Mahesh Doorgakant, FCA, Managing Director, Mauritius, of Apex Group Ltd and Chairman of Mauritius Finance comments on Sustainable evolution post Financial Action Task Force jurisdictions

Sustainability can only come through evolution, says Mahesh Doorgakant, FCA, Managing Director, Mauritius, of Apex Group Ltd and Chairman of Mauritius Finance, while compliance will be the name of the game as Financial Institutions look ahead to meeting and continuing to meet the FATF standards.

As we have gone past the halfway mark of 2021, all eyes are focused on the upcoming next step in Mauritius coming off the Financial Action Task Force (FATF) list of Jurisdictions under Increased Monitoring (the ‘Grey List’). The challenge though lies in sustainability of the new model which has been brought upon us.

The process of coming out of the Grey List has not been an easy one and has underlined a key issue – as regulatory complexity continues to mount, the scale required to comply, requires significant resource. The strain on resources has been enormous at all levels over the past year and a half.

The new rules, following the amendment of the anti-money laundering legislation in 2018, with the launch of the Anti-Money laundering and Combatting the Financing of Terrorism Handbook by the Financial Services Commission (FSC) in January 2020, have highlighted that we are entering a new era in Financial Institutions (‘FIs’) regulation. The previous focus around Anti-Money Laundering / Combatting the Financing of Terrorism (AML/CFT) was very much an exercise which was delegated most of the time to the Management Companies (‘MCs’). FIs are now fully expected to have their own processes in place on top of what is already being done by the MCs.

What has changed?

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What this means in practice is that there is a lot more responsibility on the Board of Directors of the FIs who have to ensure that they are well aware of the various ongoing activity of the FIs both at investor and investee levels. Compliance Officers (Cos), Money Laundering Reporting Officers (MLROs) and other delegated service providers will need to ensure that regular reports are provided to the Boards for them to have a full picture as opposed to before whereby this responsibility was left nearly in its entirety with the Investment Managers (IMs).

The FSC has in August 2021 presented the findings of the initial Risk Based Supervision exercises. The focus was on Risk Assessment and Independent Audit. The pace at which the changes have happened to compliance are clearly highlighted. Wherein the Risk Assessment moved from 74% Post-Onsite to 83% post remedial actions, the Independent Audit was the one which showed the efforts moving from 28% Post-Onsite to 85% Post Remedial actions.

Both of these came through the FSC itself updating the Handbook to put in place the proper compliance framework and organising regular outreach sessions to explain the expectation to the FIs. Definitions had to be brought in to clarify the requirements around the Business Risk Assessment (BRA) as well as the scope and components of the Independent Audits. Regular onsite and offsite regulatory inspections have also been keeping licensees on alert.

At the same time, the FIs – very often through the MCs – were very prompt to upscale the resources in terms of the human and technological elements.

The resource issue

The overall model in Mauritius, as with many other countries, is not going to fundamentally change in that most of the services relating to the new regulations are going to be outsourced by the FIs. Only MCs with scale can handle the other major force affecting FIs too: technology. Examples of how MCs with real scale can help FIs with both challenges are through investments in technological products which focus on ongoing monitoring as well as regulatory alignment.

Underpinning proprietary software of the MCs with the AML/CFT technological tools will simplify the process of regulatory alignment. In the interest of real sustainability, the tool must be modulable. International regulations continue to bring in new requirements in many fields such as ESG among others. To combine all this the IM needs to be able to evaluate its sustainability strategy at both manager and product level, track performance and identify key gaps against regulatory standards and ESG data sets.

Human resources, especially in the field of compliance, has taken on significant importance too. The key to getting this element right is training. Regulators are doing their part and again it comes down to the FIs and their service providers to complete the equation. With scale, a lot of this training can be done in-house whereby the fresher entrants can benefit from the experience of seasoned professionals.


Sustainability can only come through evolution. As the FIs look ahead to meeting and continuing to meet the FATF standards, compliance will be the name of the game. And the compliance model has evolved to bring into focus the responsibility of the Boards and the role of the COs and MLROs.

FIs will need to look for solution providers who can bring in a complete solution. The implementation of these regulations will have an impact on the cost element of the entities and especially for funds looking at their Total Expense Ratios (TER). Single source service providers will be able to provide this through a combined cost structure based on scale. And the service providers seem to have understood this looking at the spat of mergers and acquisition which have been going in the past few years.

What happens next?

As often, change is the only constant. Sustainable change is what we need to target. As the year wears on and we hopefully move past the FATF Grey List, we will see plenty more need for MCs to upgrade processes and technology. Investment in training of human capital will need to go along. As we are sure to constantly see evolution in the regulations, there will no longer be comfort zones. That’s the way ahead – keep on adapting.