The Mauritian regulator has issued a penalty against a wealth management 'manco' for contravening the Financial Intelligence and Anti-Money-Laundering Act and the Financial Intelligence and Anti-Money-Laundering Regulations.
In June of this year, the FSC conducted an inspection at the premises of the company which revealed that the company was in breach of numerous statutory obligations. The FSA then sent it a "deficiency letter" containing its findings and requiring the company to submit an action plan to remedy its transgressions. This, however, did not stop the enforcement process from escalating further.
The FSC found that the firm contravened the Financial Intelligence and Anti-Money-Laundering Act (the FIAMLA) and the Financial Intelligence and Anti-Money-Laundering Regulations 2018 (the FIAMLR) in the following ways.
PCL has been one of the pioneers of management companies in Mauritius and claims to be "a brand in itself." It offers financial business to funds and private clients all over the world.
It contravened section 17 FIAMLA inasmuch as it had not undertaken a risk assessment to understand the money-laundering risks in relation to its business. It did submit such a policy document to the FSC on 8 June but during the inspection the regulators saw no evidence that it had assessed such risks.
Section 17A FIAMLA obliged the company to establish policies, controls and procedures to offset the risks of money laundering which it has identified in its risk assessment. With this in mind, the firm has compiled a Compliance Procedures Manual. However, it had not finalised this manual on the date of the inspection and its senior management had not approved it, thereby breaking section 17A(2). Finalisation and board approval finally came on 10 August.
During the inspection, it was evident that the company had infringed regulation 3 of the FIAMLR since it had failed to take reasonable measures to ascertain and verify the identity of the beneficial owner of one of its corporate clients. It has since endeavoured to update its client-related Customer Due Diligence (CDD) records.
The Company infringed regulation 22(1)(d) of the FIAMLR by failing to set up an independent audit function to review and verify its compliance with the Act and the Regulations. Later, on 10 August, the company ratified the appointment of an external auditor to carry out this independent audit.
The FSC, counting the firm's transgressions as moderately serious, decided on a pecuniary administrative penalty of US$4,950. The firm tried unsuccessfully to appeal against the amount on the grounds that all firms had fallen on hard times.