Over the past months, many arrests involving charges of money laundering have been widely reported in the press based on information gathered from the Financial Crimes Commission (FCC). What is more disturbing is the arrest and detention of high-ranking police officers who apparently deposited and withdrew large sums of money from one or more banks. The question arises: what role or control these banks had, if any, on the transactions of the police officers.
In its Guideline, the Bank of Mauritius describes money laundering as follows: "Money laundering is the process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal activities. If undertaken successfully, it allows them to maintain control over those proceeds and, ultimately, provides them with a legitimate cover for the source of their income." In the Guideline, the Bank of Mauritius emphasizes the need and duty to combat money laundering. Banks have a great responsibility in this sphere.
Under the Financial Intelligence and Anti-Money Laundering Act (FIAMLA), any person who 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 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. Additionally, a reporting person, which includes a bank and a financial institution, who fails to take such measures as are reasonably necessary to ensure that neither he, nor any service offered by him, is capable of being used by a person to commit or to facilitate the commission of a money laundering offence or the financing of terrorism shall commit an offence.
The FIAMLA contains a provision on the limitation of payment in cash. Any person who makes or accepts any payment in cash more than 500,000 rupees or an equivalent amount in foreign currency, or such amount as may be prescribed, shall commit an offence. The limitation does not apply to an exempt transaction. An exempt transaction is a transaction between the Bank of Mauritius and any other person; between a bank and another bank; between a bank and a financial institution. The exemption also extends to a bank or a financial institution and a customer.
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This exemption is well regulated. The transaction should not exceed an amount that is commensurate with the lawful activities of the customer, and the customer is, at the time the transaction takes place, an established customer of the bank or financial institution; and the transaction consists of a deposit into, or withdrawal from, an account of a customer with the bank or financial institution. The Chief Executive Officer or Chief Operating Officer of the bank personally approves the transaction in accordance with any guidelines, instructions or rules issued by a supervisory authority, that is the Bank of Mauritius, in relation to exempt transactions.
The FIAMLA also gives power to the Chief Executive Officer or Chief Operating Officer of the bank or financial institution to personally approve the transaction in accordance with any guidelines, instructions or rules issued by a supervisory authority in relation to exempt transactions. In relation to banks, the Bank of Mauritius is the supervisory authority of banks and financial institutions as is explained in the 2020 Guidelines. The Bank is required to supervise financial institutions with respect to all the requirements set out under the banking laws by ascertaining that these requirements are effectively complied with and implemented by these financial institutions.
The question that is on the lips of most people is how and why some highranking police officers were allowed either to deposit or withdraw amounts of money exceeding the prescribed amount of 500,000 rupees. If the transactions of the police officers were exempt transactions, it would have to be demonstrated that the transactions of the police officers were commensurate with their lawful activities and that the police officers, at the time of the transactions, were established customers of the bank or banks and the transactions consisted of deposits or withdrawals from an account of the police officer or officers with the bank. Or else the Chief Executive of the bank might have personally approved the transactions provided he complied with any guidelines, instructions or rules issued by a supervisory authority in relation to exempt transactions.
Banks should be on the alert on suspicious transactions. Pursuant to Section 2 of the FIAMLA, a suspicious transaction is a transaction which gives rise to a reasonable suspicion that it may involve, amongst other matters, the laundering of money or the proceeds of any crime; or is made in circumstances of unusual or unjustified complexity; appears to have no economic justification or lawful objective; or gives rise to suspicion for any other reason.
Guidelines issued by the Bank of Mauritius embody several indicators on how to deal with cash transactions and how to detect suspicious transactions. One of the indicators reads: "Client conducts a transaction for an amount that is unusual compared to amounts of past transactions." In the Guidelines, indicators are given on a suspicious transaction. There is no monetary threshold for making a report concerning a suspicious transaction. A suspicious transaction may involve several factors that may on their own seem insignificant, but when taken together may raise suspicion that the transaction is related to the commission or proposed/attempted commission of a money laundering offence.
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As a general guide, a transaction may be connected to money laundering when one thinks that it (or a group of transactions) raises questions or gives rise to discomfort, apprehension, or mistrust. An assessment of a suspicion should be based on a reasonable evaluation of relevant factors, including the knowledge of the customer's business, financial history, background, and behaviour. It is the behaviour which is suspicious, not the person.
So far, we have heard that the police officers involved are being questioned. Nothing has been heard about the bank or banks that have a heavy responsibility under the law and in compliance with the Guidelines issued by the Bank of Mauritius to make sure that no transaction becomes a vehicle for money laundering. No doubt the FCC with its armada of investigators will also start querying the bank or banks involved.
