Mauritius and the FATF Evaluation Process: Understanding the Key Issues

By Kamal Hawabhay, Managing Director of GWMS Ltd (A licenced Management Company in Mauritius involved in international business, tax advisory and fiduciary services)

Mauritius should certainly take its next Financial Action Task Force (FATF) / Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) evaluation seriously. However, seriousness should not be confused with panic. Recent commentary has, at times, created the impression that Mauritius may automatically be at risk of returning to the FATF grey list following certain recent domestic developments and high-profile investigations. 

Mauritius, today, is a recognised international financial centre with an established regulatory framework, active engagement with international standard setters and demonstrated capacity to implement reforms where necessary. It continues to adapt to evolving global AML/CFT expectations, as evidenced by the AML/CFT and proliferation financing legislative amendments passed in April 2026, aimed at reinforcing the country’s compliance with evolving FATF standards. 

The reforms notably focused on strengthening beneficial ownership transparency, supervisory effectiveness, enforcement powers, inter-agency coordination and broader implementation mechanisms ahead of the next ESAAMLG mutual evaluation cycle. 

It is worth highlighting that Mauritius is one of only a handful of jurisdictions worldwide to achieve a Compliant or Largely Compliant rating on all 40 of the FATF Recommendations. 

Now let’s see how FATF evaluations work.

1. Why was Mauritius grey listed in 2020?

The FATF, at its February 2020 Paris meeting, recognised that Mauritius made progress since 2018 to improve technical compliance and effectiveness, including amending the legal framework to require legal persons and legal arrangements to disclose beneficial ownership information and improving the processes of identifying and confiscating proceeds of crimes. However, the FATF recommended the following 5 actions that Mauritius should implement:

1. To demonstrate that the supervisors of its global business sector and Designated Non-Financial Businesses and Professions (DNFBPs), i.e. casinos, real estate agents, legal and accounting professionals) implement risk-based supervision; 
2. To ensure access to accurate basic and beneficial ownership information by competent authorities in a timely manner; 
3. To demonstrate that law enforcement agencies have the capacity to conduct money laundering investigations, including parallel financial investigations and complex cases, i.e. drug crime, tax evasion, corruption or other serious offences; 
4. To implement a risk-based approach for supervision of its Non-Profit Organization sector to prevent abuse for Terrorist Financing purposes; and 
5. To demonstrate the adequate implementation of targeted financial sanctions through outreach and supervision.

Following its February 2020 Mutual Evaluation Report, the FATF placed Mauritius on the list of countries subject to increased monitoring, the so-called Grey List.

At the fifth plenary of the FATF, which took place on 19-21 October, the FATF congratulated Mauritius for the significant progress it made in addressing the strategic AML/CFT deficiencies it identified earlier and which it included in its action plans.

FATF then confirmed that Mauritius would no longer be subject to the FATF’s increased monitoring process and was removed from the Grey List.

2. The next FATF assessment cycle

Mauritius is scheduled to undergo its next ESAAMLG mutual evaluation in 2027 under the revised FATF methodology. The onsite assessment phase is expected during 2027, following which the Mutual Evaluation Report would typically go through the ESAAMLG review and adoption process during 2028.

The next evaluation is likely to focus on whether our AML/CFT framework is functioning effectively in practice.

In line with the FATF methodology document entitled “Methodology for Assessing Technical Compliance with the FATF Recommendations and the Effectiveness of AML/CFT/CPF Systems” available on its website, FATF’s current assessment methodology places significant emphasis on the effectiveness of a jurisdiction’s AML/CFT framework.

In addition to assessing technical compliance with the 40 FATF Recommendations, assessors evaluate jurisdictions against 11 Immediate Outcomes (IO), which measure whether the AML/CFT framework is functioning effectively in practice. The principal IOs are:

IO.1 – Risk, Coordination and Policy

Assessment of whether Mauritius properly understands its money laundering and terrorist financing risks and whether authorities coordinate effectively among themselves.

IO.2 – International Cooperation

Assessment of whether Mauritius cooperates effectively with foreign authorities in relation to investigations, exchange of information and mutual legal assistance.

IO.3 – Supervision

Assessment of whether regulators supervise financial institutions and DNFBPs effectively on a risk sensitive basis.

IO.4 – Preventive Measures

Assessment of whether financial institutions and service providers are effectively implementing AML/CFT obligations in practice

IO.5 – Legal Persons and Beneficial Ownership

Assessment of whether competent authorities can quickly identify the true ownership and control of companies and legal structures.

IO.6 – Financial Intelligence

Assessment of whether financial intelligence is being effectively collected, analysed and used by competent authorities.

IO.7 – Money Laundering Investigation and Prosecution

Assessment of whether money laundering cases are being properly investigated and prosecuted, particularly complex and higher risk matters consistent with the country’s risk profile.

IO.8 – Confiscation

Assessment of whether criminal proceeds can be effectively traced, frozen, seized and confiscated.

IO.9 – Terrorist Financing Investigation and Prosecution

Assessment of the effectiveness of the framework for investigating and prosecuting terrorist financing offences.

IO.10 – Terrorist Financing Preventive Measures and Financial Sanctions

Assessment of the implementation of targeted financial sanctions relating to terrorism.

IO.11 – Proliferation Financing Financial Sanctions

Assessment of the implementation of sanctions relating to proliferation financing, including UN sanctions.

Public discussion in Mauritius appears to be focusing mainly on the following Ios, although the other IOs remain equally significant within the overall FATF assessment framework:

3. Are recent high-profile Financial Crime Commission (FCC) investigations relevant to FATF assessments?

Yes, but they are not automatically determinant.

FATF assessors are generally expected to examine whether jurisdictions are capable of effectively pursuing complex and higher-risk money laundering matters consistent with their national risk profile.

The existence of investigations, use of financial intelligence, tracing of assets, inter-agency coordination and international cooperation may therefore all form part of the broader picture assessed by FATF.

FATF is also likely to look at whether the overall system demonstrates credible capability, consistency and sustained effectiveness over time, rather than focus on rate of convictions alone.

Assessors are also expected to examine whether Mauritius is pursuing complex and higher-risk money laundering matters, consistent with the country’s risk profile.

Mauritius is not likely to be judged only on whether specific cases have progressed to the DPP or the courts. Instead, the whole system will be assessed: quality of investigations, use of financial intelligence, prosecutorial capacity, asset recovery, international cooperation, beneficial ownership access, supervision and sanctions.

The overall effectiveness of the broader AML/CFT framework will therefore be key

4. FATF grey listing and sovereign ratings

FATF grey listing and sovereign rating downgrades affect the economy differently, but both potentially influence investor confidence, capital flows and the broader cost of doing business and cost of living.

Grey listing may increase the need for Enhanced Due Diligence on Mauritius-originating transactions, disrupting correspondent banking relationships, creating friction in everyday cross-border payments, increasing compliance costs and negatively impacting international investor perception.

A sovereign downgrade to sub-investment grade would affect Mauritius differently, but no less seriously. A junk rating would increase borrowing costs, constrain fiscal space, raise the cost of capital for businesses and ultimately filter through to the broader population through reduced capital affordability and higher costs of living. For an IFC, it would also signal institutional fragility to the very investors already present in the jurisdiction and those whom we seek to attract.

Both risks are distinct in their mechanics, but both may potentially undermine Mauritius’ standing and the welfare of its population.

Conclusion

Mauritius should not dismiss FATF concerns, but neither should the country allow the debate to be reduced to outright pessimism. The 2027 evaluation will be a test of national effectiveness, not a referendum on certain developments.

Balanced, informed and technically grounded discussion and proactive measures are crucial to maintaining confidence in Mauritius as a recognised and reputable jurisdiction.

Disclaimer: The views expressed in this article are the author’s own and are intended for general informational purposes only. They do not constitute legal, regulatory or compliance advice. Readers should consult official FATF and ESAAMLG publications and seek independent professional advice where appropriate.