VICTORIA, Seychelles — The cabinet of ministers has approved a new regulatory framework for Virtual Assets and Virtual Assets Service Providers in Seychelles. The move paves the way for a licensing regime that the government says will bring the country into line with international anti money laundering standards. The framework, set out in the draft Virtual Assets Service Providers Act, is designed to meet the requirements of Recommendation 15 of the Financial Action Task Force and to address a long standing finding by the Eastern and Southern African Anti Money Laundering and Countering the Financing of Terrorism Task Force.
Vice President Ahmed Afif, who briefed the press on the cabinet’s decision, said the regulations would be finalised by the end of February 2024 and submitted for re rating under Recommendation 15 by March 2024. A decision from the ESAAMLG Task Force is expected in September 2024. The Vice President acknowledged that the 2014 ESAAMLG mutual evaluation had identified a weakness in the framework covering virtual financial transactions, and said the new Act was designed to close that gap.
Under the proposed regime, only companies, rather than individuals, will be eligible for a licence. Local entities will need to demonstrate real substance in Seychelles, including a qualified board based in the country. The Vice President said the requirement was intended to put a stop to entities that claim a Seychelles base without any physical presence. Once the regulations are enforced, he added, such entities will not be able to say that they are operating from Seychelles unless they have been issued a licence from the local regulator.
The list of activities to be regulated covers virtual asset wallet providers, virtual asset exchanges, asset brokers, and investment providers. Payment service providers and mining mixers will not be permitted under the new regime. The Vice President said the framework was deliberately balanced, designed to encourage innovation in the virtual assets industry while protecting Seychelles from the financial crime risks that the sector can attract.
The draft regulations were developed jointly by the Central Bank of Seychelles, the Ministry of Finance, the Financial Intelligence Unit, and the Financial Services Authority, which will act as the sector regulator. The new regulations are to be tabled once the National Assembly is in session, although they are not subject to Assembly approval. The Vice President described the move as a significant milestone in the country’s efforts to build a robust and responsible framework for the burgeoning virtual assets industry.
