Mauritius: The Privy Council Interprets Key Provisions Of Mauritian Anti-Money Laundering Legislation

In Beezadhur v The Independent Commission against Corruption and anor [2014] UKPC 27, the Privy Council dismissed an appeal by a retired nurse who was charged with and found guilty by the Intermediate Court of Mauritius of five offences under sections 5(1) and 8 of the Financial and Anti-Money Laundering Act 2002 (FIAMLA). His appeal against conviction and sentence was dismissed by the Supreme Court of Mauritius in 2013 (Supreme Court Judgment).

By way of background the Appellant, a Mauritian citizen, and his wife, who were both nurses in the United Kingdom, received a lump sum of GBP 80,000 upon their retirement in 2004, which was partly invested in a bank account opened with a reputable bank of Mauritius (Bank Account). During the proceedings, it was undisputed that the source of funds was legitimate.

The rationale for the Appellant‟s prosecution and conviction was two-fold. First, some cash deposits and withdrawals that were made from the Bank Account were each in excess of Mauritian Rupees 500,000 (±GBP 10,000). This was an offence under section 5(1) of the FIAMLA. Secondly, during the proceedings, the Appellant did not invoke the exemption provided for under section 5(2)(d) of the FIAMLA. Under the aforesaid exemption, there is no offence where a transaction is made between an established customer and a bank in relation to a bank account held by the established customer with the bank for an amount that is "commensurate with the lawful business activities of the [established] customer".

Two issues arose before the Privy Council. First, the meaning of "lawful business activities" under section 5(2)(d) of the FIAMLA. Secondly, who had the onus of proving the application of the exemptions under section 5(2) of the FIAMLA.

The First Issue

The Privy Council endorsed the Appellant‟s argument that the Supreme Court had interpreted the phrase "business activities" too narrowly when it held that it meant activities‟ that were in the nature of money making or profit making. However, it disagreed that the term "business" captured a person‟s regular occupation, profession or trade, with the result that the Appellant would have fallen within the ambit of the exemption.

The Privy Council took the view that rather than ascribing a conclusive definition to the phrase "business activities" or to impose an ordinary meaning to it, the preferred approach was to consider the wording of the phrase as a whole which focused on the requirement that the nature of the transaction and its amount had to be "‟commensurate‟ with the activities of the business". It was clear to the Privy Council that the exemption was not intended to apply to the public at large but instead to businesses in the retail trade that routinely involve substantial cash transactions. The Supreme Court therefore rightly concluded that the exemption of section 5(2)(d) of FIAMLA did not apply to the Appellant.

The Second Issue

The Privy Council took the view that the burden of proof in relation to establishing exemptions was on person charged with an offence (i.e. the Appellant). This was provided for by section 10(11) of the Constitution of Mauritius (Constitution) which contemplates that legislation may cast a duty on an accused person to prove specific facts. Such legislation would not trigger a breach of the sacrosanct presumption of innocence enshrined under section 10(2)(a) of the Constitution.

As a matter of fact, section 10(11) of the Constitution merely confirmed "a line of [English] authority [established] .../...over the centuries" on this issue. The Supreme Court had itself consistently applied this reasoning since 1972 namely "the burden of proving that the proviso and the like applies [is] placed on the contravener" who for these purposes did not require exclusivity of knowledge‟ as a prerequisite for the obligation to arise on him. It was sufficient that the accused person was in presence of facts to his knowledge and to which he had access.

It followed therefore that it was for the Appellant to establish that each of the deposits and withdrawals that he made in excess of the amount of Mauritian Rupees 500,000 (±GBP 10,000) fell within the exemption of section 5(2)(d) of FIAMLA.

Of interest, Lord Kerr‟s dissenting judgment shows support with the majority‟s reasoning on this second issue. However, it discloses a different outcome. In his view a generous approach‟ should have been adopted in the circumstances by which the term business‟ would include a person‟s occupation, profession or trade. This was so because the act of making a deposit on a bank account was a "business activity" and that was not "an unduly strained meaning of the term". Furthermore, such a generous‟ interpretation would not defeat the policy objectives of anti-money-laundering legislation.

Beezadhur is no doubt the test case that brought to light the existing loopholes of a crucial piece of legislation as the FIAMLA and provided an opportunity for the legislator to remedy what any reasonable man would qualify as a morally‟ unfair result and that clearly defeats the spirit of anti-money-laundering legislation. This is undeniably the underlying theme of Lord Kerr‟s dissenting judgment. Indeed the exemption of section 5(2)(d) was thoroughly revisited by the legislator in 2013 shortly after the delivery of the Supreme Court Judgment inasmuch as the term business" was removed from the exemption.

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