Mauritius Offshore Sector - Finance Assignment

Published: November 26, 2015 Words: 970

Mauritius Offshore Sector - Finance Assignment

Offshore business activities became a significant sector in Mauritius as from 1992, when the Mauritian Offshore Business Activities Act (MOBA Act 1992) came into force, bringing into being the Mauritius Offshore Business Activities Authority (MOBAA), which was active and effective in structuring offshore regimes in various sectors. Non-bank financial services legislation was updated and modernised in 2007. MOBAA grants certificates to companies and trusts, and is the body through which all official applications are made.

In 2001, under the Financial Services Development Act 2001 the government established a Financial Services Commission (FSC) and an Advisory Council. The FSC now monitors the country's stock exchange, offshore business activities and the insurance industry. It also supervises non-regulated or partly-regulated non-banking activities such as fund management, pension schemes and management, collective investment schemes, investment advisory services and leasing.

The Advisory Council helps guide the development of financial services in the country and act as an information centre to keep the industry in touch with the latest international trends.

In the new structure, MOBAA ceased to exist, and most existing laws bearing on offshore activities were replaced. Due to its network of double tax treaties with most of the significant economies in its region, and above all with India, Mauritius is often chosen as a base by firms needing to set up an offshore holding or investment company, or trading subsidiary.

Mauritius has recently established a modern presence as an offshore financial center, with the passing of the Companies Act in 2001. The form of offshore company is the Global Business Company (GBC) Category 2 which is similar to the British Virgin Islands IBC. There is also a Category 1 GBC which allows access to the numerous Mauritius tax treaties.

On 28th July 2009, 132 OMCs were officially licensed by the Financial Services Commission, 26 of which were corporate trustees. Offshore companies, which must have some management actually in Mauritius, take on average 15 days to incorporate. Tax certificates are granted by MOBAA on a case-by-case basis.

Offshore companies registered in Mauritius are tax free and there is no requirement to file annual returns or audited statements with government authorities. Mauritius has not been classified as a tax haven by the OECD and is not party to any exchange of information agreements with any country.

All incorporation documents are in English. The company name may be in chinese characters, if desired, and the documents legalized by the Chinese Embassy in Mauritius. A Mauritius company may do business anywhere in the world. There is no requirement for Directors and Shareholders to be resident in Mauritius and they can be of any nationality. Meetings of Directors and Shareholders can be held anywhere in the world, either in person or by phone.

There are some important restrictions on the type of business that the company can engage in. The company cannot:

Otherwise the company can engage in the usual commercial activities.

Mauritius and Money Laundering

The Republic of Mauritius has joined in the efforts of the international community to combat money laundering and the financing of terrorism. Mauritius has adhered to the forty Recommendations of The Financial Action Task Force (FATF) and to the nine special terrorist financing Recommendations. Furthermore, Mauritius committed itself to the United

Nations Minimum Performance Standards agreed at the Global Programme against Money Laundering Plenary held in Cayman Islands in October 2000.

It is a criminal offence for financial institutions in Mauritius to fail to take measures to prevent their institutions or the services their institutions offer from being used to commit or to facilitate the commission of money laundering and terrorist financing. The latest figures from the annual report of the FSC shows that the reported turnover from offshore management companies in 2008 was USD 90,844,822, which illustrates the huge amounts of money being in circulation.

Applicable laws associated with money laundering in Mauritius are The Financial Intelligence and Anti-Money Laundering Act 2002 (FIAMLA) and subsequent Regulations, The Prevention of Terrorism Act 2002 and The Convention for the Suppression of the Financing of Terrorism Act 2003 and The Prevention of Corruption Act 2002.

According to Part II (3) of the Financial Intelligence and Anti Money Laundering (Amended) Act 2002:

(1) Any person who -

(a) engages in a transaction that involves property which is, or in whole or in part directly or indirectly represents, the proceeds of any crime; or

(b) receives, is in possession of, conceals, disguises, transfers, converts, disposes of, removes from or brings into Mauritius any property which is, or in whole or in part directly or indirectly represents, the proceeds of any crime,

where he suspects or has reasonable grounds for suspecting that the property is derived or realized, in whole or in part, directly or indirectly from any crime, shall commit an offence.

The Code on the Prevention of Money Laundering and Terrorist Financing intended for Management Companies defines money laundering as “any process that conceals the origin or derivation of the proceeds of crime so that the proceeds appear to be derived from a legitimate source.“ As per this Code, laundering is not only associated with organized crime and drug trafficking but with any person dealing with another person's direct or indirect benefit from crime.

The Mauritius Financial Services Commission (FSC) which is the regulatory authority for all non-bank financial services has issued three Codes on the prevention of money laundering and terrorist financing, namely:

The Codes issued by FSC describe the regulatory anti money laundering practices that operators involved in these three disciplines are expected to consistently follow and include:

http://www.tax-news.com/archive/story/Mauritius_FSC_Issues_AntiMoney_Laundering_Codes_xxxx11614.html

Although a number of measures have been taken to ensure compliance with international standards relating to anti-money laundering and combating the financing of terrorism, the FSC can still conduct its own investigation and take the appropriate regulatory action.