1.0 INTRODUCTION

1.1 The Financial Services Commission, Mauritius (the "FSC") is established under the Financial Services Act 2007 (the "FSA") and is mandated to regulate the non-bank financial services and global business sectors. The FSC is, by virtue of section 5 of the Virtual Assets and Initial Token Offering Services ("VAITOS") Act 2021, responsible for regulating and supervising Virtual Assets Service Providers ("VASPs") and Issuers of Initial Token Offerings ("IITOs").

1.2 The Guidance Notes are issued by the FSC pursuant to its powers under Section 7(1)(a) of the FSA.

1.3 The Guidance Notes set out the measures which entities regulated under the VAITOS Act 2021 should apply for the prevention of Money Laundering and Terrorism Financing ("ML/TF") during the course of their business and operations.

1.4 The provisions of the Guidance Notes should be read in conjunction with the VAITOS Act 2021, the Financial Intelligence and Anti-Money Laundering Act 2002 ("FIAMLA 2002"), the Financial Intelligence and Anti-Money Laundering Regulations 2018 ("FIAMLR 2018") and the FSC's Anti-Money Laundering and Combatting the Financing of Terrorism ("AML/CFT") Handbook.

1.5 Terms used in these Guidance Notes shall, unless otherwise specified, have the same meaning as under the relevant Acts.

2.0 PURPOSE

2.1 The Guidance Notes are established to:

2.1.1 provide an outlook on the significance of ML/TF risks associated with Virtual Asset ("VA") activities; and

2.1.2 guide VASPs and IITOs with an understanding of their specific AML/CFT compliance obligations under the VAITOS Act 2021.

3.0 EFFECTIVE DATE

3.1 The Guidance Notes shall take effect as from 28 February 2022.

3.2 The Guidance Notes may be subject to regular amendments or updates with a view to reflect changes at the level of the domestic and international regulatory landscape, including the market dynamics of the VA sector, in or from Mauritius.

4.0 BACKGROUND OF VAITOS ACT 2021

4.1 The VAITOS Act 2021, which came into force on 7 February 2022, provides a comprehensive legislative framework for VASPs and IITOs in line with the international standards of Financial Action Task Force ("FATF") with respect to managing, mitigating and preventing any ML/TF risks.

4.2 The VAITOS Act 2021 designates the FSC as the prudential and AML/CFT supervisory authority, responsible for regulating and supervising the business activities of VASPs and IITOs respectively.

4.3 Any person carrying out the business activities of a VASP and IITO, in or from Mauritius, shall hold a licence or registration, as appropriate, issued by the FSC.

4.4 VASPs and IITOs (hereinafter also collectively referred to as "regulated entities") are encouraged to:

4.4.1 reflect the elements of the Guidance Notes in their internal policies, procedures and controls; and

4.4.2 consequently apply the Guidance Notes inter-alia for the assessment of persons managing, controlling, directing, owning or performing key functions within their entities.

5.0 DEFINITIONS AND TERMINOLOGIES

5.1 The FATF, via its Recommendation 15 and relevant interpretative notes issued thereunder, requires countries to ensure that VASPs are regulated for AML/CFT purposes, licensed, or registered and subject to effective systems for monitoring and ensuring compliance with the measures therein.

5.2 VASPs and other financial Institutions that engage in VA-related activities, are required to identify, assess, and take effective actions to mitigate their ML/TF risks.

5.3 For any additional information, in that respect, please refer to the last or updated FATF guidance: A risk based approach to Virtual Assets and Virtual asset service providers issued in October 2021.

5.4 Virtual Asset

5.4.1 A VA is a digital representation of value that can be digitally traded or transferred and may be used for payment or investment purposes. VA does not include digital representations of fiat currencies, securities, and other financial assets that fall under the purview of the Securities Act.

5.4.2 The VA should have an inherent value to be traded or transferred and used for payment or investment or, is a means of recording or representing ownership of assets.

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