Stricter laws in Seychelles' financial services sector leads to lower dividends to government
The Financial Services Authority (FSA) is the regulator of the insurance industry. (Seychelles News Agency)
(Seychelles News Agency) - A decrease in dividends paid to the government by Seychelles' Financial Services Authority (FSA) in the past three years is related to the amendments made to the laws and the introduction of new ones with stricter rules that led to a decrease in foreign business incorporations, said a top official.
The dividend paid to the government in 2020 was SCR 90 million ($6.6 million) and it was SCR80 million ($5.9 million) and SCR67 million ($4.9 million) in 2022.
FSA which is the regulatory body responsible for non-bank financial services in Seychelles expects to pay a sum of SCR65 million ($4.8 million) worth of dividends to the government this year.
FSA chief executive Randolf Samson said that the amendments made to the laws along with new ones were done to become compliant with international standards and organisations such as Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) and the Financial Action Task Force (FAFT).
In addition, the changes made are expected to help Seychelles avoid being blacklisted as has been the case in the past. Seychelles was blacklisted by the European Union in 2018 and this led to issues with correspondent banking with a few countries.
"The International Business Companies (IBCs) Act was changed in 2021 and the work continued in 2022. The Beneficial Ownership Act has been amended under the OECD global forum in order to allow Seychelles to be re-assessed," said Samson.
He said after the changes Seychelles was removed from the blacklists in 2021 and last December, a group of assessors from the Organisation for Economic Co-operation and Development (OECD) came to Seychelles to do a review. FSA is hoping that Seychelles will be upgraded from partially compliant to largely compliant this year.
On the ease of doing business, the CEO said that FSA is careful and gave the example of OEDC requesting that IBCs keep their accounting record in Seychelles.
"This was an issue because there was the belief that this will bring down the number of incorporations but on the other hand at that time Seychelles was facing the issue of correspondent banking, a phenomenon linked with the de-risking process that the banks use. FSA decided to balance things out to meet the standard and take away the risk but at the same time ensure that we don't lose the business completely," he explained.
He added that the benefits that Seychelles will get out of it will be greater for the economy and it will help minimise the risk that may affect the whole population and every sector with regard to banking transactions.
Samson said that nevertheless, FSA recognises the need to consult with the business sector when it introduces new laws and there have been instances where they had to change some laws quickly.
Another area where Seychelles may lose money in the future is in regard to the business of cryptocurrency.
"There is the perception that Seychelles is the capital for cryptocurrency because there are many IBCs involved in such activity and when something goes wrong this gives a negative image of Seychelles. Although this is happening, FSA does not give licences nor supervise the activity of cryptocurrency," said Samson.
However, last year FSA did a risk assessment on virtual asset service providers which relates to cryptocurrency activity.
Samson said the report was presented to the government and going forward Seychelles will have to adopt a policy with regard to cryptocurrency. A proposal will be presented to the cabinet of ministers in the first half of 2023.