Seychelles Country Threat Assessment by Financial Crime News
Seychelles is rated the 2nd best rated country in SSA (out of 40) and 2/14 in Eastern Africa, with an overall score of 72/100 “Low” risk, 83/100 (“Very Low”) level for Threats, and 60/100 (“High”) level for Responses, with an “Improving” trend. Despite the Seychelles reputation as an archipelago of outstanding natural beauty, it suffers from the highest rate of heroin abuse in the world, where an estimated 10% of the working population may be addicted, smuggled in from Afghanistan. Drug trafficking is the primary area of concern highlighted by the country NRA, followed by other offences such as tax evasion, smuggling, corruption, company fraud, fraud/forgery, theft & robbery. In addition, the TA includes illegal fishing as a major concern. Seychelles is not included as a Jurisdiction under Increased Monitoring by FATF or the EU’s new list which took effect on 1st October 2020, however it does remain on the EU’s list of non- cooperative tax jurisdictions, though the country has committed to reforms to become tax-compliant.
Seychelles remains committed to tax reforms to comply with the European Union standards
Following its inclusion on the EU list of non-cooperative tax jurisdictions on 18 February 2020, the Government of Seychelles has issued a press release on 21 February 2020 to explain the rationale of why they have been included in that list and to confirm its commitments for tax reforms to comply with the EU standards as quickly as possible. Seychelles are already in dialogue with representatives from the Conduct Group on Business Taxation (CoCG) of the European Commission to address the concerns of the EU which is to ensure that its territorial tax regime applies only to entities that can demonstrate sufficient “economic substance”. In that respect, the Government of Seychelles intends to introduce more detailed substance requirements in line with the international best practices whereby it will be ‘taxing the worldwide profits of its resident persons, where these persons do not sufficiently demonstrate that they are conducting activities in Seychelles, when compared to the amount of foreign income they are generating.” Seychelles intend to implement these reforms by the end of March 2020 deadline to ensure it adheres to the EU requirements. Kindly refer to the attached article.
New AML/CFT strategy adopted by Seychelles Government
In July 2020, the government of Seychelles approved its first National Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Strategy (the “Strategy”) which comprises 5 key strategic objectives which ultimately aim at addressing the deficiencies identified by the 2017 National Risk Assessment and the 2018 Mutual Evaluation Report. These are listed as follows: Enhancing Seychelles’ AML/CFT legal framework consistent with international standards of combating Money Laundering (ML), terrorism financing and proliferation financing; Strengthening domestic and international cooperation in the fight against money laundering, terrorism financing and proliferation financing; Developing capacities of relevant public and private sector entities to combat money laundering, terrorism financing and proliferation financing; Implementing effective risk-based supervision and enforcement of AML/CFT and countering proliferation financing; and, Strengthening intelligence, investigations, confiscation and prosecution of money laundering, terrorism financing and proliferation financing. A series of actions have been devised and will be implemented to ensure that the above objectives are met at the earliest. Several laws, aimed at reinforcing the Seychelles AML/CFT framework, have already been enacted while others will be tabled before the National Assembly including the following: the new AML/CFT Act, 2020; the Beneficial Ownership (BO) Act, 2020; the Proceeds of Crime (Civil Confiscation) (Amendment) Bill, will be tabled before the National Assembly for approval. It is expected that Seychelles will complete the implementation of its Strategy by the end of 2022.
Seychelles to amend financial sector laws that put it on the EU’s taxation blacklist
(Seychelles News Agency) – Seychelles will soon send to the National Assembly for approval amended laws governing the financial sector with the aim to have the island nation removed from the European Union (EU) taxation blacklist/ Seychelles anticipated being removed from the taxation blacklist by February. However, a report from the Organisation for Economic Co-operation and Development (OECD) was released in April and it downgraded Seychelles from being largely compliant to partially compliant on four subjects. Seychelles has asked OECD to conduct a supplementary review on the reform done in its financial sector before the end of the year to get a new placement. The archipelago in the western Indian Ocean was included on the EU list of non-cooperative jurisdictions among 12 nations because of concern that its policy environment supports tax fraud or evasion, tax avoidance and money laundering. The list was first established in December 2017 and offers guidance on European investment and funding in other countries. Seychelles has already corrected some of the existing deficiencies following the enactment of the new Anti-Money Laundering and Countering the Financing of Terrorism Act, 2020 and Beneficial Ownership (BO) Act, 2020 in March. The island nation did not have a unit set up specifically within the Seychelles Revenue Commission (SRC) to share the information in a timely manner and since 2016, requests for information by other tax institutions have increased. Subsequently, the Seychelles’ government decided to amend the laws governing the financial sector, which include the Limited Partnership Act, the Foundations Act, the International Business Companies Act and a new Trust Bill. Under the new amendments, the tax information should be kept in Seychelles and should be readily available when requested. Secondly, we have added a provision that will allow the financial service authority to monitor and prevent companies which have been removed or dissolved to operate under the name Seychelles The EU decision follows that of France, which recently added Seychelles to its own list for not providing adequate information on some French offshore entities operating in the island nation’s jurisdiction. That provoked alarm among financial authorities in the island. The inclusion of Seychelles registered companies on the US sanctions list due to links with Iran has also raised alarms. The new regulations will be presented before the Seychelles National Assembly for approval when it resumes after the legislative election in October.
