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Mauritius says its banking rules don't allow money laundering

Dismissing the perception of Mauritius being a route for round-tripping and laundering of black money to and from India, the country's banking industry body says that the laws governing its banks are too stringent to be abused for illicit activities.

Port Louis: Dismissing the perception of Mauritius being a route for round-tripping and laundering of black money to and from India, the country's banking industry body says that the laws governing its banks are too stringent to be abused for illicit activities.

"We have not seen a single case of round tripping through our banks that has been proved either within Mauritius or anywhere abroad," Mauritius Bankers Association (MBA) Chief Executive Officer Aisha Timol said.

"It is not just the central bank, but revenue and other authorities also keep a close eye for any possible irregularities related to round tripping and other offences.

"The regulations are very stringent here and there is no scope for round tripping through our banks," Timol told the agency in an interview here.

"The regulations here ensure that Mauritius banks are not used for any money laundering activities or round tripping.

"Besides, India being a very important partner, we place an extra emphasis on ensuring fair business practices by the companies investing in India and we are always more than ready to assist Indian authorities in their pursuit of ensuring that funds coming to or from India are legitimate money and not the black money.

"The perception that Mauritius is being used for laundering black money is entirely wrong and the rules here can never allow round tripping or any form of illegitimate operations," she said.

Emphasising that banks in this island nation are subjected to very strong regulations, she said Mauritius is very particular about following all the international regulatory standards on financial markets, including banks.

"Besides, we have a very strong set of our own rules for compliance to KYC (Know Your Customer) norms, Anti Money Laundering norms and Countering Financial Terrorism norms," she added.

The MBA is an umbrella industry body of 21 banks operating in the country and these include banks from India, such as SBI and Bank of Baroda, as also big global names like Barclays, HSBC, Standard Bank (of South Africa) and the domestically incorporated banks like State Bank of Mauritius and Mauritius Commercial Bank.

The 21 players in the Mauritian banking industry comprise 7 local banks, 9 foreign owned subsidiaries, one joint venture and 4 branches of foreign banks. All the banks are licensed by the Bank of Mauritius to carry out banking business locally and internationally.

Besides traditional banking facilities, these banks offer card-based payment services, such as credit and debit cards internet banking and phone banking facilities.

They also provide specialised services such as fund administration, custodial services, trusteeship, structured lending, structured trade finance, international portfolio management, investment banking, private client activities besides treasury and specialised finance.

The international banks offer a wide range of global banking and financial services to corporate, institutional and private clients. Some of the biggest and most reputable international banks are present in Mauritius and actively carry out international cross border activities.

"Today, all the banks operating in Mauritius can undertake offshore banking operations as well as the domestic banking business. At least 14 of our banks are serving the local customers in a big way," Timol said.

The MBA chief said that while banking business was nearly 175 years old in this African nation, it was in early 1990s, that the country's financial services industry started developing in a big way and banks from abroad, including SBI from India, began to come here.

"Today, Africa is becoming a major focus area for our banks, while domestic banking business has today become almost 50 percent of the total business of our local banks and the offshore banking, that is servicing the international investments by Mauritius-based entities, account for the rest.

"Earlier, the offshore banking used to account for a major chunk of business for many banks operating here, but things have changed quite a lot and the domestic banking operations are growing fast for most of the banks present here, including the units of overseas banks," she said.

Hard-selling Mauritius' as a perfect gateway for Indian companies' investments into Africa, Timol said: "What we need to understand is that Mauritius is part of Africa, and at the same time it is very close to India historically in terms of culture, geography, and business relations.

"Also, Africa comprises of 52 countries and it is very difficult to go to each of those country directly. Therefore, Mauritius becomes an ideal gateway for Indian companies for going to Africa.

"Also, we have a very efficient bilingual workforce, we are part of Africa Union and have a number of tax and investment protection treaties with African countries that can be useful for Indian companies looking to invest in Africa.

"There are huge growth opportunities for Indian companies in Africa and the banks in Mauritius can help them expand there."

MBA has also set out for the banks here a Code of Banking Practice, which is reviewed periodically with a review currently due and the latest 2013 edition of the Code includes a Code of Ethics as well.

The Code of Ethics puts in place a common set of universally acclaimed principles pertinent to all banks, over and above those that they subscribe to as part of their internal Code of Ethics.

Among others, the Code requires the banks to reject any transaction in cash, that is in money or by way of cheque that is neither crossed nor made payable to order, for amounts exceeding Rs five lakh, unless these transactions qualify as ?Exempt? as defined by the FIAMLA (Financial Intelligence and Anti Money Laundering Act).


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