FATF AML Deficiency List
Offshore Finance Center
Non - Compliance with FATF MER Recommendations
US Dept of State Money Laundering assessment
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Weakness in Government Legislation to combat Money Laundering
EU Tax Blacklist
Seychelles is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The first follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Seychelles was undertaken in 2020. According to that Evaluation, Seychelles was deemed Compliant for 11 and Largely Compliant for 12 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness & Technical Compliance ratings.
US Department of State Money Laundering assessment (INCSR)
Seychelles was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Seychelles is not a major financial center, although it aspires to be. 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. In the past, Seychelles was 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. It actively markets itself as an offshore financial and business center that allows the registration of nonresident business companies. The government is aware these activities increase the risk of money laundering. In its 2007-2017 strategic plan, the government proposed 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 Financial Services Authority (FSA), which regulates and promotes the offshore non-banking financial sector, focuses solely on the licensing and regulation of the sector, while the Seychelles Investment Board engages in promotional activities. More than 100,000 IBCs are estimated to be registered with FSA. FSA must report suspicious transactions to the financial intelligence unit (FIU), which reports directly to the President.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 66
World Governance Indicator – Control of Corruption 81
Since independence in 1976, per capita output in this Indian Ocean archipelago has expanded to roughly seven times the pre-independence, near-subsistence level, moving the island into the upper-middle-income group of countries. Growth has been led by the tourist sector, which employs about 30% of the labour force and provides more than 70% of hard currency earnings, and by tuna fishing.
In recent years, the government has encouraged foreign investment to upgrade hotels and other services. At the same time, the government has moved to reduce the dependence on tourism by promoting the development of farming, fishing, and small-scale manufacturing.
In 2008, having depleted its foreign exchange reserves, Seychelles defaulted on interest payments due on a $230 million Eurobond, requested assistance from the IMF, and immediately enacted a number of significant structural reforms, including liberalization of the exchange rate, reform of the public sector to include layoffs, and the sale of some state assets. In December 2013, the IMF declared that Seychelles had successfully transitioned to a market-based economy with full employment and a fiscal surplus. Seychelles grew at 4.3% in 2015 because of a strong tourist sector and expanding private sector credits; its fiscal surplus reached 4% of GDP.
Agriculture - products:
coconuts, cinnamon, vanilla, sweet potatoes, cassava (manioc, tapioca), copra, bananas; tuna
fishing, tourism, beverages
Exports - commodities:
canned tuna, frozen fish, petroleum products (reexports)
Exports - partners:
France 18.2%, UK 17.9%, Mauritius 10%, Japan 9.2%, Italy 7.8%, Spain 4.5% (2015)
Imports - commodities:
machinery and equipment, foodstuffs, petroleum products, chemicals, other manufactured goods
Imports - partners:
Saudi Arabia 22.5%, Spain 11.1%, Singapore 7.4%, China 4.5%, South Africa 4.1%, France 4% (2015)
Investment Climate - US State Department
With a population of just over 91,000, Seychelles is an island nation located off the eastern coast of Africa in the Indian Ocean. Seychelles gained its independence from the United Kingdom in 1976, at which time the population lived at near subsistence level. Today, Seychelles’ main economic activities are tourism and fishing, and the country aspires to be a financial center. Although the World Bank recently designated Seychelles as a “high income” country, its wealth is not evenly distributed. Indeed, the United Nations Development Programme’s Human Development Report for 2015 found that Seychelles has the highest income inequality in the world, with a Gini coefficient of 65.8.
In 2014 and 2015 Seychelles saw GDP growth of 3.3 and 3.5 percent. The International Monetary Fund (IMF) has predicted GDP annual growth between 3.5 and 3.7 % through 2018. The IMF assesses the principal domestic economic risk in Seychelles as potential losses in state owned enterprises, which could endanger the public debt reduction achieved by the central government. The IMF sees external risks stemming from weakness in the tourism market.
Seychelles experienced a socialist coup in 1977 which resulted in a centrally planned economy and, in the short term, rapid economic development. However, serious imbalances such as large deficits and mounting debts contributed to persistent foreign exchange shortages and slow growth that plagued Seychelles through the first decade of the 21st century. After defaulting on interest payments due on a USD 230 million bond in 2008, the government of Seychelles (GOS) turned to the IMF for support. To meet the IMF’s conditions for a stand-by loan, the GOS implemented a program of reforms, including a liberalization of the exchange rate regime, devaluing and floating the Seychellois Rupee (SCR) and eliminating all foreign exchange controls. Seychelles completed its five-year reform program in late 2013.
Despite GOS attempts to diversify the economy, it remains focused on fishing and tourism. Seychelles’ vast Exclusive Economic Zone (EEZ), which encompasses 1.3 million square kilometers of the western Indian Ocean, is a potential source of untapped 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.
Seychelles welcomes foreign investment. The country’s investment policies encourage the development of Seychelles’ natural resources, improvements in infrastructure, and an increase in productivity levels, but stress that this must be done in an environmentally sound and sustainable manner.
Since multi-party elections began in Seychelles in 1993, the ruling Parti Lepep has traditionally won elections by large margins. However, the December 2015 presidential elections led to a run off and a very narrow victory for the incumbent President James Michel. The opposition has filed legal challenges to the election, asserting that it was fraught with corruption. At the time of drafting this document, the legal challenges are ongoing.
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