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Fighting Back the Surge of Business Financial Crime
Financial crime or financial offence is on the rise, especially in the business sector. It encompasses several crimes, including money laundering, tax evasion, corruption, financing of terrorism and drug trafficking, among others.
What is financial crime? What are the repercussions on a country’s economy? What about sanctions? How to fight this scourge?
Insights with Me Robin Pothiah.
What is financial crime or financial offence?
The term “financial crime or financial offence” is not specifically defined in our law.
However, the term is often used as a generic term for a crime with a pecuniary character or an activity involving fraudulent or dishonest behavior for personal financial gain.
However, this offense should not be taken lightly, as it can have serious consequences for a country’s economy and society.
What is the extent of this offense?
Unfortunately, financial crime is not something new in the criminal sphere.
In the 2024 Nasdaq Global Financial Crime Report, it is estimated that $3.1 billion of illicit funds have passed through the global financial system.
Money laundering accounted for thousands of billions of dollars, $722.9 billion for drug trafficking and $11.5 billion for terrorism financing.
Scams and banking fraud schemes totaled $485.6 billion in projected losses worldwide. This is why the Financial Crimes Commission (FCC) was introduced through the Financial Crimes Commission Act 2023 (FCCA) to detect, investigate, and prosecute those who commit financial crimes.
What are the sanctions for financial crime?
Under the new law introduced by the Financial Crimes Commission Act (FCCA), anyone found guilty of a financial offense is liable to a fine not exceeding Rs 20 million and a prison sentence not exceeding ten years.
Examples of financial crimes?
As mentioned earlier, financial crime is a generic term that encompasses a variety of crimes. These include money laundering, corruption, conspiracy, bribery, conflict of interest, influence peddling, tax evasion, terrorism financing, and drug trafficking financing, among others.
How does it affect a country’s economy?
Obviously, financial crime has a detrimental impact on any country’s economy. Unfortunately, Mauritius is not spared.
Take, for example, the offense of money laundering, which falls under the generic term of financial crime.
It can harm the integrity and stability of financial institutions. Illicit funds entering the financial system can distort market mechanisms, creating an imbalance affecting competition, prices, and institutions.
If this practice remains unpunished, it can harm a country’s reputation. The continued practice of impunity can in turn erode the necessary legal and regulatory frameworks.
Regarding corruption, it will lead to a decrease in investments, a decline in human capital, and political instability.
These issues, in turn, also affect the economic growth of the country in question. Financial crime.
How to combat this crime?
For better coordination and efficiency in combating the scourge of financial crime, institutions such as the Independent Commission Against Corruption (ICAC), the Asset Recovery Investigation Division (ARID), and the Integrity Reporting Services Agency (IRSA) have been assimilated under the Financial Crimes Commission (FCC).
These institutions aim to detect, investigate, and prosecute those who commit financial crimes.
Do we have the tools to combat this offense?
Mauritius was on the grey list of the Financial Action Task Force (FATF) for some time.
Fortunately, the country was removed from this list by adopting FATF recommendations, which in turn allowed it to leave the European Union blacklist.
With the Financial Crimes Commission Act (FCCA), several laws were repealed, such as the Prevention of Corruption Act (PoCA), a part of the Financial Intelligence and Anti-Money Laundering Act (FIAMLA), the Assets Recovery Act (ARC), and the Good Governance and Integrity Reporting Act (GGIRA).
These laws were then reinserted. The objective is also to strengthen the Financial Crimes Commission Act (FCCA) to combat this scourge and be more effective.
What are the loopholes in our legislation?
Despite the good intention of repealing certain laws to then integrate and strengthen the Financial Crime Commission Act (FCCA), lawmakers have still not addressed or simply ignored the issue of “political financing.”
There is no transparency regarding donations, nor where the money related to political financing comes from.
Source: Defi Media
