faq
Money laundering is the process whereby funds that have been obtained from illegal activities are placed into the financial system to disguise its true origin and made to appear to have been derived from a legitimate activity.
There are three stages involved in money laundering. These are:
Placement – The introduction of illegal proceeds into the financial system (for example, the proceeds obtained from illegal activities, such as drug trafficking, deposited into a bank account).
Layering – The movement of funds via a series of transactions/conversions to disguise the origin of funds and obscure the audit trail.
Integration – The introduction of laundered funds into the legitimate economy through ordinary financial activity (for example, laundered funds are used to invest in – goods, financial or business products, or property).
Opportunities exist to identify money laundering at all three stages.
Terrorist financing is the solicitation, collection or provision of funds with the intention that they may be used to support terrorist acts or organizations. These funds can be both from a legitimate or illegal activity.
The Financial Action Task Force, more commonly known as FATF, is an inter-governmental body whose objectives are to set international standards for combatting money laundering, terrorist financing and proliferation financing; and promote its effective implementation of legal, regulatory and operational measures by member countries in order to protect the financial systems from abuse, both domestically and internationally.
Find out more about the FATF by visiting their website https://www.fatf-gafi.org/
Seychelles is not a member of the FATF, however, Seychelles is a member of the Eastern and Southern African Anti-Money Laundering Group (ESAAMLG), which is an FATF-Style Regional Body. The ESAAMLG is an associate member of the FATF, thus its members have also made the commitment to endorse and implement the FATF Recommendations.
Find out more about ESAAMLG by visiting their website https://www.esaamlg.org/
The FATF has issued 40 Recommendations essential for combatting money laundering, terrorist financing and proliferation financing.
The FATF Recommendations set out the essential measures that countries should have in place to:
- identify the risks, and develop policies and domestic coordination;
- pursue money laundering, terrorist financing and the financing of proliferation;
- apply preventive measures for the financial sector and other designated sectors;
- establish powers and responsibilities for the competent authorities (e.g., investigative, law enforcement and supervisory authorities) and other institutional measures;
- enhance the transparency and availability of beneficial ownership information of legal persons and arrangements; and
- facilitate international cooperation.
Source: FATF (2012-2017), International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation, FATF, Paris, France, www.fatf-gafi.org/recommendations.html
A Financial Intelligence Unit (FIU) is a national agency responsible for the receipt and analysis of suspicious transaction reports and information relevant to money laundering and terrorist financing; and the dissemination of that analysis to law enforcement agencies and competent authorities. In addition to its core function, an FIU may be mandated to carry out additional functions as established under its legislation, such as supervision of reporting entities to enforce compliance to the Anti-Money legislations.
The Seychelles FIU was established in June 2006 with the repealing of the Anti-Money Laundering Act 1996 and enactment of the Anti-Money Laundering Act 2006, which defines the duties, rights functions and powers of the FIU.
Reporting Entities are entities who have legal requirements to implement measures to combat money laundering and terrorist financing. These entities are designated under the First Schedule of the Anti-Money Laundering and Countering the Financing of Terrorism Act 2020. This includes, but is not limited to, Banks, Bureau de Change, Corporate Service Providers, Insurance Companies/Brokers, Accountants, Auditors, Casinos, Motor Vehicle Dealers, Real Estate Agents, and other High Value Dealers.
Reporting entities have a number of obligations to which they have to abide to under the Anti-Money Laundering and Countering the Financing of Terrorism Act 2020. These obligations include conducting customer due diligence, monitoring customer transactions and reporting suspicious transactions to the FIU. Through the implementation of effective controls, procedures and systems, reporting entities assists the FIU, and Law Enforcement Agencies, in the fight against money laundering and terrorist financing through deterring, detecting and reporting suspicious activities.
As per the Section 48 of the Anti-Money Laundering and Countering the Financing of Terrorism Act 2020, where a reporting entity has reasonable grounds to suspect that any service, or transaction may be related to the commission of criminal conduct including an offence of money laundering or of terrorist financing activities or to money or property that is or represents the benefit of criminal conduct, the reporting entity shall submit a suspicious transaction report (STR) to the FIU. A suspicious transaction can include both completed and attempted transactions.
The law requires that reporting entities identify and verify the identity of their customers through an independent and reliable source. The identification document should be valid and bear a photograph with reasonable likeness to the individual such as National Identity Card or Passport. Each reporting entity has their list of the acceptable documents required to be submitted by customers. Please verify with the reporting entity for further guidance on what type of documents are accepted.
Reporting entities have to gather enough information to identify their customers and understand the nature of the relation and services being requested. This may include your residential and/or business address, expected monthly income and expenses, your employment status, nature of your business, etc… These customer due diligence requirements are in place to safeguard the integrity of the financial system from being abused by criminals and protect.
A reporting entity has an obligation to conduct ongoing monitoring of all their business relationships in order to ensure that the documents, data and information held on a customer is valid and updated. Therefore, depending on the nature of services being provided, you will be requested to provide updated documents and information as and when required by the entity. However, you, as a customer, also have a personal responsibility to ensure that the information held with a reporting entity is valid and accurate. This includes your residential address, employment status and monthly income.
In order to ensure that illegally obtained funds does not enter the financial system, reporting entities are required to verify the source of the funds being provided by their customers. Therefore, it is important that you cooperate with the reporting entity and provide the necessary information and/or documents being requested. This procedure is in place to protect the integrity of the financial system.