All LDS MNAs last week voted in favour of a Private Members Bill to render International Business Companies (IBCs) less transparent as the Central Bank of Seychelles (CBS) announced concrete actions to limit de-risking by foreign correspondent banks.
CBS Governor Caroline Abel said that because all offshore jurisdictions are considered high risk, Seychelles has to re-look at at this sector and update its laws.
The Bill brought by Anse Etoile MNA Ahmed Afif sought to repeal the clause that makes public the list of directors of any IBC registered in Victoria.
Under the new provision, approved by the LDS, the list of directors must be filed solely with the Registrar and will only be accessible to the relevant authorities, when authorized by a Court of law.
According to Afif, who as former Principal Secretary for Finance, helped set up the Seychelles Investment Authority (SIBA) the regulatory body for offshore (companies) existing legislation is discouraging companies to register in Seychelles .
The penalty for IBCs failing to submit their accounts to the Registrar on time, has also been brought down from $50 a day to just $5 a day. It was also claimed that the number of IBCs registered in Seychelles, has gone down since 2014.
Parti Lepep members argued that by making IBCs less transparent, Seychelles is running the risk of being black-listed by foreign watch-dog bodies, such as the OECD (Organisation Cooperation and Development). This Paris-based organization of 35 high income countries is a forum committed to democracy and good international policies.
The PL MNAs also said that it is already difficult to get foreign banking institutions to act as correspondent banks for local banks to effect international transfers.
The Leader of Government Business, Charles de Commarmond said he would call on President Faure not to assent to the Bill.
Two days later, the CBS announced measures in the same vein. Governor Abel said it is mostly IBCs which are involved in scandals, adding” It is difficult to monitor what they do as they are only registered in Seychelles, but do their business in other parts of the world.
With an offshore sector, Seychelles is deemed “high risk “and as a result large banks in the US and Europe are de-risking or terminating corresponding relationships with local banks, to avoid paying big fines.
The head of Financial Services Supervision Division, Naadir Hassan said because correspondent banks terminate relationships with local banks, it has become more difficult to make international money transfers.
In Seychelles, this is impacting, for example, on payments for imports, transfer of stipends for students studying abroad and transfer of money to any individuals in any other country.
“This issue is becoming more and more relevant in terms of the increase in transactions in terms of the transactions originating and terminating in Seychelles that are not being entertained.”
Mr Hassan said that it has been observed that most of the major American banks are refusing to accommodate Seychelles banks and now this has escalated to some European banks as well.
He added that we have to try our best to minimise the risks that Seychelles poses and that means having a discussion on how the offshore sector looks.