The redraft has been undertaken to enable firms in the financial services sector to offer services to mutual funds investors, which combine the assets of a number of investors to create larger funds for investment in stock exchanges, money markets and other investment opportunities.

“The original legislation came into force in 1997 when the whole of Seychelles’ financial services sector was in its infancy. Since then the industry has become far more advanced and sophisticated and it is essential that our legislation caters for these developments and allows us to keep pace with other jurisdictions around the world,” commented Conrad Benoiton, the Director General of the Central Bank’s recently created Securities and Financial Markets division, which is responsible for the registration as well as the regulating and supervising of non bank business activities.

By the end of 2007 the mutual funds industry worldwide was estimated to be worth USD26.2tn, surpassing any other offshore business structure and growing at an average of one trillion US dollars per year.

“The global mutual funds industry is worth trillions of dollars and, as Seychelles’ financial services sector continues to develop, it is essential that we position ourselves to access this industry,” he said.

The redraft has extended the powers of the regulator, introducing additional rights to request periodical audits, request information for inspection and grant powers to enter, search and take copies of any licensed operations and guaranteeing compatibility with international standards enforced by FATF, IMF, the International Organisation of Securities Commissions and Offshore Group of Insurance Supervisors.

“As with all areas of the financial services industry it is essential that we, as the regulator of the jurisdiction, achieve the appropriate balance in the legislation between providing local firms with the competitive advantage they require, at the same time as ensuring that it is a well regulated industry which conforms to the international standards required to maintain investors’ confidence,” said Mr. Benoiton.

“A combination of the right legislation and a dynamic private sector has allowed Seychelles to rapidly establish itself as a leading IBC registry and CSL provider, and I see no reason why we cannot achieve the same results with mutual funds,” he added.

Increasing international concern over money-laundering and terrorism funding has led to additional security measures being introduced into the new legislation.

“The dynamic growth which we want to see the industry achieve requires complete compliance with the established legislation. The reputation built over the last ten years is a strong selling point for the jurisdiction and one which we cannot afford to lose by turning a blind eye to even minor infringements," noted Mr. Benoiton

The redrawn legislation will also allow expatriate employment levels of up to 50%, replicating existing regulations for the offshore sector, which have not negatively impacted upon the local labour market.

“While Seychelles sees the need for human resources skills to take advantage of various components of the financial services industry we will in the interim phase welcome professionals from outside. But we have to learn from foreign partners in the sector so that, over time we can ensure that Seychelles derives the maximum possible benefit from the industry,” said Mr. Benoiton.

To facilitate this process the new legislation is being backed by a renewed commitment to training in the sector.

“The changes to our legislation would, of course, be ineffectual unless we have the skills to take advantage of them and the training strategy currently being developed by the Central Bank in conjunction with stakeholders will help create a jurisdiction which has both the skills and legislation to meet the needs of the international financial market,” observed Mr. Benoiton.

The newly drafted legislation is also intended to bolster banking and legal services necessary for mutual fund operations.

“It is worthy to acknowledge contributions by all stakeholders in particular representative of SAOPRA involved with the drafting works and continual support of all institutions are deemed essential for the success of the financial services industry," commented Mr. Benoiton.