1. Introduction
On 5th March 2020, Seychelles passed two new laws of Beneficial ownership Act 2020 (BOA) and AML/CFT Act 2020 in replacement of AML Act, 2006. Both served as a proactive response of Seychelles to improve its AML/CFT framework, enhance transparency regarding beneficial ownership information to prevent misuse of corporate vehicles in Seychelles, and better align with international standards.
The BOA opened up the official gateway for the establishment of a centralized data center for storing information of beneficial ownership in Seychelles. The Financial Intelligence Unit (FIU) was put in charge of managing, maintaining, and ensuring security of the database.
In what follows, we will shed light on how BOA affects your responsibilities as an owner of an International Business Company in Seychelles, as well as its possible impact on the anonymity of beneficial owner in the jurisdiction.
2. Entities affected under BOA
The Act applies to a legal person including a company (incl. overseas company), an association, a Seychelles IBC Company, a protected cell company, a special license company, a partnership, or a foundation incorporated in Seychelles under corresponding Acts. The act also applies to a legal arrangement i.e. a resident trustee of an international trust or a general partner of a limited partnership in Seychelles.
That said, this act does not apply to a listed company on a securities exchange under Seychelles securities Act or an exchange licensed in a jurisdiction that is an ordinary member of the International Organisation of Securities Commissions (IOSCO), or a subsidiary of a body corporate, partnership or trust listed on securities exchanges as mentioned above.
3. Duties of Seychelles IBCs
3.1. Duties of Beneficial Owners (BO):
Beneficial owner, according to the Act, refers to one or more natural persons:
- Who ultimately own or control a customer; or
- On whose behalf a transaction is being conducted; or
- Who exercise ultimate effective control over a legal person or a legal arrangement.
Every person must notify and provide information within 14 days when becoming a beneficial owner of the company or when there are changes in particulars of BO.
Failing to do so or intentionally providing false information will make BO subject to a fine not less than 50,000 SCR and/or imprisonment not exceeding 1 year. In addition, a BO will also face the following restrictions from the company:
- Rights to transfer shares or other interest;
- Voting rights;
- Rights to acquire additionally issued shares;
- Rights to payment of the interest in respect of capital of legal person or legal arrangement;
- Rights to take part in the management of the limited partnership;
- Benefit to which the owner of the foundation is entitled;
- Cancellation of the interest in the legal person or the legal arrangement;
- Other measures.
3.2. Duties of companies
The legal person and legal arrangement have a duty to identify and verify information of its BOs. In addition, upon receipt of such information from BOs, they have to provide and update for registered agent registrable information in the prescribed form in 14 days.
After a person ceases to be a beneficial owner, the legal person and legal arrangement must keep their information for at least 7 years.
A company failing to comply with BOA will be liable for a penalty of up to 50,000 SCR.
According to the Act, following information must be included in beneficial ownership register:
- The name, residential address, service address, date of birth and nationality of each beneficial owner;
- Details of beneficial interest;
- The date on which a person became a beneficial owner;
- The date on which a person ceased to be a beneficial owner;
- The name, residential address, service address, date of birth and nationality of each nominee member (shareholder).
4. Introduction of centralized beneficial ownership database
4.1. What is centralized beneficial ownership database?
Beneficial ownership database is a data center centrally managed by Financial Intelligence Unit (FIU) for storing information of beneficial owners provided by the legal persons and legal arrangements via their registered agents. The data center will not be made available for public examination. Only some public authorities in Seychelles are granted access to the database.
4.2. Who can request access to the database?
Following competent authorities will have access to the database:
- Anti Corruption Commission of Seychelles;
- Central Bank of Seychelles;
- Financial Crime Investigation Unit or any other Unit as may be designated by the Commissioner of Police within the Seychelles Police Force;
- Financial Intelligence Unit;
- Financial Service Authority;
- Office of the Attorney General;
- Registrar of Associations;
- Registrar of Companies;
- Seychelles Revenue Commission.
The registered agent intentionally providing wrong information onto the data center shall be subject to imprisonment at a maximum of 2 years and/or a fine of no more than 100,000 SCR.
In addition, registered agents have the responsibility to grant access to the information for some public authorities as per individual written request by such authorities:
- FIU or Financial Services Authority;
- Any law enforcement agency;
- Registrar of Associations;
- Registrar of Companies;
- Seychelles Licensing Authority;
- Central Bank of Seychelles;
- Order of a Court.
A resident agent who fails to provide prescribed information upon request will be subject to a fine not exceeding 50,000SCR per each failure. And a resident agent who intentionally supplies falsified or misleading information as requested shall be liable to imprisonment not exceeding 2 years and/or a penalty of no more than 50,000SCR.
5. BOA’s effect on anonymity of Seychelles IBCs
Before the enactment of the Act, all Seychelles IBCs had to keep their registers of directors, shareholders, and beneficial owners at the company’s registered address. Moreover, an IBC must only file its register of director with the Registrar.
Though beneficial owner register was kept at the registered address, an IBC is still responsible for maintaining and keeping its up-to-date.
Upon passing new legislation, the responsibilities of beneficial owners and IBC itself virtually remain the same as aforementioned. However, the BOA makes way for a centrally managed database of beneficial ownership information submitted through resident agents. This data center will help to facilitate access to information by competent authorities and law enforcement agencies. It will also make ease of exchange of information on request regarding beneficial ownership between Seychelles and international authorities.
The BOA will come into force on 31 January 2021. New regulations and amendments are expected to be announced in the upcoming time to support implementation.
If you have any question, please feel free to contact your dedicated relationship manager or drop us an email at service@bbcincorp.com
