Tuesday, October 15, 2019

Enforcement Matters

ENFORCEMENT

Overview

The Financial Services Authority (FSA) is mandated under the Financial Services Authority Act 2013, to supervise, regulate and monitor compliance with the non-bank financial services business carried on in or from within Seychelles which serves to ensure the integrity, effectiveness and development of the sector and assist in the prevention or detection of financial crime, including money laundering, financing of terrorism, misconduct, misuse of information, fraud and dishonesty.

In the performance of its functions, the Authority has to take into account the following:

  • the protection of the public, investors, clients and potential clients;
  • the protection and enhancement of the reputation of Seychelles as a financial services centre;
  • the reduction of crime and other unlawful activities relating to financial services business.

To achieve this purpose, the FSA has the power to take the following compliance and enforcement actions against any licensee:

  • conduct compliance inspections on the business premises of a licensee;
  • appoint an examiner to conduct investigations on its behalf;
  • issue a directive;
  • issue a direction;
  • suspension of a fit and proper status of an individual;
  • issue public statements;
  • revocation or suspension of licence;
  • application for a protection order (including the appointment of an administrator);
  • removal of any director, key employee or officer of a licensee;
  • impose an administrative penalty;
  • request for information and production of such records or documents by a licensee.
  • Initiation of legal action against licensees for commission of offences.

The FSA, being the regulator for Fiduciary Services, Capital Markets, Collective Investment Schemes, International Trade Zone, Insurance, Gambling and Hire Purchase and Credit Sale businesses, is also equipped with the necessary compliance and enforcement tools under the relevant financial services legislation.

Unauthorised financial services business

Any person wishing to carry on any financial services business in Seychelles under the relevant financial services business legislation must be properly licensed or registered. Any illegal conduct of regulated business is a punishable offence under the relevant financial services legislation.

The FSA, under the FSA Act, can take the following actions where it appears that any person is carrying on, or has carried on unauthorised financial services business:

  • Request specified information or documents from the person believed to be carrying on, or to have carried on, unauthorised financial services business;
  • Appointment of an examiner to conduct an investigation into the matter;
  • Issuance of a public statement;
  • Application for a protection order.

Public statements

The Authority has powers under the Financial Services Authority Act, 2013 to issue public statements regarding any matters where the Authority is entitled to take enforcement against a licensee or former licensee and setting out the reasons for the enforcement action.

Public statements can also be issued with regards to any person who is carrying on, or has carried on unauthorised financial services business, any person who falsely holds himself out as a licensee and any matters which the Authority considers desirable for the protection of the public, protection and enhancement of the reputation of Seychelles as a financial services centre and the reduction of crime and other unlawful activities relating to financial services business.

Revocation and Suspension of licence

The Authority may, if it is entitled to take enforcement action against a licensee revoke or suspend a licence.

A licence can be revoked or suspended where it appears to the Authority, inter alia, that:

  • the licensee has contravened or is in contravention of the FSA Act, or any other financial services legislation or any code or guideline issued by the Authority;
  • the licensee has contravened or is in contravention of the Anti-Money Laundering Act or any other laws of Seychelles;
  • the licensee is carrying on or is likely to carry on business in a manner detrimental to the public interest or to the interest of clients, creditors;
  • a licensee or another relevant person has refused or failed to cooperate with the Authority on an inspection conducted by the Authority undersection 24;
  • the licensee has provided the Authority with false, inaccurate or misleading information, whether on making an application for a licence or subsequent to the issue of the licence.

Surrender of licence

A licensee may, at any time, surrender its licence by giving prior notice in writing to the Authority.

The notice should provide a true and full disclosure of the reasons to satisfy the Authority why the licensee wants to surrender the licence, the date on which the termination is to be effective, the measures taken by the licensee for the discharge of its liabilities and transfer of the business of the clients and such other matters as may be required by the Authority.

Disciplinary actions

The Authority has powers to use certain disciplinary tools where it is entitled to take enforcement action against a licensee:

Directives

The Authority may issue a directive for the following reasons:

  • imposing a prohibition, restriction or limitation undertaken by the licensees including that the licensee shall cease to engage in any type of business and the licensee shall not enter into any new contracts for any type of business.
  • requiring that any director, key employee or person having functions in relation to a licensee be removed and replaced by another person acceptable to the Authority;
  • requiring the licensee to take such other action as the Authority considers may be necessary to protect the property of, or in the custody, possession or control of, the licensee or to protect customers or creditors or potential customers or creditors of the licensee.

Direction

The Authority may issue a direction to a licensee as it considers appropriate, where the Authority has reasonable cause to believe that —

  • a licensee has contravened or is likely to contravene the FSA Act, and other financial services legislation, any code, guideline or any other laws of Seychelles;
  • a licensee is conducting its affairs in an improper or financially unsound manner;
  • a direction is necessary or desirable to protect the interests of clients of a licensee,

Non-compliance with a direction is an offence under the FSA Act.

Administrative penalties

The Authority reserves the right to impose such administrative penalties on a licensee as may be provided for under the FSA Act or under any other financial services legislation.

Removal or suspension of fit and proper of an individual

Any director, key employee or person having functions in relation to a licensee be removed and replaced by another person acceptable to the Authority.

Protection order

The Authority may apply to the Court for a protection order under this section with respect to:

  • a licensee whose licence is about to be revoked or where the Authority is entitled to take enforcement action against him under section 27;
  • a former licensee;
  • a person carrying on unauthorised financial services business.

The Court may make such order as it considers necessary to protect or preserve the business or property of the person with respect to whom the application is made, or the interest of his clients, investors, creditors or the public, including an order —

  • preventing the person concerned or any other person from transferring, disposing of or otherwise dealing with property belonging to him or in his custody or control;
  • appointing an administrator to take over and manage the financial services business then carried on by the person concerned or carried on by him immediately before the revocation or suspension of the licence, as the case maybe;
  • in the case of a company, that the Company considered to be wound up by the Court or be subject to the supervision of the Court under laws relating to winding up;
  • granting the Authority, a search warrant;
  • where the person concerned is in contravention of this Act or any financial services legislation, requiring the person concerned to take such action, or to refrain from taking such action, as is necessary to bring him back into compliance with this Actor the financial services legislation.

FINANCIAL SERVICES APPEALS BOARD

The FSA Appeals Board is established under the Financial Services Authority Act and provides a right of appeal by a licensee or person aggrieved by a decision of the Authority within 90 days of the decision being made.

The Appeals Board is currently made up of five members who are independent of the Authority, comprising of two legal practitioners and three other persons having qualifications and experience in the field of financial services.

Any appeal before the Appeals Board needs to be lodged in the form of a Notice of Appeal which is available here. -> Notice-of-Appeal.pdf

Any persons wishing to lodge an appeal can contact the Secretary of the Appeals Board on 4380000 or email on appealsboard@fsaseychelles.sc