Centralized exchange in Seychelles

Requirement for License: Any person providing "custody or administration of virtual assets or instruments enabling control over virtual assets" as a business in or from Seychelles must obtain a VASP license from the FSA.

Mandatory Segregation: A licensed VASP offering custodial services is explicitly required to maintain a clear segregation between the virtual assets of its clients and its own virtual assets. This is a fundamental principle to protect client funds in case of insolvency or operational issues of the VASP.

Local Presence: Generally, there's a requirement for a physical presence or designated local resident.

Virtual Asset Service Providers Act, 2022 (VASP Act 2022): This is the cornerstone legislation specifically regulating VASPs. It mandates licensing, registration, and compliance with AML/CFT obligations for entities engaged in virtual asset services.

Anti-Money Laundering and Countering the Financing of Terrorism Act, 2020 (AML/CFT Act 2020): This is the overarching AML/CFT legislation in Seychelles, applying to all designated non-financial businesses and professions (DNFBPs) and financial institutions, which now explicitly includes VASPs. The VASP Act builds upon and references the requirements of this broader AML/CFT Act.

Exchange between virtual assets and fiat currencies.

Exchange between one or more forms of virtual assets.

Transfer of virtual assets.

Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.

Identification and Verification of Customers:

Beneficial Ownership Identification: Identify and verify the identity of the beneficial owner(s) of the customer. For legal persons, this typically involves identifying individuals who ultimately own or control more than 25% of the entity.

Ongoing Monitoring: Continuously monitor the business relationship, including scrutiny of transactions undertaken throughout the course of the relationship, to ensure that the transactions are consistent with the VASP’s knowledge of the customer, their business, and risk profile, including, where necessary, the source of funds.

Enhanced Due Diligence (EDD): Apply EDD for higher-risk scenarios, including:

Reporting Obligation: A VASP must immediately report to the FIU when it knows, suspects, or has reasonable grounds to suspect that funds or other assets are proceeds of a criminal activity, or are related to terrorist financing, or other money laundering activities.

No Tipping-Off: VASPs and their employees are prohibited from disclosing to the customer or third parties that a suspicious transaction report has been or will be made.

CDD Records: All records obtained through CDD procedures (e.g., copies of identification documents, account files, business correspondence).

Transaction Records: Records of all domestic and international transactions, including the amount, currency, and type of virtual asset, transaction dates, and parties involved.

Application Requirements: To obtain a VASP license for custodial services, applicants must satisfy stringent criteria, including:

Fit and Proper Test: The applicant, its directors, and senior management must meet "fit and proper" criteria.

Minimum Capital: Meeting prescribed minimum capital requirements (details usually in subsidiary regulations or FSA directives).

Cybersecurity: Strong cybersecurity and data protection measures.

Risk Management: Adequate risk management frameworks and internal audit functions.

Internal Controls: Adequate internal control systems, accounting systems, and systems for safeguarding virtual assets.

Entity Targeted: Numerous entities falsely claiming to be licensed or operating without proper authorization. While not always explicitly "crypto," many involve fraudulent investment schemes, forex trading, or brokerage services that often interact with digital assets. Violation Type: Operating without a license, misrepresentation of licensing status, unauthorized financial services activities, potential fraud. Penalty Amount: N/A (no monetary fine typically disclosed for these warnings, but the entity is ordered to cease operations and public is warned). Outcome: Public awareness, cessation of unauthorized activities (if complied), potential further legal action if non-compliant.

Entity Targeted: Various financial services providers (e.g., International Business Companies, Payment Service Providers, Capital Market Services licensees) that either failed to comply with regulatory requirements or voluntarily surrendered their licenses due to inability to meet new standards (including AML/CFT). While not always explicitly "crypto-VASP" licenses, non-compliance in the broader financial sector can affect entities that provided related services. Violation Type: Non-compliance with regulatory requirements (including AML/CFT), failure to maintain minimum capital, failure to provide required documentation, voluntary surrender of license. Penalty Amount: N/A (the primary "penalty" is the loss of operating license). Outcome: Entity can no longer operate in Seychelles under that license, removal from public registers, potential liquidation.

Regulator Name: Financial Services Authority (FSA) Seychelles

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