VASPs are companies that enable the exchange of virtual assets, such as utility tokens like Filecoin, non-fungible tokens, and cryptocurrencies like Bitcoin.
In the course of the process, Danny Sanhye of BDS Forensics conducted a national risk assessment on virtual assets and associated service providers, and the results were presented to regional partners in the business sector last Friday at Savoy Resort & Spa.
The banking industry, corporate service providers, the insurance industry, the securities industry, attorneys, accountants, and auditors, among others, participated in the presentation.
Sanhye stated in his presentation that "there are many VASPs functioning in Seychelles, but there is no structure and sufficient regulation in place, does not accommodate for their activities, therefore they cannot be effectively supervised."
In the western Indian Ocean archipelago of Seychelles, according to Sanhye, there is currently no framework in place to minimise risks related to VASPs.
According to him, "These VASPs need to be licenced the same as a current licensee, for example, like the bank, they have all these mitigants in place to protect their goods from being exploited."
Seychelles' lack of a licencing system for VASPs violates FATF Standard No. 15, which calls for licencing regimes for such entities.
Sanhye went on to say that the Seychelles' level of secrecy and the absence of adequate legislation are some of the things that would encourage such enterprises to locate there. He claimed that several of these VASPs are already being looked into.
Seychelles might solve the problem in one of two ways: by forbidding VASPs from the island country or by properly licencing them.
Sanhye stated, "We contemplated prohibiting all such operations, but that would not work since then enforcement would become an issue, given there are no laws," and noted that these businesses do provide advantages to Seychelles that will be obtained with correct regulations.
Randolf Samson, the interim head of the Seychelles Financial Services Authority, stated that while some of the VASPs registered as International Business Companies (IBC) in Seychelles could be traced, the total number of VASPs among the more than 51,000 registered IBCs could not be determined.
"When we conducted the risk assessment, we discovered that while some claim to be domiciled in the Seychelles, others are actually incorporated here but are only using the name of the Seychelles. As a result, they are harming our reputation even though their transactions are not carried out in the Seychelles. This exercise will enable us to identify those responsible for this "said Samson.
Seychelles is now regarded as being "non-compliant" in the Mutual Evaluation Report from 2018 and its follow-up report from the Eastern and Southern Africa Anti-Money Laundering Group. This is because there are insufficient regulations in place.
The Financial Action Task Force's (15) guideline on national risk assessments is one of the 11 recommendations that the Eastern and Southern Africa Anti-Money Laundering Group evaluated Seychelles as not complying with, according to Secretary of State for Finance Patrick Payet (ESSAMLAG).
Seychelles will develop an action plan in response to the National Risks Assessment Report, which will be reviewed internally with the national AML/CTF committee and submitted for approval to the cabinet of ministers and the National Assembly.
