Consultation  starts on proposed framework for regulation of VA and VASP |10 January 2024

Mr Samson (3rd from left) addressing the gathering

The National Anti-Money Laundering and Countering the Financing of Terrorism Committee (NAC) yesterday afternoon launched its consultation phase for the proposed framework for the regulation of Virtual Assets (VA) and Virtual Asset Service Providers (VASP).

The public consultation meeting for stakeholders in government institutions and private sector, that was held at the Seychelles Trading Company (STC) conference room, Bois De Rose, was to gather more suggestions and recommendations to finalise the draft before it is brought to cabinet and the National Assembly for approval.

The framework has been developed with a view to encouraging innovation and supporting the growth of the VA industry, in a responsible and sustainable manner, while also importantly addressing and safeguarding against the potential financial crime risks associated with the misuse of VA products and VASP services, mostly to do with Crypto currency, offered in or from the Seychelles. It is the Financial Services Authority that is taking the lead in drafting the law.

The NAC has been actively engaged in an action plan to address such risks and the requirements of the Financial Action Task Force (FATF) Recommendation 15 which relates to new technologies. The NAC intends to submit a request for re-rating for Recommendation 15 by March 2024 for consideration by the Eastern and Southern African Anti-Money Laundering and Countering the Financing of Terrorism (ESAAMLG) Task Force in September 2024.

In an interview with the media, the chief executive of the FSA, Randolf Samson, said that the consultative process was part of a wider aim of the government to have a policy position concerning VA and VASP and a law which will regulate the sector, which brings with it a lot of risks.

He noted the sector has attracted a lot of interest be it at the level of FATF and also other partner countries and with the law in place, it will give the different authorities such as FSA, the Central Bank of Seychelles (CBS), the Police, the Financial Intelligence Unit (FIU) and FSA, enough baggage to deal with this activity as it does present a lot of risks.

“On the positive aspect, we foresee that this framework will provide an opportunity for innovations in Seychelles and also for us to better embrace technology because this activity is very heavily technology-based,which will bring about positive changes,” said Mr Samson.

With regard to taxation aspect, Mr Samson stated that to encourage registration of companies in the sector there might be the need to incentivise them to be in the country but government is still in discussion as to whether to offer them preferential taxes or to apply the normal tax rate.

He stated that when they did their national risks assessment in 2021, which was published in 2022, they found that there were eighty companies or entities that might fall within the definition of Virtual Asset or Virtual Asset Service Providers and these companies will need to apply for a license under the new law when it is actually put in place.

“If they do not, we will be giving a transitional period of about six months as from March 2024 when the law will be enacted. And if they do not apply for a license within that period, then the FSA and other authorities will start to take action so that they do not carry out what would be an unauthorised activity,” Mr Samson said.

Among some of the concerns raised during the discussion by the stakeholders were the issue of license fees, taxes and substance requirements in terms of the number of directors, which is no fewer than two for board meeting to be held here in the country, among others.

Patrick Joubert/Press release from the Ministry of Finance, National Planning & Trade