Seychelles -- AML/CFT Compliance Regulatory Overview

**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.

**Anti-Terrorism Act, 2004 (as amended):** Addresses the financing of terrorism and related offenses.

Exchange between virtual assets and fiat currencies.

Exchange between one or more forms 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.

**STRs:** Copies of all suspicious transaction reports submitted.

**Duration:** Records must generally be kept for a period of **at least five (5) years** after the business relationship has ended or after the date of an occasional transaction.

**Financial Services Authority (FSA) Seychelles:**

**Role:** The FSA is responsible for licensing, supervising, and regulating non-bank financial services providers in Seychelles, including VASPs under the VASP Act 2022. It sets out the regulatory framework, conducts inspections, and enforces compliance with the VASP Act and the broader AML/CFT Act.

**Adopted:** Yes, Seychelles has adopted the FATF standards for VASPs, including the principles of the Travel Rule, through its comprehensive AML/CFT legislative framework.

**Effective Date:** The primary legislation governing this came into force with:

**Threshold:** For transfers of funds (including virtual assets) **equal to or exceeding EUR 1,000 (or its equivalent in other currencies/virtual assets)**, the VASP must obtain and transmit full originator and beneficiary information.

**Below Threshold:** For transfers **below EUR 1,000**, simplified due diligence may apply, but the VASP is still required to obtain and transmit *some* information (e.g., originator's name and account number, beneficiary's name and account number), and monitor for linked transactions that exceed the threshold.

**Originator:** Name, residential address or registered address, official personal document number or customer identification number, date and place of birth (for natural persons), or customer identification number (for legal persons).

**Beneficiary:** Name and account number or unique transaction identifier.

**Transmit Information:** The originator VASP must transmit this information securely, reliably, and on an immediate basis to the beneficiary VASP during or before the transaction.

**Record-Keeping:** Both originator and beneficiary VASPs must retain all required information for a period of **seven years** (as per Regulation 46 of the AML/CFT Regulations 2021) for potential disclosure to authorities like the Financial Intelligence Unit (FIU) or supervisory bodies.

**Risk-Based Approach:** VASPs are expected to implement a risk-based approach to identify and mitigate ML/FT risks, which includes screening transactions and parties for sanctions and suspicious activity.

**Administrative Sanctions:** Imposed by supervisory authorities (e.g., the Financial Services Authority (FSA) for VASPs it licenses/regulates, or the FIU generally). These can range from warnings and directives to impose specific remedial measures, to monetary penalties.

For **corporate bodies (VASPs)**, fines can be substantial, reaching **SCR 10 million (approximately USD 750,000)** or more for serious breaches.

For **individuals (directors, officers, employees)**, fines can also be imposed.

**Imprisonment:** Individuals found guilty of certain AML/CFT offences (e.g., tipping-off, failure to report suspicious transactions, or obstructing investigations) can face terms of imprisonment, potentially up to **15 years**.

**Revocation of License/Registration:** Persistent or severe non-compliance could lead to the revocation of a VASP's license or registration, effectively forcing them to cease operations.

Often available on the Seychelles National Assembly website or the Attorney General's Office portal.

[Example link (may require searching for the latest official version): seychelles.gov.sc (search for "AML CFT Act 2020") or via legal databases.]

[Example link: seychelles.gov.sc (search for "AML CFT Regulations 2021") or via legal databases.]

**Financial Intelligence Unit (FIU) Seychelles:** The central agency for receiving and analyzing Suspicious Transaction Reports (STRs) and for enforcing AML/CFT.