SEYCHELLES
Summary
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Sanctions

None

FAFT AML Deficient

No

Higher Risk Areas

 

Compliance with FATF 40 + 9 Recommendations

Not on EU White list equivalent jurisdictions

Offshore Finance Centre

Compliance of OECD Global Forum’s information exchange standard

Medium Risk Areas

 

US Dept of State Money Laundering assessment

Weakness in Government Legislation to combat Money Laundering

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)


 

ANTI-MONEY LAUNDERING

 

FATF Status

Seychelles is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Seychelles was undertaken by the Financial Action Task Force (FATF) in 2008. According to that Evaluation, Seychelles was deemed Compliant for 1 and Largely Compliant for 2 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.

 

4 February 2013 - Extract from IMF Report: Seychelles: Sixth Review Under the Extended Arrangement and Request for an Extension of the Arrangement and Augmentation of Access:

"Seychelles has taken major steps in its endeavor to fight money laundering, financing of terrorism and to improve international tax cooperation. In 2012 we made comprehensive amendments to the Anti- Money Laundering (AML) Act to enhance the independence of our Financial Intelligence Unit (FIU), to establish a time-frame for its administrative freezing of suspected assets and to oblige related parties to supply documents, information and other material for investigative purposes. FIU is in the process of recruiting more staff to increase efficiency, improve its compliance function and to speed up the resolution of cases. We have also made important strides in strengthening our legislative framework that governs offshore activities. Following on recommendations of the last peer review report of the OECD Global Forum on transparency and exchange of information for tax purposes, amendments were made to several laws governing offshore financial sector activities such as trusts, foundations and funds as well as the taxation of these entities. OECD has since classified Seychelles as fully compliant with its international standards of exchange of information. These amendments should also facilitate international cooperation once Seychelles is admitted as a member of the Egmont Group."

 

US Department of State Money Laundering assessment (INCSR)

Seychelles was deemed a Jurisdiction of Concern by the US Department of State 2014 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

 

Seychelles is not a major financial center. The Seychellois authorities consider drug trafficking, parallel market operations, theft, and fraud to be the major sources of illegal proceeds. Corruption is also a problem. Seychelles has been negatively affected by piracy off the coast of Somalia.

Seychelles is a consumer country for narcotics. To diversify its economy beyond tourism and fisheries, and to increase foreign exchange earnings, the Government of Seychelles developed an offshore financial sector. Seychelles actively markets itself as an offshore financial and business center that allows the registration of nonresident business companies. The government is aware these activities may increase the risk of money laundering. In its 2007 - 2017 strategic plan, the Government of Seychelles proposes to facilitate the further development of the financial services sector through active promotion of Seychelles as an offshore jurisdiction, with emphasis on international business companies (IBCs), mutual funds, special license companies, insurance companies, and private foundations. The Seychelles International Business Authority (SIBA), which regulates the offshore financial sector, provides training in such areas as company and trust administration, international tax planning, compliance, and AML. It is estimated more than 100,000 IBCs are currently registered with SIBA. SIBA is obligated to report suspicious transactions to the financial intelligence unit (FIU).

 

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SANCTIONS

There are no international sanctions currently in force against this country.

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

55

World Governance Indicator – Control of Corruption

68

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

Seychelles is an upper middle-income country with an estimated population of 90,825. Years of centrally-planned economic policies led to rapid economic development immediately after the socialist coup of 1977, but also created serious economic imbalances. These problems included large fiscal and external deficits and mounting debt arrears, which contributed to persistent foreign exchange shortages and slow growth that plagued Seychelles in the first decade of the 21st century. In October 2008, facing the near depletion of official foreign exchange reserves, Seychelles defaulted on interest payments due on its Eurobond valued at $230 million, issued two years prior, severely damaging its credibility as a borrower. The government subsequently turned to the IMF for support and in an attempt to meet the conditions for a stand-by arrangement, implemented a program of radical reforms. These included a fundamental liberalization of the exchange rate regime, involving the devaluation and floatation of the Seychellois Rupee (SCR) and the elimination of all foreign exchange controls.

Seychelles’ implementation and completion of its five-year reform program in late 2013 received praise from the IMF, and was helped by broad-based public support for the process and other ongoing market-based reforms. Seychelles welcomes foreign investment. However, while the country’s investment policies encourage the exploitation of Seychelles’ natural resources, the improvement of national infrastructure, and an increase in productivity levels, the Government of Seychelles also stresses the paramount importance of achieving this in an environmentally sound and sustainable manner.

While the Government of Seychelles has attempted to diversify the economy, it remains primarily focused on fishing and tourism. Seychelles’ vast Exclusive Economic Zone (EEZ), which encompasses 1.3 million square kilometres of the western Indian Ocean, is viewed as a potential source of unexploited oil reserves and represents potential business opportunities for U.S. entities. Seychelles also has a small, but growing, offshore financial sector. There is also scope for U.S. investment in renewable energy as Seychelles seeks to reduce its heavy dependence on imported fossil fuels while preserving its naturally beautiful environment.

 

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FURTHER REPORTS

4 February 2013  -  Extract from IMF Report: Seychelles: Sixth Review Under the Extended Arrangement and Request for an Extension of the Arrangement and Augmentation of Access: -

"Seychelles has taken major steps in its endeavour to fight money laundering, financing of terrorism and to improve international tax co-operation. In 2012 we made comprehensive amendments to the Anti-Money Laundering (AML) Act to enhance the independence of our Financial Intelligence Unit (FIU), to establish a time-frame for its administrative freezing of suspected assets and to oblige related parties to supply documents, information and other material for investigative purposes. FIU is in the process of recruiting more staff to increase efficiency, improve its compliance function and to speed up the resolution of cases. We have also made important strides in strengthening our legislative framework that governs offshore activities. Following on recommendations of the last peer review report of the OECD Global Forum on transparency and exchange of information for tax purposes, amendments were made to several laws governing offshore financial sector activities such as trusts, foundations and funds as well as the taxation of these entities. OECD has since classified Seychelles as fully compliant with its international standards of exchange of information. These amendments should also facilitate international co-operation once Seychelles is admitted as a member of the Egmont Group."

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