|
|
 |
 |
|
| |
 |
Mauritus Advantage - More Info |
Domestic Banking Sector
Mauritius has a long tradition of commercial banking dating back to 1812. The Mauritius Commercial Bank Ltd and the State Bank of Mauritius are among the 10 largest banks in Africa. Mauritius with its well developed commercial banking network presently has 10 domestic commercial banks operating 142 branches in the country. The banks are well capitalized, with an average risk-weighted capital adequacy ratio in the range of 12-13% in the past three years, above the Basle requirement of 8%.
The legal framework for banking business is embodied in the Banking Act 1988. Under the FSD Act 2001, consequential amendments were brought to section 46 of the Banking Act 1988 whereby Domestic Banks are now defined as Category 1 Banks having a Category 1 Banking Licence and Offshore Banks are defined as Category 2 Banks. The banking legislation provides for prudential regulations with respect to banks’ concentration of risk, weighted capital adequacy ratio, income recognition and clarification of loans and advances for provisioning purposes, maintenance of accounting and other records and internal control systems. The Bank of Mauritius, the regulatory and supervisory body, has implemented the Basle Capital Accord and endorsed the Basle Committee’s Core Principles for effective supervision of banks. Furthermore, the Bank of Mauritius forms part of the Offshore Group of Banking Supervisors and the Eastern and Southern Africa Banking Supervisors Group.
Offshore Sector
Since its inception in 1992, the offshore sector in Mauritius has known a spectacular growth. While in December 1993 only 455 offshore corporate vehicles had been registered, this figure was around 5060 in April 1997, hence involving a more than tenfold increase in less than four years.
Offshore activities were regulated by the Mauritius Offshore Business Activities Authority (MOBAA), which is now incorporated in the newly-created Financial Services Commission. The latter grants licenses and supervises the non-banking offshore sector, while co-coordinating public sector agencies and private organisations dealing with the offshore sector, so as to act as a One-Stop Shop for companies wanting to engage in offshore activities.
The main attractive feature of the offshore sector is the efficient legal and fiscal framework upon which it rests, and which is constantly upgraded to preserve the attractiveness of the Mauritian offshore sector.
As at December 2001, around 14,000 offshore entities were registered at the offshore authority. Mauritius is also progressively paving its way in establishing a solid investment fund industry in the offshore sector. About 90% of the active funds invest in Indian securities and shares. More than half of the registered offshore funds are listed on international stock markets. South Africa, the United States, India and Non-Resident Indians represent the major sources of offshore investment.
Financial Services Development Act 2001
The FSD Act consolidates our existing regulatory and supervision frameworks while simultaneously putting in place a unified regulatory framework for the financial services sector. This new legislation also reflects changes made in line with initiatives of international bodies such as OECD, FATF, UN Offshore Forum and core principles of international supervisors (IAIS, IOSCO, OGIS). The single regulatory framework has been achieved through a phased approach by the setting up of the Financial Services Commission on 1st December 2002 responsible for the licensing, regulation and supervision of the non -bank financial services and, at a later stage, after a review of the exercise to be carried out in three years' time, to the eventual integration of the FSC with the Central Bank i.e. the Bank of Mauritius, into a single unified regulatory authority for the whole financial services sector.
The advantages of the single regulatory system for a small island economy like Mauritius are many. First, it fills the supervisory gaps across the range of financial activities on offer in Mauritius. Prior to the enactment of the Financial Services Development Act, regulatory oversight extended only over the banking, insurance, securities and offshore services, leaving certain sectors as fund management, pensions funds, leasing companies as well as financial intermediaries completely unregulated or only partially regulated. These are high-risk sectors not only to depositors and investors but also to the whole stability of the financial system.
The other provisions of the FSD Act deal with the administration of the relevant Financial Services Acts, namely the Stock Exchange Act, the Insurance Act, the Protected Cell Companies Act and the new Trusts Act. The FSC has strong and effective powers of inspection under Part IV of the FSD Act 2001, and it may give directions, issue roles, guidelines or code for the proper conduct of business.
Two other important provisions exist in the legislation in respect of complaints by consumers of financial services and the investigation of these complaints by the FSC. Consumer complaints now receive due attention by law and redress will be made by the FSC.
Secondly, integrated regulation and supervision make for a more effective use of the limited human resources available in the field of supervision and by combining the various regulators, we reap the economies of scale associated with one large organisation. Thirdly, a combined regulatory framework allows for a more optimal use of the technical resources at our disposal, notably in these highly specialised sectors of activities and IT. Fourthly, an integrated regulatory framework allows for a more focused strategy in terms of promotion of the Mauritian Financial market and in creating a more coordinated approach in terms of skills development and training. Lastly, and more importantly, a single regulatory framework establishes a coherent financial structure that caters to both domestic and international business.
Under the provisions of the FSD Act, the Financial Services Commission has taken over the functions of the previous three non-banking regulators namely the Stock Exchange Commission, the Insurance Division of the Ministry of Financial Services and the MOBAA. The FSC will also supervise the activities of all presently non-regulated or partly regulated non-bank financial activities, such as asset management, pensions schemes and pension management.
Secondly, compensation funds are being set up to allow for compensation of investors and other persons suffering financial losses as a result of the default of licensed providers of financial services.
The World Bank is giving its support to the whole project of an integrated regulatory framework including staff training and skill building and the development of all-necessary standards and procedures for the functioning of the FSC. The support involves the review of existing standards, policies and procedures, the development of appropriate standards for prudential and market conduct regulations, short, medium and long term implementation policies and internal governance. Operational manuals and guidelines will also be prepared for the FSC.
Trusts Act 2001
The enactment of the new Trusts Act answers a crying need in favour of integrating two parallel legislation that caters for trusts - the Trusts Act 1989 and the Offshore Trusts Act 1992. Though of a general application, the Trust Act 1989 has been used exclusively, but sparingly by Mauritian residents. The reasons being that the Act contains major constraints and rigidities that render it cumbersome and heavy.
In contrast the Offshore Trusts Act 1992 was a good measure of favour with international business professionals and tax lawyers.
However, the existence of two distinct statutes governing the same subject of law but applied separately to residents and non-residents has attracted adverse comments from the international institutions and business professionals.
The main objective of the new Trusts Act is therefore to address the blatant dichotomy between Trusts meant for residents and non-residents and to further the implementation of Governments declared policy of integrating the onshore and offshore financial service sectors.
The Trusts Act 2001 also consolidates the law relating to trust and trustees, regulates and governs the setting up and the administration of trusts in Mauritius, and replaces the Trusts Act 1989, the Offshore Trust Act 1992 and the Trusts Companies Act 1989.
Essentially, the Trust Act 2001 offers the same law to the user whether a local resident or a foreigner who wishes to avail himself of a trust as a legal solutions.
The provision of the Trust Act 2001 also includes developments in the area of the trust legislation at international level and follows in the steps of such jurisdictions as Quebec, Louisiana and Luxembourg to integrate the trust concept in the domestic civil law system. The Trusts Act 2001 is therefore viewed as a modern piece of legislation with a number of attractive features. The trusts set up under this act therefore hold huge potential for increasing use in varying fields, like private banking, asset management, high net-work family settlements, collective investment business card and other areas of business practices.
Anti-money Laundering Act 2002
The Act restates the provisions relating to money laundering and provides for the establishment of a Financial Intelligence Unit and Review Committee to review the activities of the Unit. The Act provides in particular, for the reporting of suspicious transactions by, interalia, banks, financial institutions, cash dealers and members of relevant professions or occupations to the FIU; the exchange and provision of information in relation to money laundering; mutual assistance with overseas bodies in relation to the investigation of and prosecution of money laundering and the reporting responsibilities of practitioners.
Prevention of Corruption Act 2002
The objects of this Act is to strengthen the laws on corruption and fraud by introducing new corruption offences with severe penalties; the creation of the Independent Commission Against Corruption (ICAC) which has powers to (i) detect and investigate corruption offences (ii) investigate money laundering offences and (iii) improve public awareness of corruption; restraint and forfeiture of the proceeds of corruption and money laundering and finally provide mutual assistance in relation to corruption and money laundering.
|
|
|
|
