Introduction
The Mastercard Foundation study on Africa as a jurisdiction for domiciling investment vehicles, analysed 13 African countries and found that 60% of Africa-focused investment vehicles are domiciled mainly in Luxembourg, Dublin, and Delaware. This limits capital for African businesses, particularly micro, small, and medium enterprises, which face a USD940 billion funding gap despite generating 80% of formal jobs on the continent. The study also highlighted the need for more African-domiciled investment vehicles, urging stakeholders to increase efforts to diversify and encourage local investment vehicles. This would attract international capital, catalyse local capital mobilisation, and drive growth in Africa's investment ecosystem, promoting economic growth and dignified work for the continent's youth, who make up 70% of the population.
The report also outlines a path to increase the domiciliation of investment funds in Africa. By examining insights gathered from the drivers and participants of domiciliation decisions – including fund managers, regulators and other ecosystem enablers, key areas were identified on how to enhance Africa's readiness. These areas include emerging trends, growth drivers, key sectors and the size of funds in Africa's investment landscape.
According to the report, Africa's potential as a domiciliation hub depends on improvements in regulatory frameworks, operational efficiency and domestic capital mobilisation. Furthermore, there is an urgent need for African jurisdictions to enhance their regulatory environments, oversight and enforcement to attract more investment. Of the 13 African countries studied, Mauritius stands out as a leader in the drive for increased domiciliation. The research below delves deeper into the investment landscape of Mauritius.
Strategically located in the Indian Ocean, Mauritius has established itself as a leading jurisdiction for investment fund structuring, leveraging its position as a gateway to Africa. Its robust legal and regulatory framework, business-friendly environment, and commitment to international best practices have solidified its reputation as a trusted and competitive financial centre.
Recent developments continue to shape Mauritius' investment fund landscape. With a well-established legal and tax framework, it stands as one of Africa's top-regulated financial centres, making it an attractive hub for fund domiciliation. By refining its regulatory environment and aligning with global best practices, Mauritius aims to strengthen its position as a preferred domicile for Africa-focused investment vehicles, reinforcing its role as a gateway to Africa.
Mauritius has also advanced in the Global Financial Centers Index (GFCI 37), rising to 58th globally from 60th and securing 4th place in the Middle East and Africa. The country has made significant strides in fintech, climbing over 20 spots to 53rd worldwide and 1st in Africa, highlighting its growing status in digital finance. Furthermore, it is recognised as one of the 15 financial centres poised to gain importance in the next few years, reinforcing its trajectory as a financial powerhouse.
As Mauritius continues to refine its value proposition, fund managers and investors alike are closely monitoring the evolving legal and regulatory trends. Against this backdrop, this article explores the latest trends and regulatory developments shaping the investment funds ecosystem in Mauritius. From licensing efficiency reforms to the strengthening of environmental, social, and governance (ESG) fund regulations, these initiatives highlight the jurisdiction's ongoing commitment to maintaining its leadership as a sophisticated and resilient financial centre.
Mauritius Strengthens Its Financial Services Sector Through Regulatory Reforms and Market Enhancements
Mauritius has implemented significant reforms to enhance the efficiency and appeal of its financial services sector, particularly regarding the licensing processes and the modernisation of its funds regime.
Policy and governance continuity to ensure market stability
While Mauritius has maintained consistent financial regulation, adjustments to enhance competitiveness, streamline fund structuring, and reinforce compliance may be expected. As of February 2025, after the change of administration following the November 2024 general elections, the country is ranked as having a stable political environment, due to its multi-party democracy, strong policy continuity, and peaceful international relations. Stakeholders are closely monitoring the new administration's approach to key areas like financial services modernisation and tax policies.
Streamlining licensing processes for investment funds
To expedite the licensing process for financial activities, the Financial Services Commission (FSC) introduced a fast-track mechanism through the Financial Services (Consolidated Licensing and Fees) (Amendment) Rules 2024, which came into force on 1 July 2024. These amendments aim to reduce bureaucratic delays and, consequently, turnaround times for investor queries and licence applications by implementing new processes and establishing fixed timeframes for processing different types of licences. Furthermore, applications nearing the end of their designated timeframe are now escalated to a special fast-track sub-committee for expedited processing.
Modernisation of the funds regime and fintech
One key reform in the funds regime, was the revision of the regulatory framework for special purpose funds (SPFs). The 2024 reforms expanded the eligibility criteria for collective investment schemes (CISs) and closed-end funds (CEFs) seeking SPF status, offering more flexibility for fund promoters.
In addition to its status as an International Finance Centre (IFC), Mauritius has made significant progress in fintech, ranking 53rd in the GFCI 37 with a fintech score of 668 – a jump of 21 places and 34 points from the previous ranking. This progress is attributed to factors such as access to finance, an innovation-friendly ecosystem, ICT infrastructure, demand, and skilled talent. Mauritius' commitment to fintech is evident in its strengthened regulatory framework, business facilitation, and investment in financial and technological infrastructure. The country has also diversified its IFC offerings, introducing innovative products like the variable capital company (VCC) and virtual asset and initial token offerings (VAITOS) licences to attract fintech investors.
Introduction of post-licensing fees
The Finance (Miscellaneous Provisions) Bill 2024, the object of which aims to implement measures announced in the Budget Speech 2024-2025, introduces provisions for post-licensing fees applicable to regulatory processes that occur after obtaining an FSC licence. These fees are now required for applications to appoint new management companies or registered agents. Additionally, post-licensing processes such as the appointment of officers, directors, auditors, actuaries, new controllers, and beneficial owners are also subject to these fees.
IFRS 17: exceptional extension of filing deadlines
In response to the challenges arising from the implementation of International Financial Reporting Standards (IFRS 17) (which replaces IFRS 4 and sets out principles for the recognition, measurement, presentation, and disclosure of insurance contracts within the scope of IFRS 17), the FSC has granted an exceptional extension of filing deadlines for regulated entities. This regulatory relief measure acknowledges the significant impact of IFRS 17 on financial reporting obligations, providing insurers and other affected entities with additional time to comply with the new accounting framework.
The extension applies to financial years starting between 1 January 2023 and 31 December 2023 and covers various reporting requirements. The revised deadlines are as follows:
- audited financial statements and annual reports – extended from three to six months;
- actuarial investigation reports – extended from three to six months;
- auditor's certificate and statutory returns – extended from three to nine months;
- risk management framework documents, auditor's report and actuary's report – extended from six to 11 months; and
- quarterly/interim financial statements – specific deadlines now apply.
Failure to meet the extended deadlines will result in administrative penalties under the Financial Services (Administrative Penalties) Rules 2013. However, the FSC encourages entities to adhere to the standard statutory deadlines whenever possible, to maintain transparency and meet stakeholders' expectations.
Enhanced regulatory oversight
The FSC continues to strengthen its regulatory framework to bolster the integrity of the Mauritius financial centre. This includes the publication of updated FSC Rules and Guidelines, ensuring a fair, efficient, and transparent financial market. Additionally, the regulator introduced new enforcement mechanisms, enabling past cases of non-compliance to be referred to an enforcement committee for further scrutiny.
Tax exemption on virtual assets and virtual tokens
The Finance (Miscellaneous Provisions) Act 2024 has amended the definition of "securities" to include virtual assets and virtual tokens. As a result, any trading profits or gains on virtual assets and virtual tokens are exempt from income tax starting 1 July 2024.
Mauritius Strengthens ESG Fund Framework and Corporate Climate Initiatives
As global interest in ESG investing surges, Mauritius is positioning itself as a forward-thinking financial hub with the recent issuance of the Disclosure and Reporting Guidelines for ESG Funds by the FSC. Effective from March 2025, these guidelines aim to enhance transparency, combat greenwashing, and align local standards with international best practices – a timely move as Africa's ESG landscape gains momentum.
The African and Mauritian ESG context
Africa's ESG market is growing rapidly, driven by demand for sustainable infrastructure, climate resilience, and social impact investments. Mauritius, with its strong financial services sector and commitment to the United Nations Sustainable Development Goals (UNSDGs), is well-positioned to connect global capital with African ESG opportunities. The country has seen a rise in ESG-labelled funds, especially those focused on renewable energy, gender equity, and sustainable agriculture.
However, the lack of standardised disclosure frameworks raises concerns about "greenwashing", where funds overstate their ESG credentials. The FSC's guidelines address this by introducing strict reporting requirements and third-party certifications, in line with recommendations from the International Organization of Securities Commissions (IOSCO).
Key highlights of the FSC guidelines
The newly established FSC guidelines introduce a multi-layered regulatory framework designed to reinforce investor confidence and ensure that funds marketed as ESG-compliant meet rigorous standards.
A key pillar of these guidelines is the introduction of a strict eligibility criteria for ESG funds. Only investment schemes that allocate at least two-thirds of their net asset value to assets genuinely aligned with ESG principles can claim ESG status. This threshold ensures that ESG considerations are central to investment decision-making, rather than merely an ancillary feature. The guidelines also explicitly exclude funds that rely solely on negative screening or those that integrate ESG factors merely as a secondary consideration without a concrete and measurable commitment to ESG principles.
To enhance transparency and accountability, the guidelines establish robust disclosure requirements. ESG funds must provide comprehensive details in their offering documents, clearly defining their ESG objectives, the methodologies used to assess and achieve these objectives, and the key performance metrics they employ – such as carbon footprint, gender diversity indicators, or governance structures. Funds are also required to specify the benchmarks they use, whether tracking an ESG-focused index or measuring their ESG impact against a designated sustainability reference point.
Annual sustainability reporting is another cornerstone of the framework. ESG funds must disclose the extent to which their investment objectives have been met, providing investors with a comparative analysis of performance across previous periods. This report must include the actual proportion of the fund's investments that align with its stated ESG goals, an evaluation of any deviations from these goals, and an explanation of corrective measures taken to ensure compliance. Moreover, funds must outline their engagement with stakeholders, detailing initiatives such as proxy voting policies, corporate engagement strategies, and measures undertaken to drive sustainable impact.
The FSC requires ESG funds to undergo third-party certification from qualified entities, such as registered auditors, credit rating agencies, or recognised sustainability certifiers. This applies to both new ESG fund applications and existing funds transitioning to ESG, which must obtain certification by August 2025.
Additionally, the FSC will maintain a public register of all ESG funds, promoting transparency and allowing investors to verify ESG claims and monitor compliance. Funds that fail to meet ESG criteria may be removed from the register, with the FSC taking regulatory action to uphold the credibility of Mauritius' ESG fund ecosystem.
Implications for investors and fund managers
For fund managers, the guidelines require robust internal ESG due diligence processes and may necessitate the restructuring of portfolios. Investors, meanwhile, gain clearer insights into a fund's alignment with sustainability goals – a critical factor as institutional allocators increasingly prioritise ESG compliance.
The FSC's proactive stance mirrors global trends but is particularly significant for Africa, where ESG frameworks remain fragmented. By adopting IOSCO-aligned standards, Mauritius not only enhances its reputation as a transparent jurisdiction but also sets a benchmark for other African financial centres.
Corporate climate responsibility levy and sustainability initiatives
Mauritius has introduced a Corporate Climate Responsibility Levy in the 2024/2025 National Budget. Corporations, including partnerships, with an annual turnover exceeding MUR50 million must contribute 2% of their taxable profits to the Climate and Sustainability Fund, starting from the financial year ending on or after 1 January 2024. The levy will finance national projects focused on environmental protection, ecosystem restoration, and climate change mitigation.
The government has also allocated approximately MUR300 billion towards climate change adaptation and mitigation projects, highlighting the need for proactive ESG engagement across industries.
Mauritius is also promoting cross-sector collaboration in sustainability efforts. In partnership with the University of Mauritius and various non-governmental organisations, the country is working to enhance public health, protect natural ecosystems, and optimising resource usage. Key initiatives include:
- Decarbonisation Strategy: The Central Electricity Board is introducing prepaid charging stations for electric vehicles, supporting the transition to clean energy.
- Water Quality Monitoring: The National Environmental Laboratory is launching a programme to detect pesticides in aquifers and groundwater, using 26 IoT sensors to provide real-time monitoring of surface and groundwater quality.
- Coral Farming Projects: The Economic Development Board (EDB) is inviting private sector participation in coral farming to strengthen Mauritius' position as a green destination and support sustainable tourism.
Looking ahead
As ESG investing evolves, Mauritius' regulatory clarity and strategic initiatives have the potential to attract more impact-driven capital to Africa. However, challenges remain, including data availability and the need for local ESG expertise. For fund managers and corporations alike, these measures should be viewed not as hurdles but as opportunities to differentiate themselves in a competitive market and unlock certain types of financing.
One thing is clear: Mauritius is committed to sustainable finance. The FSC's regulatory framework, coupled with nationwide climate initiatives, represents a decisive step toward ensuring that ESG funds and corporate responsibility efforts fulfil their promises – both for investors and the planet.
Mauritius Strengthens its AML/CFT Framework for Investment Funds
Mauritius, as a prominent international financial centre, has been strengthening its AML/CFT framework to align with global best practices. With a robust regulatory environment, the country aims to uphold financial integrity and maintain investor confidence, particularly in the investment funds sector, which faces increased risks due to complex financial transactions.
Regulatory and legislative framework
Mauritius has strengthened its AML/CFT framework with the adoption of the Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation (Miscellaneous Provisions) Act 2024, enacted on 18 July 2024 and effective from 25 July 2024. This legislation amends 16 existing laws to align with international best practices, particularly those of the Financial Action Task Force (FATF) and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). A key reform is the extension of electronic know your customer (e-KYC) processes to the global business sector, streamlining identity verification and enhancing regulatory compliance.
Additionally, amendments to the Financial Crimes Commission Act 2023 bolster international co-operation in asset recovery, responding to FATF's revised Recommendation 38. These changes enhance Mauritius' asset recovery framework, positioning the country as a strong jurisdiction in the fight against financial crime and promoting global financial security.
Key AML/CFT measures for investment funds
Given their exposure to large capital flows and complex financial structures, collective investment schemes (CIS) and closed-end funds (CEF) remain at the forefront of AML/CFT compliance. Regulatory authorities have strengthened their expectations regarding customer due diligence, transaction monitoring, and compliance oversight to mitigate the risks associated with money laundering and terrorist financing.
The FSC has placed particular emphasis on beneficial ownership transparency, requiring investment funds to identify and verify the ultimate beneficial owners behind investments. Heightened due diligence obligations also apply to politically exposed persons (PEPs) and investors from high-risk jurisdictions, ensuring a robust, risk-based approach to financial crime prevention.
Mauritius has also strengthened transaction monitoring and reporting obligations, requiring investment funds to maintain comprehensive records of financial activities and promptly report suspicious transactions to the Financial Intelligence Unit (FIU). The FSC continues to enforce stringent compliance requirements, including the appointment of a Money Laundering Reporting Officer (MLRO) for each fund and the implementation of independent audit mechanisms to assess and enhance AML/CFT controls.
Strengthening AML/CFT enforcement and international co-operation
In response to international concerns regarding the effectiveness of asset recovery measures, Mauritius has expanded its legal framework to ensure seamless co-operation with foreign jurisdictions in identifying and confiscating proceeds of crime. The country remains committed to maintaining compliance with FATF recommendations and avoiding blacklists, further reinforcing its reputation as a transparent and co-operative financial hub.
To further bolster its AML/CFT regime, Mauritius has enhanced its information-sharing mechanisms with global financial crime enforcement agencies. The FSC and the FIU have strengthened their cross-border collaboration frameworks, ensuring that Mauritian entities can swiftly respond to international requests for assistance in financial crime investigations.
Sanctions and penalties for non-compliance
The FSC has reinforced strict sanctions and penalties for non-compliance, underscoring Mauritius' zero-tolerance approach to financial misconduct. It has the authority to impose administrative sanctions, including fines, licence revocations, and operational restrictions on non-compliant entities. More severe breaches may lead to criminal liability, with individuals and institutions facing substantial fines and imprisonment for AML/CFT violations.
Conclusion
Mauritius' unwavering commitment to refining its financial infrastructure ensures that it remains at the forefront of global investment fund domiciliation, particularly in the African context. By modernising its financial services sector, enhancing ESG standards, and reinforcing its AML/CFT framework, the island has not only solidified its position as a leading financial hub but also demonstrated a forward-thinking approach to evolving global trends.
As the region embraces new economic and sustainability paradigms, Mauritius is uniquely positioned to act as a bridge, channelling capital into Africa's burgeoning markets while adhering to global best practices. Looking ahead, the strategic regulatory advancements and deepening international co-operation suggest that Mauritius is primed to play a pivotal role in shaping the future of investment funds in the region and beyond.
In an era where financial innovation and regulatory integrity are paramount, Mauritius' agility in adapting to global trends positions it not only as a regional powerhouse but also as a beacon of stability and opportunity for investment flows, particularly in the African context. The journey ahead will undoubtedly reveal even greater potential as the island refines its offerings and strengthens its role as a gateway to the future of sustainable investment.
Originally published by Chambers and Partners
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