25 May 2020
Mauritius - high-risk country list - AML/CTF framework
Mauritius included on the list of high-risk countries with strategic deficiencies in their AML/CTF framework
On 10th May, The European Commission, the executive branch of the European Union, has included Mauritius in its revised list of high-risk countries with strategic deficiencies in their anti-money laundering and counter-terrorist financing frameworks.
This decision has a serious impact on the way entities domiciled in Mauritius are treated by investors, promoters or investee company with which they are in business.
As a result of such decision, some countries are forced to apply stricter AML rules when dealing with Mauritian entities. Some others must now apply a withholding tax on payments made to such Mauritian entities or some debtor may not deduct interest paid to Mauritian structure for tax purpose. Bank may simple consider to close their relation with such entities.
Many promoters are considering a redomiciliation of their project, SPV or fund out of Mauritius as a precaution, should this situation create a negative perception towards their business, especially among their investors base such as institutional or family offices.
A redomiciliation of a fund or a corporate vehicle from Mauritius to Luxembourg can be done through a simple process within a matter of days.
For instance, the Mauritius company will transfer their seat of incorporation in Luxembourg in order to become an entity duly incorporated under Luxembourg law and change its nationality.
The redomiciliation may give the fund or the SPV new advantages like the benefits of the double tax treaties; at least being established in a fully compliant environment and avoid undesirable measures when performing due diligence.
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