Financial Services Authority |16 June 2021

Mr Robert (Photo: Jude Morel)

Low-risk firms to be exempted from having to appoint compliance officer

The Financial Services Authority (FSA) is bringing a new regulation that will exempt low risks companies and licensees under its jurisdiction from having to employ or appoint a compliance officer.

This decision was green-lighted by the cabinet of ministers last week and will be formalised once the Minister for Finance signs the regulation and it is placed in the gazette.

Paul Robert, director of policy and legal at FSA, yesterday explained that the FSA will now exempt five groups of licensees from having to appoint compliance officer as required under section 23(2) of the Financial Services Authority Act, 2013.

These are companies licensed under the International Trade Zone Act, licensees involved in hire purchase and credit sale, some relevant companies under the Companies (Special Licences) Act and private, professional or public funds operating under the Mutual Fund and Hedge Fund Act.

Individuals holding a licence under the Securities Act to act as representatives for a securities dealer or for an investment advisor are also exempted from this obligation.

Mr Robert explained that FSA was already administratively exempting these types of businesses from the requirements stated under Section 23 (2) of its Act and the new regulation only serves to legitimise this practice.

Section 23 of the FSA Act states that a licensee or company shall appoint an individual approved by the Authority as its compliance officer who shall be appointed to oversee the compliance to relevant laws and regulations.

“Exempting low-risk licensees from this obligation falls in line with international standards,” noted Mr Robert.

“This is something that FSA should have put in place some years ago because the law since 2013 has stated that all licensees should comply but this is not possible in practice. Once this regulation is enforced, this will give the FSA, as a regulatory body, the reassurance that our practices are aligned with the laws of Seychelles. Presently, right now we can be questioned but now we are clarifying everything and the international community can see that we are being transparent, and that nothing is happening under the table,” added Mr Robert.

“It will also be a plus for these businesses, some of which did not have a compliance officer, and now they do not have to look over the shoulder because they do not have the legal support.”

In regards to whether there are risks to exempting some businesses from having to have a compliance officer, Mr Robert noted that there are little to no risks in removing this obligation from the low-risks businesses.

“Businesses that are high-risk are already covered by the Anti-Money Laundering/ Countering the Financing of Terrorism (AML/CFT) that specifies which businesses that have to comply with money laundering. So the AML/CFT Act caters for all these risky businesses. If we are to exempt some of these businesses from appointing a compliance officer, this is where the danger is,” he stated.

Elsie Pointe