Banking Environment in Mauritius
Mauritius has got a safe banking environment for local and foreign investors.
With the inception of The Mauritius Commercial Bank Ltd ever since 1838, Mauritius, the emerging tiger of the Indian Ocean has shown its proven stability to the World. Other banks have followed its path and they are as follows:
Bank of Baroda, Banque des Mascareignes Ltée, Barclays Bank Plc., Deutsche Bank (Mauritius) Limited, First City Bank Ltd which has just changed name into Bank One, Habib Bank Limited, Indian Ocean International Bank Limited, Investec Bank (Mauritius) Limited, Mauritius Post & Cooperative Bank Ltd, P.T Bank International Indonesia, SBM Nedbank International Limited, SBI International (Mauritius) Ltd, South East Asian Bank Ltd which has just changed to Bramer Banking Corporation Limited, Standard Bank (Mauritius) Limited, Standard Chartered Bank (Mauritius) Ltd,. State Bank of Mauritius Ltd, the Hong Kong & Shanghai Banking Corporation Ltd.
Baron de Rostchild, I am told, used the tenet of stability when he decided to operate a bank in Mauritius. The geographical position of Mauritius in the Indian Ocean has been subject matter of most local and international brochures and magazines. The political stability with the enshrined guarantee in our written constitution to hold the general elections every 5 years is acknowledged by the whole World.. The social stability has always been under the close scrutiny of all governments as the leitmotiv has always been the well coined Creole expression '' ène seul lé peuple, ène seule nation dans éne pays arc en ciel''.
The local legislation have over the years evolved towards a more stringent and regulated environment. The various ministers of finance have depending on the circumstances not missed the least opportunity to intervene and caused the required legislation to be enacted to pave the way for a secured banking environment. The local enactments commonly resorted to in international transactions are mainly as follows: Bank of Mauritius Act, Banking Act, Business Facilitation (Misc. Provisions) Act, Civil Code, Code de Commerce, Companies Act, Finance Act, Financial Intelligence and Anti- Money Laundering Act, Financial Services Development Act, Patents Act, Industrial Designs & Trademarks Act, Prevention of Corruption Act, Protected Cell Companies Act, Securities Act, Stock Exchange Act and the Trusts Act.
The Bank of Mauritius Act 2004 and the Banking Act 2004 regulating the banking sector were enacted in October 2004. The Bank of Mauritius Act 2004 governs the Central Bank principally whereas the Banking Act 2004 governs the banking business in general. The Banking Act has primarily merged the global business sector and the domestic sector by abolishing the two types of banking license: category 1 banking license and category 2 banking license which was allocated to banks in the domestic and global business sector respectively. The same banking license now applies to both sectors. Strict rules apply in respect of confidentiality and opening of accounts.
In the Republic of Mauritius the legal profession is composed of barristers, attorneys and notaries. Barristers deal with advocacy and consultancy. Attorneys are mostly specialized in procedural aspect and litigation, whereas notaries are involved in conveyance works and succession.
There are several District Courts, one Intermediate Court with several divisions and the Supreme Court with several divisions as well, where the same judges sit as judge at the level of the court of appeal, and the British Privy Council has been kept as the ultimate court of appeal. Money laundering finds no place in Mauritius as the safeguards set up under one or more of the above mentioned legislation have proved very efficient on several occasions. The Supreme Court of Mauritius has been put to tasks on numerous times and it does play its role to either protect the rights or enforce the obligations of the parties to international transactions. When deciding about whether to order or not any banking information the Supreme Court is very cautious and the following case law is cited for guidance:
In Ex Parte: Director of Public Prosecutions 1986 MR 196
It was held that the object of Section 34 of the Banking Act is to obviate inconvenience caused to bankers by having their employees summoned to produce documents in legal proceedings actually pending in court. It is not designed to help the police, when they suggest an offense, to obtain documents from the bank pertaining to customers suspected of committing offense.
In Director of Public Prosecutions v/s Indian Ocean International Bank and Ajay Shanto 1989 MR 110 – 1989 SCJ 187 *
It was held that in the context of a criminal investigation, there is no duty on the part of a bank to oppose or probe evidence given in support of police applications for the inspection of a suspected customer's accounts and that a bank is not in breach of its duty to maintain confidentiality in complying with orders obtained by the police under the Act.
No doubt these powers given to the police are wide. However, there will always be a remedy for abuses where the purpose of the authorities turns out not to have been the investigation of suspected offenses but merely the breach of a person's privacy for other purposes…
In Mauritius Co-Operative Central Bank Ltd v/s Primary School Teachers’ Co-operative Credit Union and S. Tengur 1989 MR 233 - 1989 SCJ 67 *
It was held that a bank's duty of confidentiality goes beyond the particular interests of its customers. “It is the solid rock on which its existence and self-preservation are based. A bank which converts the affairs of its customers or allows them to be converted into an open book surely commits self-destruction. This is what the applicant bank does not want to do and claims interlocutory relief. Nothing that I have said so far means that confidentiality should not give way to the requirements of investigation into a suspected offense or to use of the information as evidence as a result of a court order’’.
In Ex Parte: The Commissioner of Income Tax 1996 SCJ 204
It was held that as regards confidentiality of information “Bankers are more liable to be compelled to reveal the secrets they hold when the public interests, and particularly the detection of crime, so requires” as was said in DPP v Indian Ocean International Bank [1987 MR 22]. In the case of Clinch v Inland Revenue Commissioners 1974 1 Q B 76 it was remarked per curiam that “the currently alleged ‘right of silence’’ seems to find no place in the field of tax avoidance - a fortiori where tax evasion is concerned. Indeed so far from being entitled to remain silent, the individual is subject to penal sanctions if he refuses to supply the very information that may lead to his conviction”. However, it is the functions of the Courts to protect the individual from any abuse made of the power given. It is no doubt to prevent the power given to the Commissioner from being used as an instrument of oppression and to protect against a gross invasion of privacy of the subject that the legislature has provided for certain safeguards under S 39 (6) of the Banking Act……having found the Commissioner to have given sufficient reasons in his affidavit to base his application, and being satisfied that the conditions required under S 39 (6) have been met the application must succeed.
Comptroller of Customs v/s Ramraccheya and two other cases 1998 MR 45-1998 SCJ 215
It was held that in considering whether to make an order of disclosure, this Court must carry out a balancing exercise and weigh all the relevant factors - vide In re State of Norway’s Application (1986) 1 W.L.R 452 at page 487…..Since it is open to us on appeal to carry out the balancing exercise afresh, we have come to the clear conclusion that the balance is in favor of making the order for disclosure, given the material on hand. We consequently quash the judgments of the learned Judge and grant the orders of disclosure applied for.
ABOUT THE AUTHOR: Siv Potayya
Siv Potayya is a former assistant manager at the legal department of the Mauritius Commercial Bank and former partner at Juristconsult. He has written various articles on Banking in Mauritius. His experience in the Banking Sector throws a mark of excellence on law firm Wortels Lexus.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.