The Anti-Money Laundering and Combatting the Financing of Terrorism and Proliferation (Miscellaneous Provisions) Act was passed by the National Assembly on 18 July 2024. The Act amends a series of legislation to ensure that the country further complies with international standards on anti-money laundering and combatting the financing of terrorism and proliferation. This article highlights one major change which the Amending Act brings, and this concerns beneficial ownership information. In addition, it seeks to highlight the lack of clarity on the subject in the existing AML/CFT regime which poses serious challenges for compliance professionals.
Beneficial Ownership Register
The Registrar of Companies in Mauritius will be required to keep a ‘Beneficial Ownership Register’. The register will include information such as:
- the full name and usual residential address of the beneficial owner or, in case no natural person is identified or where there is a nominee, the full name and the usual residential address of the nominee, if applicable, and the ultimate beneficial owner;
- the passport number or National Identification Number;
- the citizenship or nationality;
- the ownership structure identifying the ultimate beneficial owner; and
- such other information which may be prescribed by the Minister responsible for the subject of corporate affairs.
Access to the Beneficial Ownership Register
The legislative proposal provides that all competent authorities and other public sector authorities as may be prescribed will have access to the register. The definition of the term “competent authorities” sends the reader to the Financial Intelligence and Anti-Money Laundering Act (“FIAML Act”), and FIAML Act in its turn sends the reader to the Financial Crimes Commission Act where the reader finally reads the definition. A combined reading of the definition of the term in the Companies Act, the FIAML Act and the Financial Crimes Commission Act reveals that a competent authority is an investigatory authority (such as the Financial Crimes Commission, the Mauritius Police Force, the Financial Services Commission), and a supervisory authority (such as the Bank of Mauritius, the Financial Services Commission, the Mauritius Institute of Professional Accountants, the Gambling Regulatory Authority and the Financial Intelligence Unit).
In other words, any of the competent authorities mentioned above will have access to the Beneficial Ownership Register which will be kept by the Registrar of Companies. In addition, the Minister responsible for the subject of corporate affairs may make regulations to allow a public sector authority to have access to the Beneficial Ownership Register. A public sector authority would be synonymous with the expression “public sector agency” which is used in other legislation and would include a Ministry or a Government department.
Existing AML/CFT Regime: Beneficial Information
A reporting person (e.g., a bank, financial institution, cash dealer or a member of a relevant person or occupation such as an accountant or a lawyer or law firm) is required to keep identification information of customers and beneficial owners under section 17F of the FIAML Act and the Financial Intelligence and Anti-Money Laundering.
Who is a Beneficial Owner?
Obvious answer one would say. Who is a beneficial owner for the purposes of, not the Companies Act, but the FIAML Act? Unfortunately, the FIAML Act does not provide for a definition for the term in section 2, but strangely enough, this term is defined for the purposes of one section only: section 17E which concerns CDD requirements for existing customers on the commencement of that section. The term is however defined in the Financial Intelligence and Anti-Money Laundering Regulations 2018 (“FIAML Regulations”).
Regulation 6 of the FIAML Regulations which imposes an obligation to identify the beneficial owner refers to the natural person who ultimately has a controlling ownership interest in the legal person. The question which one may ask: how much % shareholding a natural person must have to satisfy the “controlling ownership interest”? Does a natural person who have 10% or more shares, have a controlling ownership interest? Or should this percentage be 20% or more, or 25% or more? Should a threshold of 20% threshold which is mentioned in the Practice Note No. 542 of 2020 issued under the Companies Act apply?
Legal Certainty and Clarity
The FIAML Act could have been clearer as regards who is to be regarded as a beneficial owner when the “controlling ownership interest” test mentioned in regulation 6 of the FIAML Regulations is applied. The passing of the Amending Act was an opportunity to clarify the law on the subject. Incidentally, the lack of clarity in the law was highlighted at an event which was held before the introduction of the Bill at the National Assembly.
The UK Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 defines “beneficial owner” in relation to a body corporate which is not a company whose securities are listed on a regulated market as:
- any individual who exercises ultimate control over the management of the body corporate;
- any individual who ultimately owns or controls (in each case whether directly or indirectly), including through bearer share holdings or by other means, more than 25% of the shares or voting rights in the body corporate; or
- an individual who controls the body corporate.
As to when an individual controls a body corporate, the UK law refers to the UK Companies Act which uses the concept of “significant control”.
The European Union 4th Anti-Money Laundering Directive defines the term in the case of a body corporate as follows:
- the natural person(s) who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means, other than a company listed on a regulated market that is subject to disclosure requirements consistent with European Union law or subject to equivalent international standards which ensure adequate transparency of ownership information.
- a shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a natural person shall be an indication of direct ownership. A shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), shall be an indication of indirect ownership. This applies without prejudice to the right of Member States to decide that a lower percentage may be an indication of ownership or control.
- if, after having exhausted all possible means and provided there are no grounds for suspicion, no person under point (1) is identified, or if there is any doubt that the person(s) identified are the beneficial owner(s), the natural person(s) who hold(s) the position of senior managing official(s), the obliged entities shall keep records of the actions taken in order to identify the beneficial ownership under point (1) and this point (3).
Conclusion
The Amending Act is certainly important to improve the existing AML/CFT regime and to create a more robust regime. However, forward-looking measures are not sufficient if the AML/CFT regime lacks clarity and does not address legislative gaps, for example, in respect of the term “beneficial ownership” (to name one instance). From a reading of the Hansard debates, it appears that the views of reporting persons were not asked. At the end of the day, it is not the legislative assembly or a Government department or competent authorities which must apply the law: it is the reporting persons who must do so. If there is a disconnect between the Mauritian AML/CFT regime and AML/CFT regime of FATF Member States (e.g., the U.K) or the European Union, foreign investors may be hesitant to provide their personal information for AML/CFT screening when in similar situations they would not be required to provide such information to a reporting person, e.g., in the European Union or in the U.K . On a side note, a couple of the provisions of the United Nations (Financial Prohibitions, Arms Embargo and Travel Ban) Sanctions Act could also have been reviewed to provide more clarity to compliance professionals.
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