Seychelles Recognizes Significant Money Laundering Threat from Non-Resident Clients
Seychelles, a major international financial center, has acknowledged the significant threat of money laundering (ML) posed by non-resident clients. Financial institutions in the country are allowed to rely on third parties or introduced business for customer due diligence measures when opening a business relationship, but only if it comes from foreign regulated entities from jurisdictions deemed to have effective Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulation and supervision.
Vulnerable Sectors Identified
The Seychelles financial authorities have identified several sectors as being vulnerable to ML/TF risks, including:
- Commercial banks with operations in the international financial center space
- Luxury real estate
- Dealers in motor vehicles, yachts, and boats
- Trust companies service providers (TCSPs) operating in the international financial center
- Bureau de change
AML/CFT System at an Emerging Stage
The AML/CFT system in Seychelles is currently at an emerging stage, with a number of legislative and institutional reforms underway. The country has just completed a national ML/TF risk assessment, which has improved its understanding of ML/TF risks across the board. However, the system still faces challenges in terms of technical compliance and effectiveness.
Technical Assistance Providers Consulted
Improvements to the technical component of the AML/CFT system are already underway, with consultation with technical assistance providers. The authorities have also established an AML/CFT Committee, which is a multi-agency forum charged with coordinating AML/CFT issues in the country and advising government on policy and strategies.
Financial Intelligence Unit Conducts Analysis
The Seychelles Financial Intelligence Unit (FIU) conducts analysis of transactions and other information received from reporting entities, producing financial intelligence and disseminating it to competent authorities for use in pursuing potential ML/TF cases. However, there are concerns about the lack of reporting by DNFBPs (except for ICSPs) and limited reporting by non-bank FIs.
Investigating Authorities Focus on Predicate Offences
The investigating authorities in Seychelles have focused more on predicate offences than potential ML cases. Only three ML cases, all related to drug trafficking, had been investigated, with one conviction secured through a plea bargain. There has been no confiscation of criminal property on account of ML conviction.
Recommendations
To optimize resources allocation and utilization, it is recommended that Seychelles:
- Uses the findings of its national ML/TF risk assessment to develop and promote effective implementation of risk-based AML/CFT strategies and policies across the spectrum
- Focuses on improving its technical compliance and effectiveness in investigating ML cases
- Increases reporting by DNFBPs and non-bank FIs