Seeking to build on the success of the financial services industry, Seychelles’
Mutual Fund Act has been redrafted to plug gaps in the previous legislation
and allow local financial service providers to tap into the multi-trillion dollar
mutual funds industry, the Central Bank of Seychelles has announced.
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.
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