Mauritius offers the right attributes in terms of credible solution offerings, risk mitigation and confidentiality assurances, as a viable platform for wealth management for HNW individuals, according to Shamima Mallam-Hassam, Managing Director at Trident Trust (Mauritius) Ltd, and the island has positioned itself as a reputable and attractive International Financial Centre in the African region, enhancing investors’ confidence.

What matters to HNWIs?

In a world of growing financial transparency and compliance, balancing the imperative to build and plan wealth through the generations with the income needs and personal ambitions of the current generation has become a priority for HNW individuals.

The usual challenges being faced by HNWIs range from the fundamental concern of wealth preservation, through to planning income requirements, and considering succession. In addition to those usual challenges, we see more and more importance being laid on governance, organization of ownership records, making use of diversified structures as well as mitigating risk like currency fluctuation, local inflation, the risk of asset sequestration and the ability to move investment monies across borders.

Mauritius - a viable platform for managing wealth and advising high net worth clients

Mauritius, with its well-regulated and structured International financial sector, coupled with its strategic geographic positioning, offers attractive features for wealth management, especially targeting the African market. According to the AfrAsia Bank Africa Wealth Report 2021, total private wealth held on the continent amounts to approximately USD 2 trillion and the big 5 wealth markets in Africa are South Africa, Egypt, Nigeria, Morocco and Kenya.

Mauritius offers the right attributes in terms of credible solution offerings, risk mitigation and confidentiality assurances, as a viable platform for wealth management for HNW individuals. Mauritius has over the years positioned itself as a reputable and attractive International Financial Centre in the African region, enhancing investors’ confidence.

The country’s sustained track record relies mainly on its ease of doing business, human capital, infrastructure, a well-regulated and transparent financial services sector, adherence to international norms, standards and practices, adoption of a number of reforms to comply with the recommendations of the Financial Action Task Force (FATF), and the provisions of EU Directives on AML-CFT. In addition, Mauritius has tax treaties with several countries in the surrounding African region.

Focus on wealth management solutions

Wealth management solutions to HNW individuals often depend on the specific situation and objective of each individual or family. There is also the need for expert insights from professionals who not only understand the cultural norms and dynamics of African families but who actually have a passion for working with African clients, supporting them in fulfilling their aspirations, guiding them and advising them on appropriate wealth management solutions and the establishment of sustainable fiduciary structures that will help achieve the desired family or business goal.

HNW individuals also often demand a certain level of control in the decision making and an input into the management of their financial affairs. Confidentiality is paramount in the wealth management of these HNW individuals’ family wealth.

The Mauritius offering

The Mauritius Financial Services sector has evolved from pure reliance on basic onshore banking services to a more open and diversified sector with the presence of international banks, law firms, asset managers and global funds through trading platform and other collective investment vehicles.

Mauritius also offers sophisticated and diverse financial products and services for wealth management, which includes broadly:

1. A diversified range of banking products which includes, amongst others, portfolio investments, trading desk in listed securities (stocks, bonds and funds), investment into structured products, Exchange-Traded Funds, unlisted securities, mutual funds, Forex and Treasury solutions (forward contracts, structured FX options), custody services and online portal access for clients to view assets.
2. Availability of structured vehicles, notably trusts, foundations and Private Trust Companies, customised to the client’s diverse personal and business needs. Those vehicles can be used for better estate planning and succession planning, asset protection, wealth management, asset holding, tax planning, pension schemes or housing intellectual property. Added to that, we also see that those vehicles are being used for charitable, non-charitable activities as well as philanthropic activities. The interest in philanthropy across the world has been on the rise and Mauritius can be the jurisdiction of choice for the structuring and professional management of philanthropic activities.
3. Family Office Offering that caters for the domiciliation of High Net Worth Single-family offices (SFO) and Multi-family offices (MFO), to hold and manage international assets and funds. According the AfrAsia Bank Africa Wealth Report 2021, total wealth in Africa is expected to rise by 30% over the next 10 years, reaching USD 2.6 trillion by 2030. With this rising wealth in Africa, the need for family offices will grow and Mauritius is positioning itself very adroitly to be a beneficiary of many of those key trends relating to Africa’s very wealthy, especially in relation to family offices and a host of incentives to encourage the families of UHNWIs to relocate to Mauritius. The family office licence holder is entitled to a ten-year tax holiday based on minimal employment and expenditure requirements. The value of the assets and/or investments of each family under SFO or MFO management must be more than USD 5 million. The threshold proposed under the Mauritius regulations remains low compared to global standards and therefore opens the possibility to emerging markets’ HNWIs/UHNWIs to have a safe and regulated family office in a recognised international financial centre.

To further attract private wealth, Mauritius offers a panoply of residency permits such as the occupation permit, retirement non-citizen permit and the foreign investor permit for HNW individuals having an interest to work, invest, live or retire in Mauritius.

In the perspective of positioning Mauritius as a wealth management-estate planning hub for the region, the Mauritius government has in the 2020/2021 Budget Speech highlighted the introduction of new products including:

1. The Insurance Wrapper - The insurance wrapper caters for life insurance policies of the exceptionally affluent with underlying investment portfolios which could comprise of investment funds, shares, securities, bonds, and generally both listed and non-listed investments.
2. Variable Capital Company (VCC) - The VCC will be a new type of corporate structure to complement the existing myriad of fund structures in Mauritius. The regulatory framework for the VCC is currently being finalized.

Conclusion

Mauritius is constantly innovating its legal and regulatory framework in line with global market demand. There have been significant improvements in the Mauritius legal framework to enhance investor confidence and trust in the jurisdiction. The enactment of the Anti-Money Laundering Miscellaneous Provisions Act as well as the Finance (Miscellaneous Provisions) Act have added to the strengthening and transparency of the regulatory framework of Mauritius.

On a concluding note, HNW individuals’ main concern remains that their wealth is managed in a well-regulated jurisdiction where corporate governance is strong. Mauritius shall continue to promote its good reputation, governance and expertise as a viable platform for the management of the wealth of HNW individuals to capture the momentum of an influx of such demands. Mauritius really does tick so many boxes for the very wealthy. And, of course, there is an excellent lifestyle, security, healthcare, education, a transparent regulatory and low tax environment.