Remote VASP serving residents in Seychelles

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.

Financial Intelligence Unit Act, 2006 (as amended): This Act establishes the Financial Intelligence Unit (FIU) and outlines its powers and responsibilities, including receiving and analyzing suspicious transaction reports.

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.

Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

Identification and Verification of Customers:

Natural Persons: Obtain and verify identity through reliable, independent source documents, such as name, residential address, date of birth, nationality, and official identification numbers.

Legal Persons/Arrangements: Obtain and verify identity information such as name, legal form, proof of existence, powers that regulate the legal person, names of directors/partners, and the address of the registered office or place of business.

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.

Purpose and Nature of Business Relationship: Understand the purpose and intended nature of the business relationship or occasional transaction.

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:

Transactions with Politically Exposed Persons (PEPs).

Business relationships or transactions with persons from high-risk jurisdictions identified by FATF or the domestic AML/CFT framework.

Complex, unusually large transactions, and all unusual patterns of transactions that have no apparent economic or lawful purpose.

Specific virtual asset activities deemed higher risk.

Identifying the source of funds and source of wealth when dealing with higher-risk customers or transactions.

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.

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.

Regulatory Reference: Virtual Assets Service Providers Act, 2022, Section 5(1).

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.

Business Plan: Submission of a comprehensive business plan detailing operations, strategies, and internal controls.

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

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.

Enforcement Type: Public Warning & Cease and Desist (against Unlicensed Operation)

Regulator Name: Financial Services Authority (FSA) Seychelles

Enforcement Type: License Revocation/Cessation of Activity (for broader financial services that may intersect with 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.

Outcome: Public awareness, cessation of unauthorized activities (if complied), potential further legal action if non-compliant.

Outcome: Entity can no longer operate in Seychelles under that license, removal from public registers, potential liquidation.