Legal Alert | Mauritius’ Vigorous Response to its Inclusion on the EU List of High-Risk Jurisdictions

In a Communiqué issued on 3 June 2020 the Government of Mauritius, through the Prime Minister’s Office gave a vigorous response to the European Commission’s decision of 7 May 2020 to include Mauritius on its list of high-risk third countries (the “List”), deploring its flawed decision-making process, its breach of fundamental EU principles and the unfortunate timing of this decision.

The Communiqué is critical of the European Commission’s decision to include Mauritius on the EU List for a number of reasons. Firstly, the listed countries were given no opportunity to provide any explanation or make representations in blatant disregard of their right under Article 41 of the EU Charter of Fundamental Rights. Secondly, the Commission did not carry out its own autonomous process but relied exclusively on the Financial Action Task Force (the “FATF”) findings.  Thirdly, the Commission merely replicated the findings of the FATF without considering the fundamental differences between countries that form part of the FAFT blacklist and others such as Mauritius which are simply on the latter’s monitoring list for the purposes of addressing identified weaknesses in its AML/CFT system. In so doing, the Commission literally assimilated countries under observation, such as Mauritius, with countries that are blacklisted by the FATF.

Had the Commission undertaken an autonomous assessment, it would have found that Mauritius had immediately embarked on the implementation of the FATF’s action plan with specific deadlines to remedy the identified shortcomings.  The FATF found that Mauritius was compliant with 53 out of FATF 58 recommended actions and the deadline for addressing the 5 remaining deficiencies was set to September 2021.  Mauritius had initially committed to complete the exercise by end of 2020.  Subsequently, this process has been accelerated with a new target completion date of August 2020.  Mauritius has obtained technical assistance from the EU AML/CFT Global Facility and the German Government through the German Development Agency (the “GIZ”) to support the implementation of the FATF action plan.

The Government of Mauritius draws attention to the Commission’s non-transparent methodology which was published on the same date of its decision.  The Communiqué condemns a process that is neither resilient nor fair, as it is clearly unable to allow affected countries to undergo decisive reforms to avoid being listed. The Commission flouted the fundamental principle of proportionality in failing to measure the grave consequences of its decision on the Mauritian economy against the risk posed to the EU financial system.

Mauritius is not the only country which has voiced out the multiple irregularities which underpin the decision of the EU.  For example, the Ghana Ministry of Finance proffers that the decision of the EU did not reflect the current status of Ghana’s AML/CFT regime; and that the EU’s blanket decision to include all countries on the FATF grey and black list on the EU list irrespective of the progress made was unfortunate.

It is recalled that last year on the 5th March 2019, the EU Council had rejected the Commission’s proposed delegated regulation of the 13 February 2019 on the basis that the 2019 list had not been prepared in a transparent and resilient process incentivizing affected countries to take decisive action such that there would only be listed those countries that had failed to take the required actions.  The European Parliament had also rejected the Commission’s proposed delegated regulations on the basis that the criteria laid down in the EU AML/CFT Directive had not been respected.  The European Parliament had called on the Commission to ensure a transparent process with clear and concrete benchmarks for countries which commit to undergo reforms so as to avoid being listed. The Commission has failed to take into account the recommendations of the European Council and the European Parliament in the preparation of the List.

Mauritius has always adhered to international standards and norms, namely in terms of good governance, transparency and taxation. It has also incorporated the FATCA and CRS standards in its local legislations and ratified the OECD’s Multilateral Instrument (“MLI”). Moreover, the EU and OECD recently confirmed that Mauritius’s tax framework meets their required criteria and is in line with their respective standards.

Mauritius also boasts a stellar reputation across the African continent and as such has consistently earned first place amongst African countries in the World Bank’s Ease of Doing Business Index, with the World Economic Forum’s 2017-2018 Global Competitiveness Report re-affirming Mauritius as the most competitive Sub-Saharan country.   Mauritius maintained its first position in the Mo Ibrahim Africa Governance Index 2018 with a score of 79.5 out of 100 points.

The Mauritian Government has engaged discussion with European Institutions with a view to reconsidering their decision in line with due process and the principle of fairness.

Please read the full Communique in English and French.

 


This article should not be construed as legal advice and is made for information purposes only.