COMPLIANCE THE COMMITTEE BETWEEN THE REGULATOR AND COMPLIANCE OFFICERS OF BANKS In February 2004, the Banking Committee

chaired by the Governor of the Bank and comprising Chief Executive Officers of banks formerly holding a Category 1 Banking Licence decided to set up a Committee between the Regulator and the Compliance Officers (Committee) of those banks to serve as a platform for interaction on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) issues. The Committee so constituted met regularly until August 2005, when the Banking Committee decided to extend the membership of the Committee between the Regulator and Compliance Officers to include Compliance Officers of banks formerly holding a Category 2 Banking Licence as well. Also, the mandate of the Committee which was restricted to AML/CFT issues was extended to include other aspects of compliance. THE WORKS OF THE COMMITTEE The Committee discussed extensively the provisions of the Guidance Notes on AML/CFT issued by the Bank to the industry in November 2003, its day to day administration, practical difficulties encountered in its implementation as well as its monitoring. Consequently, the Guidance Notes on AML/CFT, which comprise the best international practice on AML/CFT and include the requirements of the Customer Due Diligence Paper (CDD Paper) issued by the Basel Committee on Banking Supervision (BCBS), have been amended by the Bank on several occasions, to cater for, inter alia, the following : (i) (ii) The ratification by Mauritius of the International Convention for the Suppression of the Financing of Terrorism 1999 on 13 January 2005. Clarifications brought to Recommendation 9 of the revised Forty Recommendations of the Financial Action Task Force (FATF) on the issue of introduced business in the light of the joint paper issued by the BCBS and the Offshore Group of Banking Supervisors (OGBS) regarding perceived differences in the interpretation of the provisions of the CDD Paper. The delisting by the FATF of Non-Cooperative Countries and Territories (NCCT). The verification, for listed companies, of the identity of only the authorised signatories of those companies. The statutory change in the limitation of payment in cash from Rs350,000 to Rs500,000.

(iii) (iv) (v)

2 A general review of the Guidance Notes on AML/CFT was undertaken following the enactment and proclamation of the Banking Act 2004 and Bank of Mauritius Act 2004. The review also took on board experience gathered and the constant dialogue between the Bank and stakeholders on the matter. The revised Guidance Notes superseded the previous Guidance Notes and were issued to the industry in June 2005. The Guidance Notes were updated in September 2005 to reflect changes brought about by the enactment of the Financial Intelligence and Anti-Money Laundering (Amendment) Regulations 2005. Subsequently, a IMF/World Bank Financial Sector Assessment Program (FSAP) Team conducted a detailed assessment of the AML/CFT regime in Mauritius from 24 September to 9 October 2007. In July 2008, the Guidance Notes were amended to reflect the recommendations made by the FSAP Mission. The FSAP report has been published on both the websites of the IMF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). The updated Guidance Notes are available on the Banks website at http://bom.intnet.mu/guidelines_menu.htm. Other issues discussed and considered by the Committee include the following: The pooling of efforts by the Banking Industry to collect the National Identity Cards (NICs) of existing customers, following which the Mauritius Bankers Association Limited caused a Communiqu to be published in the newspapers requesting customers to provide banks with copies of their NICs. The submission by banks to the Bank of Mauritius of their annual AML/CFT Training Plans. The reporting to the Bank of Mauritius of the name of persons/organisations appearing on the Consolidated List of persons/organisations suspected of terrorism issued by the United Nations Security Council and the Council of European Union. The list of suspected terrorists issued by the Office of Foreign Assets Control, a department of the US treasury. The maintenance of internal controls by banks in order to ward off money laundering and terrorist financing and the necessity for all banks to have a manual of compliance and procedures on AML/CFT as provided by law. The functions and duties of the Money Laundering Reporting Officer. The maintenance of anonymous accounts and the underlying sanctions provided by law in such cases. The prohibition to maintain reference accounts. Acceptance of Mauritius by other jurisdictions as a jurisdiction equivalent to theirs.

3 The implications of making or accepting payments in cash in excess of Rs350,000, now Rs500,000. Complaints from banks customers on abandoned funds and charges applied on dormant accounts. Other Know Your Customer (KYC) issues generally, including, inter alia, proof of address for company directors, KYC for married women as well as recourse to eligible and group introducers. The Committee also kept in view other local and international developments in AML/CFT, more particularly at the level of the FATF, BCBS, OGBS and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), among others. Discussions have also started on the various prudential guidelines issued by the Bank of Mauritius with a view to provide Members of the Committee with desired clarifications thereon. A list of those guidelines may equally be obtained on the Banks website. The Committee received on 9 March 2006, the visit of Mr R. Nunkoo, Commissioner (Drug Assets Forfeiture), who had expressed the wish to meet Members of the Committee with a view to fostering a meaningful relationship with the Banking Sector. A Select Committee has been set up to study the papers issued by the FATF and to make appropriate proposals for inclusion in the Guidance Notes.