The Finance Act 2016 brought amendments to the Banking Act 2004 (the “Act”) to introduce a standalone licence for private banking business in Mauritius which was till then encompassed within the generic banking licence issued by the Central Bank. The amendment goes further with the introduction of a definition of private banking as the business of offering banking and financial services and products to high-net-worth customers including but not limited to an all-inclusive money-management relationship.
Before the amendments, the realities of the market were such that many operators who had the ambition to operate as private banks had to apply for a banking licence. This was often considered cumbersome by such operators given the extremely onerous level of compliance and reporting that a banking licence requires. The new standalone private banking licence will allow operators opting to carry out exclusively this specific activity to be exempted from certain provisions of the Act as the Central Bank may determine.
On the 10th February 2017 the Central Bank issued guidelines setting out the regulatory and supervisory framework that would be applicable the private banking business with key features such as (i) corporate governance and the role of directors (ii) risk management and monitoring of transactions (iii) policies and procedures through “Know Your Customer” mechanism, (iv) anti-money laundering safety requirements (v) internal controls (vi) segregation of duties and (vii) compliance and audit.
The guidelines also empower the Central Bank to supervise the shareholding of private banking institutions conducting exclusively non-discretionary wealth management with the requirement that any person who holds or intends to hold a major interest in such institution (i) notifies the Central Bank of its intention to hold such an interest in the bank (ii) undertakes in writing to the Central Bank not to influence or impede the prudent management and functioning of the bank in accordance with sound banking practice and (iii) notifies the Central Bank on each occasion where his interest reaches 20, 33 or 50 per cent of the capital or of voting rights in the bank or decreases below each of these levels.
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