Since its creation, the Global Business (GB) sector has evolved to adapt to the changing regulatory and financial landscape on local and international fronts. These changes have contributed to consolidating Mauritius as a transparent jurisdiction committed to fighting money laundering, terrorist financing, and proliferation financing while providing an investment- friendly ecosystem conducive for cross-border solutions. The GB sector is a key component of the financial services sector and its contribution to the Banking sector cannot be underestimated. It significantly contributes to the Mauritian economy in terms of the Gross Domestic Product (GDP) and job creation. According to the Bank of Mauritius (BoM) Financial Stability Report dated December 2021, the deposits of Global Business Companies (GBCs) accounted for about 28 per cent of the total liabilities of banks. 

However, the listing of Mauritius on the Financial Action Task Force (FATF) Grey List, the European Union (EU) and United Kingdom (UK) lists of High-Risk Third Countries (having strategic deficiencies in their national AML/CFT regimes) caused uncertainty in the GB sector during the year under review. Mauritius had to demonstrate that operators in the GB sector are inter alia adhering to the Risk Based Supervision (RBS) framework given Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) deficiencies identified by the FATF.

All efforts from the different stakeholders were geared toward addressing the identified shortcomings. In order to operate in the financial services sector, applicants must be able to meet the requirements as per the relevant Acts of the Financial Services Commission, Mauritius.

This helps to protect investors' interests and safeguard the integrity of the financial services sector. As part of both authorisation and ongoing oversight, the GB Authorisation cluster verifies whether the business model of a company and its activity can lead to any risks (including reputational risk). It also looks at whether the company has adequate financial resources to provide for the regulated activities and whether the resources are fit and proper." Source: Extract from FSC Annual Report 2021/2022 - Accessed on its website under the Media Corner section (https://www.fscmauritius.org/en/media-corner/publications)



Required:

(a) Relating to the above statement, briefly explain the grounds on which the FATF cautioned Mauritius as a 'jurisdiction subject to an increased monitoring' in 2018.

(b) Identify one key stakeholder in the financial services sector and elaborate on its contribution in redressing Mauritius' position vis  vis FATF. Use example to support your answer. 

(c) Subsequent to the de-listing of Mauritius from the FATF grey list, critically evaluate the risk-based supervision mechanism adopted by the local regulatory authorities in order to ensure that the improved status of Mauritius as an International Financial Centre is maintained. Use examples to support your argument.