Mauritius: National Money Laundering and Terrorist Financing Risk Assessment Report

The Overall Money Laundering Risk for Mauritius is Medium-High. This is a product of the national Money Laundering threat which is Medium-High and the national vulnerability which has a rating of  Medium-High.

FSC issues Circular Letter CL210819 on Cyber Risk Security Governance

From a cyber security risk governance perspective, the FSC will expect as a minimum from the Management Companies the following:

• understanding of the cyber risks, vulnerabilities and impact associated in running their businesses, with supporting documentation;
• putting into place appropriate policies and procedures duly approved by the board to mitigate the risks;
• carrying out an annual cyber security risk assessment which is reported to the board;
• conducting regular IT audit and addressing identified loopholes accordingly;
• conducting penetration testing to ensure that their systems are not vulnerable or susceptible to cyber attacks;
• putting in place appropriate contingency arrangements that they can be deployed in the event of a cyber attack, including but not limited, maintaining service levels for clients and informing relevant parties and authorities about the attack and its impact; and
• running a comprehensive technology risk and cyber security training programme at all levels.

Mauritius: FSC issues Administrative Penalties Regulatory Framework

COMMUNIQUÉ

ADMINISTRATIVE PENALTIES REGULATORY FRAMEWORK

Further to the Consultation Paper on Administrative Penalties issued on 10 May 2019 which set out preliminary information and the proposal to develop a framework to impose Administrative Penalties (APs), the Financial Services Commission (the “Commission”) today publishes its Administrative Penalties Regulatory Framework (the “Framework”).

APs will be applied by the Commission to sanction its licensees for instances of regulatory breaches other than for non-filing of statutory documents and statistical information which are provided for under the Financial Services (Administrative Penalties) Rules 2013. APs are recognised by international standard-setting bodies as an effective enforcement tool to address instances of non-compliance with relevant laws and to prevent future re-occurrence.

The Commission is committed to implementing enabling frameworks to facilitate the growth and sustainability of the Mauritius International Financial Centre and the financial services sector at large.

The Framework has been devised in line with the Commission’s credible deterrence strategy. The structured five-step approach set out therein is designed to ensure transparency, proportionality and consistency of the Commission’s penalty-setting process. The Framework primarily sets out the policy and methodology for the imposition of APs by the Commission, including the exercise of its discretion, in determining an applicable quantum and has been benchmarked against best practices adopted by various jurisdictions.

Mr Harvesh Seegolam, Chief Executive of the Commission states that, “APs are an important and effective enforcement tool to address regulatory breaches. The proportionate and effective imposition of APs will play an important role in engendering public confidence in the regulatory regime and the regulated industry. The Commission will continue to work with its stakeholders to embed sound business conduct. I wish to thank members of the industry, relevant professionals and the public for the views and comments provided, all of which were carefully considered in finalising the Framework.”

In view of the continuously evolving financial landscape, the Framework will be subject to periodic reviews and updates.

Click here to access the Q&A on Administrative Penalties on the Commission’s website.

Any queries about this Framework can be sent to apframework@fscmauritius.org

19 August 2019

Financial Services Commission

FSC House, 54 Cybercity

Ebene, 72201 Mauritius

T: (+230) 403-7000 • F: (+230) 467-7172

E: fscmauritius@intnet.mu

www.fscmauritius.org

FSC: Cancellation of the disqualification of Mr Rajindersingh Borthosow pursuant to the decision of the Financial Services Review Panel

Public Notice

Cancellation of the disqualification of Mr Rajindersingh Borthosow

pursuant to the decision of the Financial Services Review Panel

Pursuant to a determination (2017 FSRP 4) delivered by the Financial Services Review Panel on 6 November 2017, the Financial Services Review Panel cancelled the disqualification of Mr Rajindersingh Borthosow.

Please refer to https://www.fscmauritius.org/media/4176/edited-determination.pdf

19 August 2019

Financial Services Commission

FSC House, 54 Cybercity

Ebene, 72201 Mauritius

T: (+230) 403-7000 • F: (+230) 467-7172

E: fscmauritius@intnet.mu

www.fscmauritius.org

IBFD: New Trends in the Definition of Permanent Establishment

New Trends in the Definition of Permanent Establishment, comprising the proceedings and working documents of the annual seminar held in Milan in November 2018, is a detailed and comprehensive study on the definition of permanent establishment (PE). It begins with an overview of article 5 of the OECD Model Convention, focusing on the history of that provision and on recent amendments and upcoming challenges thereto. It next deals with the “physical” PE, examining the open issues under pre- and post- BEPS OECD Models, with a particular emphasis on (i) geographic and temporal issues, (ii) problems of interpretation of article 5(3) and (iii) the negative list and fragmentation of activities within groups of companies.

The book then analyses the “agency” PE, similarly examining the open issues under pre- and post-BEPS OECD Models and, in particular, (i) the requirement of concluding contracts and playing the principal role in concluding contracts, (ii) the relevance of the conclusion of those contracts “in the name of” the foreign enterprise and (iii) the independent agent exception. Special attention is also devoted to the question whether, within the current international framework, the PE concept should be expanded, particularly with regard to the digital economy.

Individual country reports provide an in-depth analysis of the domestic tax regimes and actual tax treaty application and practices by several states, namely Australia, Belgium, Brazil, China (People’s Rep.), France, Germany, India, Italy, Luxembourg, the Netherlands, Norway, South Africa, Spain, Sweden, Switzerland, the United Kingdom and the United States.

This book presents a unique and detailed examination of the PE definition in an international context and is therefore an essential reference source for international tax students, practitioners and academics.

Competition Commission of Mauritius: VISA and Mastercard ordered to reduce interchange fees for debit and credit card payments​

The Commissioners have concluded that VISA and MasterCard have abused their dominance by setting a high interchange fee (at 1%) charged between banks for debit/credit card payments. The interchange fee can constitute up to 79% of the cost incurred by banks for supplying merchants(retailers) with facilities for accepting card payments. At 1%, the interchange fee is restricting competition among banks/financial institutions by preventing some of them, especially smaller ones, from providing merchants with card acceptance facilities at lower prices. To remedy the situation, the Commission has ordered VISA and MasterCard to limit their interchange fee to a maximum of 0.5% for debit/credit card transactions.

The Competition Commission’s investigation follows a complaint into fees charged to merchants for accepting debit/credit card payments.

The Competition Commission received a complaint alleging that the commission charged by banks to merchants when accepting payment by cards was too high. This led to the investigation on the interchange fee set by VISA and MasterCard for debit/credit card transactions in Mauritius.

VISA and MasterCard, as card-network operators, provide theirrespective networksto banks. This enables banks to issue debit and credit cards to consumers and provide facilities to merchants for accepting payments by cards. For every debit/credit card payment that a merchant accepts, the latter must pay a commission (known as the merchant service commission) to his bank. This commission comprises different elements, of which the major one is the interchange fee. In fact, the interchange fee can account for up to 79% of the merchant service commission. When a consumer makes a payment by card to a merchant, the merchant’s bank (known as the acquiring bank) pays the interchange fee to the consumer’s bank (known as the issuing bank). The level of commission charged to the merchant is largely determined by the interchange fee, that is, the higher the interchange fee, the higher the merchant service commission.

The investigation found that VISA and MasterCard set interchange fees between issuing and acquiring banks through agreements.

The investigation found that the level of interchange fee is set by VISA and MasterCard through agreements that they respectively sign with the banksfor using their networks. VISA and MasterCard have set the interchange fee for local debit/credit card transactions at around 1%, and merchants were in turn paying up to 3% as merchant commission to their banks. There are 13 banking/non-banking financial institutions which issue VISA and MasterCard cards but only 4 of them provide facilities to merchants for accepting payments by cards.

The Commission reviewed VISA’s and MasterCard’s agreements since the 1% interchange fee level prevented smaller banks/financial institutions from offering lower commission rates to merchants.

The interchange fee is usually set at a level that encourages (issuing) banks to issue debit/credit cards to consumers and (acquiring) banks to supply merchants with card-acceptance facilities. Of the four acquiring institutions in Mauritius, The Mauritius Commercial Bank Ltd (MCB) and SBM (Mauritius) Ltd (SBM) are the largest players in terms of both the number of cards issued and merchants. Most of the transactions that merchants acquire are made on the cards issued by these two banks. As a result, these banks retain most of the interchange fees from the merchant service commission.

By contrast, the two smaller acquiring institutions (CIM Finance Ltd and Barclays Bank Mauritius Ltd) are mostly paying out, from their merchant service commission, interchange fees to MCB and SBM. To these acquirers, a 1% interchange fee level represents an important business cost for providing card facilities to merchants and restricts their ability to offer competitive commission rates to merchants. With the exception for the petrol and government segment, where both VISA and MasterCard have set a lower interchange fee of 0.5%-0.6%, the smaller acquiring institutions are constrained in setting the commission rates below 1.0%. The current interchange fee level of 1% set by VISA and MasterCard inflates the costs of smaller acquiring institutions for providing card acceptance facilities and thus limits their ability to compete effectively by offering lower merchant service commission.

Merchants on their parts are left with a limited choice of banks providing them with card-acceptance facilities and are in a weaker position to bargain for lower commission rates. The higher costs for accepting debit/credit cards by some merchants could be reflected in the final prices to consumers. Another consequence of a high interchange fee is that many merchants do not provide card-acceptance facilities to consumers and some card-accepting merchants are reluctant to accept debit/credit cards; depriving consumers of the convenience of using their debit/credits as payment means.

The Commissioners have concluded that the current interchange fees restricted competition among banks and ordered a reduction in the interchange fee level.

After reviewing the Report of investigation and hearing parties, the Commissioners have found the competition concerns, as identified in the investigation, to be verified. In their decision, the Commissioners have concluded that the interchange fee of 1% set by VISA and MasterCard restricts competition in the acquiring market. While reaching their decision, the Commissioners have also considered local market conditions in which banks operate. Given existing market features, the current interchange fee was found to inflate the cost of smaller acquirers and to limit their ability to better compete with MCB and SBM by offering merchant service commission rates. In addition to raising existing banks’ costs of offering card-facilities to merchants, interchange fees also raised the costs of potential entrants and may thus discourage local banks from offering competing services to merchants.

In order to address the competition concerns, VISA and MasterCard have been ordered to limit their interchange fee level for debit/credit card transactions to a maximum of 0.5%. VISA and MasterCard have been given six (6) months, starting from the date the Commissioners’ Decision is notified to them, to implement the Commission’s directions. The 0.5% maximum rate takes into consideration the positive effects resulting from VISA’s and MasterCard’s introduction of a 0.5% interchange fee for debit/credit card payments at petrol stations. At this level, the smaller acquirers were able to offer lower commission rates (0.87%) to petrol stations than those offered by MCB and SBM.

Mr Deshmuk Kowlessur, the Executive Director of the Competition Commission, said:

“The decision of the Commission requiring VISA and MasterCard to limit the interchange fees to a maximum of 0.5% is likely to reshape the competition landscape in the local payment card market. The reduction of the interchange fees will open-up the market for existing and potential banking and other financial institutions to offer acquiring services to merchants. At the same time, the two dominant banks will have to compete more rigorously. A new dynamism in the local payment card market is likely to encourage existing competitors and new entrants to offer innovative services. 

The resulting lower merchant service commission will encourage card-acceptance by merchants and thus offer card users the convenience, security and lower costs of settling their transactions. It can also be expected that consumers can benefit from lower prices of goods and services, as merchants’ cost of transaction will be reduced with lower merchant service commission. At the end, the reduction in the interchange fee will bring more competition in the payment card market and positively impact on trade, commerce and economic development.

I am pleased that the determination of the Commission in this matter support the findings of the investigation. The reduction will intensify the rivalry among the various players in the local payment cards markets for the greater benefit of cardholders, merchants, banks and the economy at large.

The parties have exercised their right of appeal and the Commission will put up its case to the Supreme Court for the latter to decide on the matter.”

LexisNexis® Risk Solutions: Financial Crime In Focus - Edition 11

Regular financial crime news update. This edition includes another tropical tax haven in the Mauritius Leaks and professional football on the EU AML watchlist.

FSC Mauritius releases Annual Report 2017/18

Jeune Afrique: Bataille d’interprétation autour des Mauritius leaks

Face au Consortium international des journalistes d'investigation (ICIJ) qui reproche au système d'optimisation mauricien de siphonner les revenus fiscaux africains, Port-Louis se défend et met en avant la légalité de ces avantages et un environnement favorable aux affaires.

Microgen: 5 Simple Key Steps to Help Mitigate Against Cyber Threats Infographic

The ever-evolving cyber threat landscape and what ‘we know’ and hear about in the news with cyber-attacks is enough to give you nightmares, but we shouldn’t forget, it’s also about what we don’t know which is even more unnerving…

Doug Cooper explores the dark reality of the cyber threat landscape and Microgen launch their new infographic which arms you with ‘5 Simple Key Steps to Help Mitigate Against Cyber Threats.’

Innovation and the fight against financial crime | Refinitiv

Last year’s global report on the true cost of financial crime revealed its impact, not just on companies and governments, but also the human victims exploited by criminal gangs which launder their gains through the financial system. This year we shift our focus onto another critical area, innovation – and reveal how emerging technologies and new collaborations are helping to turn the tide against financial crime.