Seychelles gets its first VASP law
August 13, 2024
The National Assembly, has unanimously approved the Virtual Asset Service Providers (VASP) Bill, 2024.
The bill was presented before the House by the Minister for Finance, National Planning and Trade, Mr. Naadir Hassan.
The main objective of the bill is ‘provide a legislative framework to regulate virtual asset service providers (VASPs) and address potential financial crime risks associated with the misuse of virtual asset (VA) products and virtual asset service provider services’.
The main clauses of the bill are as follows:
• Introduction of a licensing regime for specific VA products and VASPs.
• Registration of promoters of initial coin offerings (ICOs) and non-fungible tokens (NFTs).
• Prohibition of the promotion or provision of VA products and VASP services without the requisite authorization.
• Provision for increased monitoring of and action taken in response to VA products and VASP services promoted online indicated to be “regulated” in the Seychelles.
• Introduction of supervisory measures of VA promoters and VASPs, including specific control measures to mitigate money laundering and terrorism financing (ML/TF) and other financial crime risks.
• Designation of the Financial Services Authority (FSA), as the regulatory authority responsible for the implementation of the law.
• Setting out specific requirements expected to be met in order for a legal person to be licensed as a VASP operating in or from Seychelles.
The Bill also aims to strengthen understanding about possible VA and VASP risks by existing regulated entities who may provide legal, company formation or administration and other services to VA promoters and VASPs. It recognizes the importance of raising of awareness of Seychelles consumers and regulated entities about scams and VA misuse while also ensuring sufficient protections are in place for those consumers who fall victim to illicit activity.
The bill is ‘allowing for responsible innovation and use of technology while mitigating the risk of VA products and VASP services being misused by illicit actors’.
As of a result of this newly approved bill on virtual asset service providers, consequential amendments have also been made to other related Acts, referencing VA and VASPs, including the Anti Money Laundering and Countering the Financing of Terrorism Act, 2020, the Financial Services Authority Act, 2013, the International Business Companies Act, 2016 and the Financial Consumer Protection Act, 2022.
As a matter of best practice, jurisdictions are expected under the Recommendations of the Financial Action Task Force (FATF) to evaluate the financial crime risks to which their country could be exposed. This includes assessing the money laundering and terrorist financing (ML/TF) risks associated with VA products and VASP services. The Seychelles undertook an assessment of VA products and VASP services in 2021, the results of which were published in July 2022 and indicated that Seychelles has a high ML/TF risk exposure concerning VA products and VASP services. Recommendation 15 of the FATF requires jurisdictions to establish a regulatory framework which comprises of certain key elements, and the passing of this bill considers such requirements, and thus promotes Seychelles’ efforts towards achieving an upgrade on this recommendation at the next opportunity.”