies Act and the Banking Act, and

enacted new laws, including the Public Procurement Act 2006 and the Mutual Assistance in Crimi-

nal and Related Matters Act 2003, to strengthen the combat against corruption and strictly control

corruption in Mauritius. The country also ratified the United Nations Convention Against Corrup-

tion and the SADC Protocol.

The Mutual Assistance in Criminal and Related Matters Act 2003

The Mutual Assistance Act's goals are to make it possible for Mauritius to give and receive the

greatest amount of international cooperation in investigations, prosecutions, or proceedings involv-

ing serious offences and related civil matters as quickly and fully as possible. It also makes provi -

sions for mutual assistance between the Republic of Mauritius and a foreign State or an interna -

tional criminal tribunal in relation to serious offences.

The Public Procurement Act 2006

The Public Procurement Act of 2006 was passed with the intention of improving public procure-

ment systems and bringing them into line with global trends. It establishes contemporary standards

and practices for openness, accountability, and competitive bidding. To guarantee that the principles

are correctly applied and enforced, it also establishes new bodies within the public administration,

such as the Procurement Policy Office, the Central Procurement Board, and the Independent Re-

view Panel.

The Banking Act 2004

There are now more provisions for combating corruption and money laundering in the Banking Act

of 2004.

4.6 Anti-Corruption Initiatives at Regional and International Levels - Involvement of Mauritius

The ICAC is actively involved in regional and global anti-corruption campaigns. Following are

Mauritius' primary involvements:

Mauritius participates actively in the Southern African Forum Against Corruption (SAFAC), a plat-

form for regional cooperation in the fight against corruption that also gives anti-corruption authori-

ties in the SADC area a place to conduct anti-corruption operations and exchange best practices.

Since it was established in Beijing in October 2006, the ICAC has been a participant in the Annual

Conferences and General Assembly Meetings of the International Association of Anti-Corruption

Authorities (IAACA).

Mauritius routinely participates in the UN Convention Against Corruption's Annual Conference of

States Parties. The Fifth Global Forum on Fighting Corruption and Safeguarding Integrity in South

Africa in April 2007 and the First Africa Forum on Fighting Corruption conducted in South Africa

in February 2007 both saw participation from Mauritius through the ICAC. ICAC Hong Kong,

ICAC NSW, CPIB Singapore, ACA Malaysia, BIANCO Madagascar, CBI/CVC India, and Serious

Fraud Office, UK are further anti-corruption organisations that Mauritius has forged connections

with. Through the signing of a Memorandum and following officer visits in 2006, the partnership

between the ICAC and BIANCO, Madagascar's national anti-corruption agency, became official.

The ICAC warmly welcomed representatives from the Zimbabwe Anti-Corruption Commission,

"L'Observatoire de Lutte Contre La Corruption du Benin," the Supreme People's Procuratorate of

the People's Republic of China, who were in Mauritius under the leadership of the Prosecutor Gen-

eral, a team of specialists from the Financial Enforcement Office of Technical Assistance (OTA) of

the US Department of Treasury who were in Mauritius for 14 days to train ICAC officers on finan-

cial investigation. In June 2010, a three-day regional anti-corruption workshop was organised by the
Commonwealth Secretariat in collaboration with the Independent Commission Against Corruption

and the Office of the Director of Public Prosecution (ODPP) of Mauritius.

Self-Assessment Activities

1. Highlight the main legislations that exist in Mauritius on corruption.

2. What are the main guidelines and best practices on corruption in Mauritius that can

be helpful in combating corruption?

UNIT 5
AN OVERVIEW OF SPECIFIC CORRUPTION OFFENCES UNDER THE PREVENTION

OF CORRUPTION ACT 2002

Learning outcomes of the Unit:

• Introduces the learners to specific offences under the POCA 2002

• Discusses case law and judicial precedents explaining and clarifying the understanding

and application of the laws providing for the specific offences.

From the outset, it is important to highlight the overlapping nature of corruption related offences in

the sense that within an act of corruption, multiple offences could be taking place. This is clearly

highlighted in the case of ICAC v Soobrun 2007 SCJ 318, where the Court stated the following:

POCA seeks to criminalize as many situations of bribery as may be possible and creates a

host of offences. In many cases, the offences so created overlap not only with others in

POCA itself but also with criminal offences under the Criminal Code. They are, however,

not mutually exclusive. Which charge befits which offender in which situation is not for the

courts to decide but for the prosecution in its discretion.

5.1 Section 4: Bribery by Public Official

A public official solicits, accepts, or obtains a reward while performing his or her duties is an of-

fence under the POCA 2002. An example would be a Ministry official accepts payment from a can -

didate in exchange for moving their application to the front of the waiting list.

In the case of ICAC v Bhye Mamed Seedeer 2012 INT 92, in violation of sections 4(1)(a) and (2) of

the Prevention of Corruption Act of 2002, Seedeer, a road traffic inspector, was accused of wilfully,

unlawfully, and criminally soliciting from Mr. Doongur a sum of Rs. 200 for himself in exchange

for refraining from doing an act in the course of his duties, namely, refraining from booking the lat-

ter for a traffic offence. After assessing the evidence, this Court determines that the Prosecution has
not established beyond a reasonable doubt that the Accused wilfully, illegally, and criminally so-

licited from Witness Doongoor a gratification for himself in order to avoid charging the latter with a

violation of the RTA, and it thus grants the Accused the benefit of the doubt.

5.2 Section 5: Bribery of Public Official

A person provides, agrees to provide, or offers a reward to a public official in the course of the per-

formance of his or her duties. An applicant who pays a ministry officer to move his application to

the top of the waiting list is an example of the offence provided for by section 5 of the POCA 2002.

In the case of ICAC v Ameeth Kumar Chaundee 2012 INT 88, the Accused has pled not guilty to

the allegation of "Bribery of Public Official" in violation of sections 5(1)(b) and 2 of the Prevention

of Corruption Act, with the assistance of counsel. The court stayed the proceedings because of

abuse of process stating the following:

It is therefore clear to this Court that allowing prosecution under the present information is

tantamount to the Court allowing its process to be used as an instrument of unfairness.

Denying the Accused of the benefit of application of section 49 so that he may be only pros -

ecuted under section 49(6) for false disclosure is something so unfair that it ought not be

allowed. This case therefore contains all the ingredients of an abuse of process as defined

by authorities cited in Wasson so that there is a high need for the Court to intervene. In the

light of above, I find that the motion to stay proceedings in the present matter is definitely

well founded and I therefore exceptionally exercise my discretion and order that the present

proceedings against the Accused be stayed.

5.3 Section 6: Taking gratification to screen offender from punishment

Any person who accepts, obtains, agrees to accept, or attempts to obtain gratification in exchange

for concealing an offence, shielding someone else from legal action for an offence, refraining from

taking legal action against someone else for an alleged offence, abandoning or withdrawing a prose-
cution against someone else, or obtaining or attempting to obtain the withdrawal of a prosecution.

An example of this is a police officer who accepts bribes from suspects in exchange for covering up

crimes.

5.4 Section 7: Public Official using his office for gratification

Any public servant who uses their position or authority to further their own or another person's in-

terests. Using his own application as an example, the clerk of ministry moves his name to the head

of the waiting list.

In the case of ICAC v Prakash Baboolall 2012 INT 77, The accused was charged with violating sec-

tion 7(1) of the Prevention of Corruption Act by "public official using his office for gratification,"

to which he entered a not guilty plea with the assistance of counsel. The complainant, Asraf Adam -

saib, subsequently testified as follows: On March 27, 2008, he was pulling a car behind his "jeep,"

with license plate AX 1014, when a police officer stopped him and informed him that he was chat-

ting on the phone. The accused confirmed his car and the car being towed after the accused's denial

that he was on the phone. Then, he told him that the car had no "on Tow" license plate. The accused

informed him he could let him go as long as he was handed 500 rupees after he admitted the same.

He then gave him his business card and instructed him to come pay him 500 rupees at the Midlands

Police station. The Court adjudicated as follows:

In the present case, after the cross examination of the said witness, it cannot be said by any

stretch of imagination that the credibility of the complainant has remained untainted. The

flaws revealed in the complainant’s testimony cannot be explained on account of mere

memory lapse. The fact of the matter is that he has been shown to be so blatantly inconsis-

tent and confused that the only reasonable conclusion reached is that the said witness is de-

void of any credit usually attached to a truthful and reliable witness. It would thus be most

unsafe and insecure to rely on such evidence to find the Prosecution case proved beyond

reasonable doubt. I therefore find that the Prosecution has not been able to prove its case
 against the Accused beyond reasonable doubt. I accordingly dismiss the present charge

against the Accused.

In the case of ICAC v Bidianand Jhurry 2010 INT 145, the term gratification was explained in the

following terms:

Under section 2 of the Prevention of Corruption Act, a “gratification” is defined as includ-

ing the offer of employment. Furthermore, in relation to counts 1, 2 and 3, there is a pre -

sumption in section 7(2) of the said Act that a public official has made use of his office for a

gratification where he has taken any decision in which he or his linear descendants have an

interest. This statutory presumption would therefore apply under Counts 1, 2 and 3 in addi -

tion to the evidence already on record.

Furthermore, in the case of ICAC v Leckram Seeruttun 2009 INT 200, while considering the ques-

tion of whether the accused obtained a gratification for himself, the Court further explained the term

gratification as follows:

The mere fact that a ‘mutual agreement’ was signed by witness 5 is not in my view suffi-

cient evidence to prove that it was meant to be a gratification. It was incumbent on the

prosecution to prove that simply by entering into the agreement it was gratification per se.

Gratification implies that the corruption leads to a gain. It is not sufficient that the accused

would get that money but it should be shown that he actually got it. The damages caused to

his motor-cycle were something which was due to him. The Prosecution only presumed that

the accused was at fault for the accident and used his position to get unlawful gain. This is

certainly not the case in the light of the evidence in hand.

In the case of ICAC v Harishchandrah Lutchmeenaraidoo 2009 INT 266, the accused was charged

of violating Sections 7(1) and 83 of the Prevention of Corruption Act by wilfully, illegally, and

criminally using his position as a public official for personal gain. It is said that while working as a

Detective Police Sergeant and looking into a case involving Vishnu Potigadoo, the accused received
Rs 3,000 from the defendant in exchange for agreeing to their bail and the bail of Rajesh Poorun.

He was assisted by counsel as he entered a not guilty plea to the charge. Regarding the cross-exami -

nation of the accused, which was an essential part of the process, the Court stated and acted as fol-

lows:

The accused has been subjected to a thorough cross-examination but this court finds that he

has withstood that test. His version is supported by the testimony of the witnesses who de-

posed on his behalf. For all the reasons given above, this court is unable to find that the

prosecution has proved its case beyond reasonable doubt. I therefore find it unnecessary to

make any pronouncement on the issues raised by the defence. I shall accordingly dismiss

the information against the accused.

5.5 Section 8(1): Bribery of a public official to influence the decision of a public body.

(1) Any person who gives, or agrees to give, or offers, to a public official, a gratification for-

(a) voting or abstaining from voting, or having voted or abstained from voting, at a meeting of a

public body of which he is a member, director or employee, in favour of or against any measure,

resolution or question submitted to the public body;

(b) performing or abstaining from performing, or aiding in procuring, expediting, delaying, hinder-

ing or preventing, or having performed or abstained from performing, or having aided in procuring,

expediting, delaying, hindering or preventing, the performance of an act of a public body of which

he is a member, director or employee;

(c) aiding in procuring, or preventing, or having aided in procuring or preventing, the passing of any

vote or the granting of any contract or advantage in favour of any other person

As an illustration, a bidder might bribe a Central Procurement Board member to cast a vote in favor

of him while allocating a tender.

5.6 Section 8(2) Bribery by Public official to influence the decision of a public body

Any public servant who requests or accepts a reward for one of items in subdivisions (a), (b), or (c)

of section 8 (1). A Central Procurement Board member can, for instance, ask a bidder for a bribe in

return for casting a vote in his favor during the allocation of a tender.

5.7 Section 9: Influencing a Public Official

any person who uses force or intimidation to coerce a public official into acting in the course of per-

forming his functions or duties. Example: An applicant threatens a government official if his appli-

cation isn't processed quickly.

5.8 Section 10(5) Trafic D’influence

Any public official who solicits, accepts, or receives something of value from someone else for

themselves or for someone else in an effort to utilize their influence, actual or perceived, to secure a

job, contract, or other advantage from a public body is violating the law.

Example: A National Transport Authority officer asks a vehicle owner for a bribe as an inducement

to convince the authority to issue a fitness certificate.

In the case of ICAC v Kunal Beegoo 2009 INT 166, the accused was charged of participating in

proceedings of that public body regarding a decision to renew his father, Mr. Premchand Beegoo

employment's contract on or around December 1, 2006 at MSPCA, Rose Hill, knowingly, unlaw-

fully, and criminally, while holding public office and having a personal stake in the outcome of the

decision. While explaining the meaning of ‘taking part’, the Court stated the following:

Taking all the above into consideration this Court is of the considered conclusion that the

evidence adduced by the Prosecution in support of the charge as per the information falls

short of establishing its case beyond all reasonable doubt. The word “take part” should

certainly be construed as the accused taking an active part in the decision of the commit-
 tees as opposed to his mere presence the more so that he did not even opened his mouth

during that particular deliberation. It is also worth noting that the testimony of Mrs Krish-

nawtee Bhuckory, a member of the Council of the MSPCA and who was present at that

meeting, stood unrebutted in the sense that she was not cross-examined by the Prosecutor.

She stated that the services of Premchand Beegoo were necessary at the MSPCA and that

she personally thought it fit for his working contract to be renewed. In all intent and pur-

poses this Court concludes that this is a suitable case where the accused must be given the

benefit of the doubt which I accordingly give him. The charge is otherwise dismissed

against the accused.

5.9 Section 11: Public Official taking gratification

Any public official who solicits, accepts, or receives something of value from someone else for

themselves or for someone else in order to utilise their influence, actual or perceived, to gain some-

thing from a public body. Example: A clerk at the Civil Status Office collects money from a poten-

tial spouse even though he has no authority to issue a marriage license but claims to be able to do

so.

5.10 Section 12 (1): Bribery for procuring contract

Any person who gives or offers a gratification to a public official in consideration of that public of-

ficial using influence in:

(a) promoting, executing, or procuring a contract with a public body for the performance of a

work, the supply of a service, or the procurement of supplies;

(b) the payment of the price provided for in a contract with a public body;

(c) obtaining for that person or for any other person, an advantage under a contract for work or

procurement,
Example: In exchange for prompt payment on a contract between the Government and the contrac-

tor, the contractor proposes to pay the Accountant General 1% of the amount that is due.

5.11 Section 12(2): Bribery for procuring contracts

Any public official who solicits, accepts or obtains from any other person, for himself or for any

other, a gratification forgiving assistance or using influence to (see (a); (b); (c) above)

Example: The Accountant General who consents to the Contractor's offer to withhold 1% of a pay-

ment.

5.12 Section 13: Conflict of interests

Where a public body in which a public official is a member, director or employee proposes to deal

with a company, partnership or other undertaking in which that public official has a direct or indi -

rect interest; and that public official and/or his relative or associate hold more than 10 per cent of

the total issued share capital or of the total equity participation in such company, partnership or

other undertaking, that public official shall disclose such interest.

Section 13(2) also provides that where a public official or a relative or associate of his has a per -

sonal interest in a decision which a public body is to take, that public official shall not vote or take

part in any proceedings of that public body relating to such decision.

In the case of DPP v Jugnauth and Another 2019 UKPC 8, the Judicial Committee of the Privy

Council stated the following in relation to conflict of interest:

The avoidance of situations giving rise to a conflict of interest is clearly part of the purpose

of the offences created by section 13. The offence created by section 13(1) and (3) creates a

wide-ranging prohibition and is committed where an official fails to declare an interest in

relation to an entity with which the public body to which he belongs proposes to deal. The

offence created by section 13(2) and (3), with which we are concerned, creating a duty not
 to vote or take part in proceedings relating to a relevant decision, is equally wide-ranging.

It is, for example, irrelevant whether the decision made by the public body favours or is

counter to the interests of the public official, relative or associate. These provisions are in-

tended to prohibit the situations in which corruption might operate. In establishing lines

which must not be crossed they are necessarily broadly drafted and wide in their scope of

application. It is important to have these considerations in mind when interpreting this leg-

islation.

In the case of ICAC v Jogueswar Ajoodhea 2022 INT 326, the Court explained the elements of the

offence that the prosecution needs to prove:

In the light of the case of DPP v/s Jugnauth & Anor [supra], the following mental elements need to

be proved to the criminal standard: (1) That the defendant knew that he was a public official (2)

That the defendant knew, or was reckless as to the fact, that the public body was taking the relevant

decision (3) That the defendant had knowledge or was reckless as to the existence of facts giving

rise to his sister’s personal interest in the decision (4) That the defendant intentionally or recklessly

carried out the act which amounted to participation in the proceedings of the public body relating

to the decision.

5.13 Section 16(1) Corruption of Agent

Any agent who solicits, accepts, or receives remuneration for performing or refraining from per-

forming an act in the course of his functions or duties or in connection with the affairs or business

of the principal without the principal's agreement is guilty of an offence.

In the case of ICAC v Boutanive 2012 INT 240, the Court clearly explained the concept of Agent

and its elements in the following terms:

Now, the elements which constitute the present offence in the light of the said provision and

which should be proved beyond reasonable doubt by the Prosecution are as follows: 1. An
 agent 2. without the consent of principal 3. Accept a gratification 4. For having done an act

5. In relation to his principal’s business. It is also essential to understand the definition to

be given to the different terms used under this offence, particularly: 1. Who is an agent? 2.

Who is a principal 3. What is a gratification?

Self-Assessment Activities

1. By referring to case law, explain the offence of conflict of interest under Mauritian

laws.

2. What is your understanding of a public official using his office for gratification and

what are the elements of this offence?

3. Distinguish between bribery by public official and bribery of public official.

UNIT 6

INTERNAL CONTROLS TO COMBAT MONEY LAUNDERING

Learning outcomes of the Unit:

• Discusses the concept of accountabilities and responsibilities pertaining to money launder-

ing

• Introduces to the learners the post of Money Laundering Reporting Officer and Compli-

ance Officers and their roles and duties

6.1 Accountabilities and responsibilities

Financial institutions must have proper policies, procedures, and internal controls in place to sup-

port high ethical and professional standards and guard against the purposeful or accidental use of

their institutions by criminal elements. Therefore, financial institutions must set clear roles and du -
ties to guarantee that internal controls, rules, and procedures are implemented and upheld in a way

that discourages criminals from utilising their services for terrorist financing and money laundering.

Financial institutions must take the reasonable steps needed by section 3(2) of the FIAMLA to en -

sure that neither they nor any services they provide can be used by someone to conduct or assist in

the commission of a money laundering offence. Any financial institution that doesn't take these

steps is breaking the law. Financial institutions are required to implement internal controls and other

procedures to combat money laundering and the financing of terrorism under Regulation 9 of the

Financial Intelligence and Anti-Money Laundering Regulations 2003, which includes, among other

things, establishing and keeping a manual of compliance procedures in relation to money laundering

and programs for evaluating risks relating to money laundering and the financing of terrorism.

Therefore, having a solid "Know Your Customer" (KYC) method and policy in place is crucial for

financial organisations. The battle against money laundering and terrorism financing is where KYC

is most closely related.

6.2 Appointment of a Money Laundering Reporting Officer

Every financial institution must choose a suitable individual as its money laundering reporting offi-

cer (MLRO), who may be one of the organisation's current employees, to whom all internal suspi-

cious transaction reports will be directed. (For more information on the function of an MLRO, see

paragraphs 8.08 to 8.12) The MLRO needs to be appropriately senior and not below Manager rank.

Financial institutions' branches should have a responsible officer who would be in charge of

AML/CFT issues. The Financial Institution must require the MLRO to submit Suspicious Transac-

tion Reports to the FIU.

6.3 Appointment of a Compliance Officer

Additionally, financial institutions are expected to designate a Compliance Officer at the Manage-

ment level who will be in charge of regularly ensuring that policies, procedures, and controls rele -

vant to money laundering and the funding of terrorism activities are being followed. This will make
it easier to prove that financial institutions are carrying out their duties in accordance with FIAML

requirements. It is crucial that all financial institutions have well defined policies and responsibili-

ties for monitoring the effectiveness of anti-money laundering and counterterrorism funding poli-

cies and procedures.

However, it is not required to designate a Compliance Officer in every single branch of the financial

institution. It will do to designate a Compliance Officer at the Head Office with authority over its

branches. Although it is best if the Compliance Officer and the MLRO are two separate individuals,

it is up to individual financial institutions to decide if the Compliance Officer can also perform the

duties of the MLRO.

The compliance officer's ability to effectively carry out his/her should not be hampered by the eco-

nomic interests of financial institutions, and potential conflicts of interest should be avoided. The

compliance officer, for instance, should be separate from the internal audit and business line func-

tions to enable objective judgments and facilitate impartial counsel to management. Procedures

should be in place to guarantee that AML/CFT concerns are objectively examined and addressed at

the appropriate level of the financial institution's management in cases when there are conflicts be-

tween business lines and the duties of the compliance officer.

6.4 Duties of the Compliance Officer

The duties of a compliance officer should be as follows:

1. Executing, or supervising the execution of, continuing business relationship monitoring and

sample account review for compliance with the AML/CFT laws, regulations, and

these guidance notes

2. Encouraging adherence to the AML/CFT laws, rules, and these Guidance Notes, as well as

being in charge of any AML/CFT-related issues within the organisation;

3. Promptly alerting staff members and officers of regulatory changes;

4. Ensuring a prompt and appropriate response to any situation where ML/TF is suspected;

5. Counselling and educating staff members and officers on creating and enforcing internal

AML/CFT policies, procedures, and controls;

6. reporting to senior management on the findings of assessments of the financial institution's

adherence to these Guidance Notes, AML/CFT rules, and risk assessment processes;

7. Reporting to the senior management of the financial institution, and in the case of locally

incorporated financial institutions, to the board of directors, at least once a year and

as and when necessary, regarding significant AML/CFT risk management and control is-

sues, as well as any necessary corrective actions, arising from audit, inspec-

tion, and compliance reviews.

6.5 Regulatory procedures on identification procedures

According to section 55 of the Banking Act 2004,

(1) Every financial institution shall only open accounts for deposits of money and securities, and

rent out safe deposit boxes, where it is satisfied that it has established the true identity of the person

in whose name the funds or securities are to be credited or deposited or the true identity of the

lessee of the safe deposit box, as the case may be.

(2) Every financial institution shall require that each of its accounts be properly named, at all

times, so that the true owner of the accounts can be identified by the public and no name shall be

allowed that is likely to mislead the public.

Therefore, before creating any accounts, accepting any deposits of cash or securities, or renting a

safe deposit box, financial institutions are required to confirm the real identity of their customers. In

that regard, it is appropriate to mention that financial institutions are expressly forbidden under the

Financial Intelligence and Anti-Money Laundering Regulations 2003 from creating false or anony-
mous accounts. Financial institutions are not permitted to maintain reference accounts under Sec-

tion 55(2) of the Banking Act of 2004.

A fine of not less than one million rupees and not more than five million rupees is imposed for vio-

lating section 55 of the Banking Act of 2004. The Banking Act 1988's provisions applied to the

time before November 10, 2004, the day the Banking Act 2004 went into effect in Mauritius. Dur-

ing that time, violating section 40 of the Banking Act of 1988 with regard to "Identity of Cus-

tomers" is punishable by a fine of between 10,000 and 5,000,000 rupees.

Additionally, the FIAMLA mandates that every financial institution confirm the real identity of ev-

ery customer and any individual with whom they do transactions in accordance with any applicable

regulations. The Financial Intelligence and Anti-Money Laundering Regulations 2003, as modified,

specify how to verify customers' identities and addresses. Financial institutions should ensure that

the identification processes outlined in these Guidance Notes are followed for all business ties

formed with applicants for business on or after 21 June 2003.

Self-Assessment Activities

1. What recommendations can you make to render the work of the MLRO and Compli-

ance Officer more effective?

2. To what extent the identification procedures can be effective in combating money laun-

dering and financing of terrorism?

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1. Bank of Mauritius ‘Guidance Notes on Anti-Money Laundering and Combatting Financing of

Terrorism July 2017.

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Law., 48, p.389.

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text, 3(3), pp.227-255.

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tions (DPP) in Commonwealth Africa: A Case Study of The Gambia, Kenya and Mauritius.

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growth (pp. 295-342). University of Chicago Press.

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Business Environment (Vol. 2, pp. 153-175). Emerald Group Publishing Limited.

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tion. World Bank Institute, 2.

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Ethos Against Corruption in Mauritius.

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national Finance and Banking Conference (p. 258).

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Botswana, Lesotho, Mauritius, Rwanda and Seychelles. Commonwealth Secretariat.

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