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The United Arab Emirates were removed from the Financial Action Task Force's grey list last February. South Africa is still on it. Two situations that are not without consequences for Mauritius.

The fight against money laundering and the financing of terrorism is an area on which the Financial Action Task Force (FATF) is anything but nonchalant. The strategic deficiencies of certain jurisdictions in this fight have earned them a place on the grey list of this body. Included in February 2023, South Africa is currently still on this list. Africa remains an important market for Mauritius. Indeed, 33% of the new Global Business Company licenses granted by the Financial Services Commission (FSC) last January came from the continent.

Certainly, Hafeez Toofail, a professional in the financial sector, is of the opinion that South Africa will at some point be able to get out of the FATF gray list. However, this situation causes increased costs for companies doing business with South Africans due to closer scrutiny. “The country risk for South Africa and consequently the Customer Risk Assessment will be high. AML Supervisors will also need to carry out enhanced due diligence for a Mauritian company to do business with South Africa. Unlike normal due diligence, enhanced due diligence costs more,” he explains.

Competitiveness

On the other hand, the FATF plenary meeting held last February was favorable to the United Arab Emirates, which were removed from the gray list. This will, according to Hafeez Toofail, increase competition from Dubai, which is a major player in the global financial sector. This will attract more business. “We see that there are Mauritian companies opening offices in Dubai. It is an interesting market that offers diversity,” he adds. The number of services and the different regulators in Dubai are other attractions.

On the other hand, the Mauritian jurisdiction could see its competitiveness take a hit. An operator is concerned about the introduction of the corporate climate responsibility (CCR) tax announced in the 2024-25 Budget. This will be equivalent to 2% of the profits of a company whose turnover is greater than or equal to Rs 50 million. This is because the possible application of this tax to Global Business companies will negatively influence Mauritius' competitiveness. “It is already in a bad way with the cost of doing business which is not the most attractive among international financial centers,” the operator maintains.

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